Do you know how long the average void period is for UK Landlords?
Well, the average UK Rent in 2020 was £967, and the average Buy to Let mortgage was £412.50.
Note: UK Buy to Let Mortgage monthly rate was based on average Buy to Let Property Price of £165,000 x 75% loan to value = £123,750. Then taking a 4% annual interest rate, this equates to £4,950 and monthly payments of £412.50.
These are important to note because when the property is not rented, not only are you not making any revenue, you are also making a loss as you are still responsible for paying the mortgage. Therefore, in order to not default on the mortgage and risk losing the property, you have to pay the mortgage out of your own back pocket.
1. How much on average do landlords lose through voids?
The average void period for UK Landlords is 4-6 WEEKS.
If we take the middle, which is 5 weeks then every single year the average landlord loses the following:
REVENUE:
£967 (monthly rent)/4.3333 (Number of weeks in a month) = £223.17 (weekly rent)
£223.17 x 5 = £1,115.85 (5 weeks rent)
Landlords lose out on £1,115.85 worth of rent on average every single year.
MORTGAGE:
£412.50 (monthly mortgage)/4.3333 (Number of weeks in a month) = £95.20
£95.20 x 5 = £476.
Landlords pay £476 worth of mortgage payments from their own funds on average every single year.
So, in order to avoid losing money and potentially the property, it’s imperative that you understand how to avoid void periods completely.
THIS MEANS THAT ON AVERAGE, A LANDLORD LOSES £1,591.85 EVERY SINGLE YEAR JUST ON VOID PERIODS.
AND OVER 3 YEARS THAT EQUATES TO £4,775.55.
This means it’s imperative for you as a landlord to understand:
2. How do I reduce my Void Periods?
We’ve studied the market and used lots of data to come up with several different ways you can do this:
#1 - Use Good Quality Photographs
You want a tenant to be able to make a decision quickly so your void period shortens. One of the best ways to do this is to use good quality photos OF EVERY ROOM OF THE PROPERTY. There are a lot of viewings whereby the tenant arrives and the property looks completely different to the photos or the room sizes are so much smaller. This just annoys the tenant, but more importantly, you will LOSE THEIR TRUST.
#2 - Keep the property well maintained
One of the easiest ways to increase the attractiveness of renting your property is to make sure everything is very well maintained and in working order. This means all the appliances are well looked after and serviced, any problems are dealt with immediately to stop damage, a fresh lick of paint and wallpaper may be required, along with some soft furnishings like artificial plants. Most tenants will pay any price if they are emotionally connected and get the fuzzy feeling when they walk into the property.
#3 - Ask for reasonable rent
The extra revenue that you can generate by offering reasonable rent or even offering below market value rent usually makes you more money than holding out for a premium price. This is because for every week the property is not let then you are losing £223.17 worth of rent on average. If the property is not let for 3 weeks that would be £669.51 lost in rent which works out to £50 a month. So, if you just offer £50 less to start with you will let your property straight away and still come out with the same money at the end of the year with a happy tenant.
#4 - Target a long term reliable tenant
“No tenant is better than a bad tenant”
It’s absolutely key that when you do select a tenant that you make sure you know, like and trust the individual, family or company. Families and individuals are great because they can be low maintenance and very easy to manage. However, the maximum tenancy tends to be 12 months at a time so your maximum guarantee is only 1 years.
Similar to a family or individual (AST Tenant), a company let is fantastic because they can also be low maintenance and very easy to manage. However, Company Lets can be more lucrative because they are usually for a minimum of 3 years and can go up to 5 years of guaranteed rent. This means absolutely no voids periods for up to 60 months straight. So if you're looking for a long term, low risk guaranteed rent a company let may be the way to go.
If you have a property and you are struggling to rent it out, please don’t hesitate to get in touch now and see how we can help you out.
Give the team a call on 0113 292 6904 or email us at info@ppsltd.net
Sources: Statista, Goodlord, Landlord Today, Haart
