Build a void period strategy to increase your buy-to-let profits
Recent news shows research shows that 35% of UK landlords have experienced a void period in the first quarter of 2018. However, the average tenancy is 18 months, and the average void period is 22 days. Some landlords suffer from a constant merry-go-round of tenancies and longer-than-average void periods. Yet some landlords keep their tenants for seven, eight, 10 years and longer.
In this article, I’ll share my top tips to avoid void periods.
How much might a void period cost you?
When you suffer a void period, the obvious cost is the lost rental income. You’ll have to pay the mortgage from other means. But this isn’t all:
- You will also need to pay utilities and the council tax.
- You should keep up to date with your landlord insurance premiums, too.
- Then there is the cost of re-advertising your property and finding and vetting new tenants.
- You will need to produce new tenancy agreements, and pay for any mandatory checks that must be made between tenancies.
- You will probably also need to carry out some maintenance and redecoration work to bring the property up to scratch.
Add up that little lot, and it’s easy to see that void period become very expensive for landlords.
Void periods are inevitable, but…
You will never eliminate void periods. They are inevitable. As their circumstances change, tenants move on. But there are things you can do to extend tenancies and minimise the time it takes to get a new tenant when your existing gives notice.
By building a strategy to avoid void periods, your property will earn you more and cost you less. Here are nine tips to incorporate in your buy-to-let strategy. These will help ensure you perform better than the average landlord.
1. Ensure your property is a good home
Your property must be one which a tenant wants to call home. Invest in bathrooms and kitchens, and provide a high standard of furnishings and white goods.
2. Find the best tenants, and keep them
You must vet your tenants effectively. Check their backgrounds, previous rental history, current employment, and run a credit check on them. Build a good relationship with them, and if they give notice, ask them why. You may be able to resolve the issue and retain them as tenants for longer.
3. Keep on top of maintenance
While most void periods are because of natural turnover, almost a third of void periods are caused by landlords undertaking essential maintenance. If you regularly inspect your property and do maintenance work early, it should not become a large, expensive repair that requires a vacant property.
4. Keep your rents competitive
If you set your rent too high, existing tenants will be tempted to leave and you will find it difficult to tempt new tenants to pay your asking price. Take the sensible option with rental prices and stay competitive. When reviewing rent, consider your tenants as well as your costs and inflation. It’s better to retain good tenants than put rents up so high that you force them out.
5. Offer an incentive
If your existing tenants do move on, offering an incentive to new tenants could clinch a tenancy deal faster. Perhaps a discount on the first month’s rent, a lower security deposit, or offering to pay the first month’s council tax would help secure a shorter void period.
6. Don’t wait for the tenant to leave to market your property
If your current tenant gives notice and you can’t change their mind, get marketing the property immediately. Don’t wait. You could have a new tenant in just a couple of days after the previous one leaves.
7. Use void periods wisely
When you do have a void period, use it wisely. Book a maintenance inspection to see what work needs to be done, and then book the time of decorators and maintenance technicians that are required to prepare the property for new tenants.
8. Budget for void periods
Never be found wanting when a tenant gives their notice. Ensure you have an adequate cash reserve to maintain buy-to-let investment through a void period, and add a little each month from positive cash flow.
9. Protect your property
Just because your property is empty, doesn’t mean it is safe. Savvy investors make sure they invest in landlord insurance. Don’t let your insurance lapse, and you will never be caught out by the unexpected.
Manage void periods to reduce your tenant risk
Void periods may be inevitable, but the nine tips above will help you avoid them. You don’t need to ride that tenancy merry-go-round. Getting the best tenants faster and then keeping them longer will make you more profitable. After all, that’s the point of investing in property.
Building a great property portfolio isn’t only about buying in the best places to invest in property UK. Long-term success in property investment requires long-term strategies. To learn more about these strategies, book a property investment consultation by contacting Gladfish today on +44 (0) 207 923 6100.
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