As a landlord with a buy-to-let property, you'll want to do everything in your power to avoid void periods. Before your tenant has vacated your property, they're still contributing rent and you still have an asset on the books. This blog explores how Guaranteed Rent can help buy-to-let investors to reduce void periods and hence increase their overall returns from a property.
So what are void periods?
After a tenant has left the property, there is usually a period of 2-3 weeks until a new tenant moves in. This is called the 'void period'. Some landlords choose to utilise these periods and will use the 2-3 weeks to carry out maintenance required or to advertise their property with a letting agent.
If you are a landlord who is looking to cut down on your void periods, it is important that you plan ahead and find a potential tenant while they are still in the property. You could be a landlord who wants to let their property but are are concerned that tenants may decide to terminate their tenancy, potentially leaving the property left empty for a length of time. Or, you may own a commercial or residential property and want to generate rental income from an investment property; again, it's not an ideal situation to leave yout property empty for any length of time.
It is estimated (by DSS Research) that the average void period in England is the equivalent of 7% of the annual rent. To break it down further, that's 16.8 days a year, with an average monthly rent of £940, equating to £31 per day – this is costing landlords £518 per year.
This naturally has a significant impact on profitability, especially over the course of an extended market cycle which can see upwards only movement in property prices. It therefore makes sense to look to reduce void periods, and one way to do this is by implementing strategies such as Guaranteed Rent to ensure properties are producing an income for longer.
Reducing void periods might seem an obvious goal for any buy-to-let investor, yet is alarmingly often overlooked in the pursuit of higher yields. We would suggest that any individual or business looking to invest in the buy-to-let market should pay particular attention to ensuring their properties are well placed to achieve maximum yields in order to create long term and sustainable profits.
The current market (February 2023):
The latest rental index from Goodlord shows that Rents have held steady in recent weeks but rental void periods have markedly increased in certain regions.
Despite ongoing demand for rental properties keeping prices resilient, January 2023 recorded a notable increase in void periods across England. The number of void days per property rose from 20 to 23 – a rise of 15% and is the highest figure recorded by the Index since April 2021.
July 2022 saw voids reach 10 days – a record low for the index. However voids have been gradually increasing since then.
The East Midlands, Greater London, the North West, and the South East all saw sizeable increases in their average void periods over the last month. The North West jumped from 20 to 27 days on average, with numbers jumping from 13 days to 17 in Greater London.
How Elliot Leigh Guaranteed Rent can help with voids:
The Elliot Leigh Guaranteed Rent scheme can be extremely beneficial to landlords when it comes to reducing voids. One of the many benefits being that the rent is guaranteed even when the property is empty, but wouldn't it be nice if there was a system in place where you didn't have to worry about any of that? That's where Guaranteed Rent comes in. You enter into an agreement whereby your potential tenant (and future tenant) will rent your property for the guaranteed amount per week for the length of their tenancy.
This means that regardless of whether tenants are living there or not you will receive a regular income each month. Apartments and homes eligible from the Guaranteed Rent scheme benefit from fully managed contracts with numerous additional perks such as free minor repairs, free inspections and property refurbishments between tenancies . The rent is also guaranteed if tenants do not pay, allowing landlords to work with financial protection and providing short-term security for tenants wishing to move home, as well as investors looking to secure a portfolio on a long-term basis.
If you are new to Guaranteed Rent concept and would like to know more, get in touch today.