Rental void slowly being filled
The average UK private property landlord’s annual void period has fallen by 15% in last year as money lost through voids drops 12%, research shows.
Two-thirds of landlords have properties vacant for only two weeks, costing just £319 a year per property and just 18% of landlords have properties vacant for four weeks or more each year, according to latest research by LSL Property Services, which owns the UK’s largest lettings agent network, including national chains Your Move and Reeds Rains.
In October 2009 the average property remained unoccupied for 36.4 days per year but in October this year this had fallen to 30.9 days, a saving of £125.
With rents at a record high of £691 per month, this means that a landlord looking to rent out a property now may face losing £702 in rent through voids in the next 12 months, some 12% less than a year ago. Taking this into account, a landlord is looking at an average annual rental income of £7,594.
A landlord looking to rent out a property one year ago would have seen £799 lost in voids despite a much lower rent of £668 per month. In October 2009, a landlord’s void adjusted annual rental income would have been £7,217.
‘Void periods are a nightmare scenario for landlords. Whilst their property remains vacant, landlords aren’t collecting the rent they need to pay their mortgage each month. But the good news is that void periods are decreasing,’ said David Brown, commercial director of LSL Property Services.
‘Tighter lending criteria have kept thousands of first timers off the property ladder, and most are staying in their current rental accommodation for longer. On top of this, tenant demand has rocketed up in the past twelve months. Frustrated first time buyers swell the rental population, while the supply of properties has been kept in check by difficult mortgage finance conditions for landlords,’ he added.
According to the survey of landlords, just 18% witnessed void periods of a month or more last year. Nearly six in ten landlords saw their properties remain empty for less than two weeks in total, costing an average of £319. Only 7% of those polled stated they had void periods in excess of ten weeks, a figure which also includes landlords who were refurbishing their properties.
‘It is a minority of landlords with severe void periods that are pushing up the national average. The vast majority are seeing their properties stay vacant for less than two weeks per year. However, properties don’t just rent themselves out. Investors need to do their homework to ensure the property has a strong rental history and is in the correct condition to appeal to tenants to help limit void periods and achieve a strong rental income. With the right research before purchase, and the right letting agent, void periods can be minimised,’ said Brown.
The research also shows that nine in ten landlords, some 88%, expect void periods to be lower than four weeks in the next twelve months, with just 3% anticipating their properties will be vacant for ten weeks or longer.
‘Void periods have been declining for landlords and will continue to do so. With the recent cuts to the social housing budget, the private rental sector will have an even bigger stream of demand over the next few years. We anticipate the average void period will fall by another two days over the coming year, making property investment an even more attractive opportunity to professional investors,’ added Brown.