Recent news that void periods are shortening across the rental market is welcome news in the sector, with time between tenancies costing landlords much less.
The UK’s private rented sector continues to show its strength, with huge interest from investors as well as tenants snapping up properties. While this is pushing prices up, there’s another benefit for buy-to-let landlords.
Research published by Rentd has shown that void periods – the time that a property sits empty in between tenants – have fallen in England. The average void time is now 20 days, compared with 25 days this time last year.
The data also demonstrates how the cost of each empty home period has also dropped. On average, landlords are losing around £599 every time there’s a gap between the tenant leaving and the next one moving in. This is down from £697 since early 2021.
This is because landlords are renting their homes out more quickly each time, so the amount of rent lost is falling. At the same time, average rents have risen from £848 per month to £911 per month.
Void periods across the regions
While London’s property market has somewhat lagged behind in terms of growth in recent years, it is the area that has fared the best in Rentd’s figures on void periods. The average cost for a landlord is now £984, compared to £1,285 last year.
In Yorkshire and the Humber, the cost of a rental home sitting empty has fallen by £219 over the past 12 months. In the north-east, it has dropped by £173, while in the West Midlands it has fallen by £165.
Other parts of the country have seen less significant falls, although they will still make a difference. In the south-east, an empty property costs the landlord £87 less than it did a year ago, while the figure is £62 in the east and £8 in the East Midlands.
Ahmed Gamal, Rentd chief executive, says: “The impact of the pandemic was quite profound in many areas of the rental market and particularly across major cities, where dwindling levels of tenant demand saw rental expectations slashed simply to secure a tenant and reduce the long void periods that were building between agreements.
“However, with Covid restrictions now behind us and a return to the workplace in full swing, we’ve seen tenant demand once again return to the rental market on all fronts and this has started to cultivate signs of a rental market revival across the board.”
“The previous surplus of rental stock is now starting to vanish and as a result rental values are climbing from the pandemic depths to which they had previously slumped.”
Make tenants want to stay
As a landlord or property investor, it is in your best interests to keep your tenants in your property for as long as possible, in most cases. While so-called “rogue landlords” attempt to cut corners to try to maximise profits, it goes without saying that this is a very poor business model.
Clearly there is only so much influence you can have on your tenants’ behaviour. But there are steps you can take to reduce your risk of void periods.
- Look at areas of high demand. If you invest in an area with high tenant demand, such as in or close to a major city or town, you will have a wider choice of tenants. Think about where local jobs are, the transport options and the social scene in the area.
- Consider size. Depending on your target tenant, size could make a difference. If you want to attract affluent young professionals, for example, a spacious two-bedroom apartment might be a good choice. If your investment is in London, a one-bedroom flat or studio might be more popular.
- Invest in mod cons. Today’s tenants expect more from their rental properties. Patchy WiFi and a kitchen without a dishwasher are not on most peoples’ wish lists. You could even add smart technology, as these small touches can make a tenant want to stay.
- Think about their bills. The more eco-friendly your property is, the lower your tenants’ bills will be. This is a major selling point, and you could even get a better mortgage rate for your property. New-builds offer the most energy-efficient options.
- Make it their space. Tenants want to feel at home in a place, even if they are renting. If it’s furnished, consider investing in a furniture pack to get the right balance. You should also respect the fact that it is their space by giving plenty of notice for inspections.
- Resolve issues quickly. If an appliance breaks or there’s a leak, respond as quickly as possible. The same applies for any disputes that arise. Once you’ve got good tenants, this can help you keep them.
- Get good tenants. Your vetting process should help you rule out risky tenants. This could include those who have been evicted in the past, or who have failed to pay rent. If you appoint a letting agent, they should do this for you, but you can still have a say.
- Consider an HMO. A house in multiple occupation (HMO) tends to have separate contracts for each tenant. This means that when one leaves, it is only that room that stops bringing in rent, rather than the whole property.
- Budget for void periods. Sometimes, despite your best efforts, your tenants decide to move out. It is important to have a contingency plan for this so that you can cover any costs until you find a new tenant.