In this blog we discuss voids - times when your properties are left without a tenant.
Our advice on voids
Voids – simply, periods when your property is without a tenant – eat into the yield on your investment dramatically and almost imperceptibly, like moths munching on clothes in a drawer.
Voids are really unavoidable at some stage, but minimising them is probably the most effective way of keeping your yield optimal.
Yield = the rental return on either your investment or the value of your investment property expressed as a %.
It is commonly expressed as gross yield – before all costs have been deducted.
To calculate gross yield:
(Annual rent / Cost of Property) x 100 = Gross yield
Or the yield on your investment:
(Annual rent / Amount You Invest) x 100 = Gross yield
For example – a property costs £200,000 and achieves an annual rent of £10,000:
(10,000 / 200,000) x 100 = 5%
Even without running the numbers, any experienced landlord can explain that all the most effective yield raising measures aim to reduce voids to a minimum.
Your anticipated pattern of void periods will depend on the type of property you have and the type of tenants you are targeting.
For example, if you’re letting to students you might have to allow for long voids during holidays (although more students are now prepared to rent a place they like and want to keep year-round.)
Holiday lets or short term lets of a week or several will generally attract more void periods – and higher rents when they are let, of course.
It is crucial to be organised ahead of a tenancy changeover, allowing prospective new tenants to look round the property in good time. Also, as we said above, it’s important to do necessary repairs and redecorate, etc, as quickly as possible between lettings.
With thanks to BuyAssociation.