This can put an end to any profits from your property investments instantly
Most landlords are renting out a property to generate an income. Whether that is to supplement their salary, save for a rainy day, or cover the cost of owning the property. But what if the property sits empty for a month or two whilst you refurbish or try to re-let? How can that impact your overall income?
Most landlords aim to ensure that any rental income generated, at the very least, pays for the property itself. But what if there are costs, unforeseen expenses, maintenance and repairs or unpaid rent? Consider the annual account overall rather than looking at the revenue as a monthly income.
Each year you will have fixed costs, from insurance to safety checks. And you'll have the rent at the current market value. The average rent for a property in the UK at the moment is £1190 (according to the Guardian in April 2023), so for the year, this would be £14,280. Take away the fixed costs, leasehold and ground rent fees and any letting agency charges, and you have your profit. On top of this, you'll have taxes and possibly even a mortgage to pay.
On the face of things, owning and renting out property seems easy to generate an extra £1190 monthly. But, each time you have a month without any rental income, you are reducing your profit over the year because the costs will still come even if the rent doesn't. And in fact, if the property is vacant, your costs may well increase as some councils do not allow a period of grace for the council tax between tenants, and there will be utilities to pay for too.
Add to this the charges for an agent to re-market and re-let the property, and you could be another month's rent out of pocket, meaning that your overall profit for the year will be reduced even further. You can't force a tenant to stay if they want to or need to move out, and you might not want them to stay if there are issues with the tenancy, but you need to reduce the length of time that the property is vacant between tenancies to reduce the lost revenue as much as possible.
The usual notice period for a tenant to give a landlord is 4 weeks or one calendar month. A new tenant must be referenced and perhaps provide notice to their current landlord, which will also take around 4 weeks.
You want to find a new tenant as quickly into this notice period as possible to reduce the time between the checkout of your current tenant and the check-in of a new tenant. So how is this done?
Get prepared -
If there are maintenance issues to be dealt with between tenancies whilst the property is vacant, this will add time to the process, costing you lost rental income and the repairs themselves. In an ideal world, there will be no tasks between tenancies, but this is not an ideal world, and there is almost always something to do. The best way forward is to be prepared. Have a pre-checkout visit with your current tenant to establish what needs to be dealt with and who will deal with it, you or the tenant. Compare the property with the original inventory to decipher what needs to be done and have a plan to tackle the tasks. If you need to arrange contractors, get them booked ahead so that the vacant period is minimised as much as possible.
Get on the market-
Some tenancy agreements will allow access to the property within the last month for viewings. If you have this clause in your contract, get your property on the market and begin advertising for a new tenant as soon as possible. But, you must be careful and considerate of the tenant still living in the property.
- Be respectful for viewing times, ideally, a block booking, so you're causing minimal disruption to the tenant.
- Don't expect the tenant to do the viewings for you - it's of no consequence to them whether you rent the property or not, and they are not the best person to handle this.
If you cause them too much trouble, they could decide to make it difficult for you to gain access, and then you'll have no choice but to wait until they have left to start marketing for a new tenant. This would mean you're losing two months' rent, one for the marketing and one for the referencing.
Overall, having a property empty or without rent for one or two months in a year would likely make your investment profitless. With this in mind, keeping a good tenant for as long as possible is the priority for most landlords. And if your tenant does decide to leave, work quickly so that the property isn't left empty for longer than is necessary.
If your tenant has given their notice and you're concerned about re-letting quickly, contact our team for expert advice to ensure that you have a new tenant lined up in no time.