There are two types of individual in the Property Investment world, your landlords and your investors. Landlords are generally more hands on with their tenants and in some cases, deal with maintenance themselves directly whereas investors are significantly lower touch and prefer to just focus on the numbers i.e. chasing yields and capital growth. That’s not to say both are mutually exclusive but whichever discipline you fall into, in order to be successful in property investment, significant attention must be paid to the level of occupancy in your rental properties and you should aim to mitigate any void periods as much as possible.
According to latest York Open Data (YOD), the level of rent in York lost through void periods is approximately 1.03% for the last 12 months (currently stood at 1.61% for the last quarter). Whilst that may not seem like a lot, when we scrutinise the data sets from the same source, this works out to be a rather significant £1,651,562.98 per annum.
Let me explain. According to YOD, York has approximately 208,163 residents occupying 87,371 households, 14,980 of which fall under the Private Rental Sector banner. With Private renters paying on average, rent of £892 per calendar month, this quickly adds up on an annualised basis. Do bear in mind that this figure doesn’t consider the other rates landlords need to pay during the vacant period i.e council tax, water, electricity and gas.
What is disconcerting is that percentage of void periods are on the rise which won’t help a landlord’s bank balance and eligibility to cover their financial obligations. With this in mind, I’ve spoken with some landlords who maximise the rent they can achieve when new tenants move in as well as at point of renewal. I also deal with landlords who prefer to keep rents below the market rates to keep ‘bums on seats’ as they’d prefer not to rock the boat and put the tenant in a position where they serve notice through rental price hikes. For the record, I don’t think either approach is right or wrong quite frankly. So, what can landlords do to mitigate voids in their properties?
Well for starters, when you have tenants in your rental properties, make sure any necessary maintenance is dealt with promptly. YOD reported that 15.02% of York private rental tenants were dissatisfied with the way their landlord deals with repairs and maintenance generally. Given the recent changes in Private Rental Sector with the introduction of the Tenant Fees Act, the expectation is that tenants will now have a lot more freedom of movement within rental properties as they no longer have to pay up-front fees and deposits being capped etc. It is a false economy to ‘kick the can down the road’ to save money or wait until your tenant moves out. My philosophy is if you have a tenant who looks after your property and pays their rent on time, you want to nip any maintenance issues in the bud and keep those tenants on side.
The same data set quoted that 4.95% of dwellings in York failed to meet the ‘decent homes standard’. Other than reiterating the above my advice I also recommend focusing on your product and resolve any works that need to be done prior to the start of a tenancy, in fact prior to the marketing of a property for rental.
My mentor in London taught me the value of a term he coined which I now refer to all my landlords and this is the concept of ‘flat prep’. This is where you visit the property and spot check the little details which may enhance not only the tenants experience when in situ but the aesthetical value of the property. For instance, does the property need any cleaning including carpets? Are all plinths firmly affixed to the kitchen units or are they hanging precariously? Do any of the walls need a touch up of paint? Even are all toilet seats securely fastened. My acid test is always, ‘would I let a member of my family move into this property’.
In my experience, the landlords/investors who take pride in investing in their product are more likely to source a better quality of tenant. They will also have a better point of reference at the start of a tenancy to compare against the checkout at the end of the tenancy should there be any dilapidations which may fall out of the scope of fair wear and tear. Tenants are generally more likely to look after a property when it is in near mint condition (think about that new smartphone feeling and the desire to maintain it as new). Lastly, in my experience, I’ve noticed tenants are less likely to report maintenance when a property has been beautifully presented and is aesthetically pleasing.
The above graph would lead us to believe that vacant periods are on the rise and as such, it is imperative, if you are a York landlord, you have someone on standby who can give you great advice on how best to position and market your product to minimise any delays in your property being rented. After all, an empty property is wasted potential. In short, I’m here if you need me.