Avoid the rental void
How do landlords avoid a costly rental void?
One of the most essential things for any landlord in running a successful rental business is to avoid a rental void.
What is a rental void?
A void refers to a period where a landlord does not have a tenant paying rent. Thankfully in the current rental environment this is a situation that should be entirely avoidable.
Here are five simple steps for a landlord to avoid the dreaded void:
1. Don’t be greedy!
One of the biggest mistakes made by many landlords, particularly newbie landlords is that they hold out for an unrealistically high rent. Maybe they were once given a rental valuation by a predatory letting agent wanting their business. This rental valuation having stuck in their head means that they feel by accepting less that they are practically giving away their rental property. This mindset could very well be their undoing.
Landlords need to be realistic on the rent they charge to avoid the void. Remember that once you have a tenant in a property paying rent you can always increase it slowly over time.
A tenant who is in situ and is happy is much less likely to balk at a small rent rise and move out for the sake of a number of small rental increases because of the inevitable hassle factor.
Remember that even if you have to take 5% less rent; this is a lot less of a loss than having a rental void for a month; which equates to over an 8% loss on income over the year. Once lost you will never get this rental income back so always try and look to do a deal.
2. Don’t be passive on the marketing
Some landlords make the mistake of being duped into a passive role on the marketing of their rental property. They have their property listed with a letting agent and they just sit back and allow the letting agent to get on with it. Wrong! Where the letting agent has a shop full of rental properties yours could easily get left at the bottom of the pile. What you need to do is keep in contact with the letting agent for regular updates. Find out how many viewings they have carried out and what the feedback from prospective tenants has been. Are people being put off by the rent or the condition of your buy-to-let property? If there is a common theme you then need to take steps to correct things. If the letting agent isn’t doing their job then get a new one in or even consider a joint agency agreement. Remember to check before signing up with a letting agent what the restrictions are.
Even where you are employing a letting agent on a let only basis; this doesn’t stop you marketing your buy-to-let property independently. There are a growing number of specialist property marketing websites that will get your property on Rightmove for around 50 quid. It is also possible to list your property to let for free.
3. Don’t drop your guard!
One fatal mistake some landlords make is to drop their guard and get in a rubbish tenant because they get desperate. Never, never do this! If you do you will very quickly live to regret it. It won’t be long before you wish you simply had an empty flat to deal with; rather than an intractable british legal system and a conniving rent dodging tenant.
Always remember if you are unsure about the tenant then make sure that you get a guarantor.
Thoroughly vet your tenants first, even if on the face of it they appear to be absolutely ideal.
4. Ensure you and your property look their best
All of us work off first impressions. They count! Make sure that both you and your rental property are dressed to impress. That doesn’t mean necessarily embellished with gold; but your property should be clean, fresh smelling and shiny even if not every thing is brand new. Tenants make snap decisions and if you and your property are looking a little tired and jaded and even worse they don’t smell good; there’s every chance that they will simply move on to the next rental property.
Having secured a prospective tenants viewing. You have to make every effort to then directly market your buy-to-let to avoid a void. Remember also that if you are conducting the viewings yourself. It’s as much about promoting YOU as a good landlord. Be nice, smile and be accommodating. Even ‘cold hearted tenants’ sometimes respond to a little bit of humanity.
5. Consider incentives
If you are really struggling to get a tenant in then have you thought about offering incentives?
I’m a bit torn on the idea. In many ways the fact that a landlord has to offer free bees signifies a failure in other aspects of their business planning. Perhaps the void is partly due to the landlord buying the wrong rental property, or trying to charge too much rent, or not marketing it correctly.
I have heard about instances where the rental market is particularly competitive, say where there is a large modern block and landlords are struggling to differentiate their property from other identical buy-to-lets and landlords have resorted to offering an incentive package to attract tenants. I can see this working particularly well with young tenants who are setting up home for the first time and therefore appreciate the up front cost savings. Offering an incentive package is a good way of not getting drawn into a downward competitive spiral on rent.
Offering a package of say the first month at half rent and or a free Sky subscription package could be the difference between attracting a tenant and having your property remaining empty and thereby taking that avoidable hit!
Any advice or tips on avoiding a void then please post your comments
My first property stayed on the market with one estate agent for 6 weeks @550pcm. I changed agents and the new agent advised me to lower the rent which I did to 525pcm. Within a week he found one tenant paying 510pcm unfurnished or 525 furnished. I opted for the 510 unfurnished. A year later I upped the rent to 525 and a year after that I upped it 530 as more flats were being built 100m away. In the 4th year with more houses being built nearby, the tenant complained about the 5 pound increase but I said that it’s an admin charge.
My second property, was tenanted @560 within 24 hours – it was posted on a Monday and by Tuesday a tenant put a deposit on it. They moved in 10 days later which is when the AST started. The same agent rented it @575 within 3 days of me giving them instructions and they moved within a week. There was a 3 day gap between the previous tenants leaving and the new ones moving in for which Birnmingham City Council charged me 10 pounds – well 9 pounds as I get 10% discount for empty properties.
My third property remained on the market for 3 months with the same agent that I bought it from. Then I moved to a letting specialist who managed to get a tenant within 7 days @525 minus the management leaving me with a clear 475.
My 4th property was tenanted during the refurbishment period @495 for a 2bed whose maximum for the area is 450. The tenant was prepared not only to wait for the refurb to complete but also to pay more than the market rent because I spent 12K on the refurb – everything was new.
So, from my experience, I had 3 pieces of good news and 2 pieces of bad news. The moral of the story is that if you don’t get results within 2 weeks, change agents. Personally, I wouldn’t use an Estate Agent that specialise in selling house to let my properties. Dixons Estate Agents don’t let properties probably for that reason. One of them advised me to choose a letting specialist and pointed me to a specialist who rented my property within 24 hours.
I think most landlords will think I am mad but after having had the tenant from hell, who got away with owing me thousands, did a runner and my flat a tip and then spending weeks redecorating, I really wanted a good tenant and decided to follow all the procedures advised by yourselves and various advice forums but I also had an idea of my own and so I worded my ad in the local paper as follows: Two bed flat, blah, blah, blah….. £400. per calendar month, reduced by 10% to £360.00 after six months, for long term, reliable tenant.
I forced myself to do everything as advised and although getting quite a few applicants, it wasn’t until the 3rd week of advertising that I felt I’d found the perfect tenant, a single working mum with a 10 year old daughter who brought a pad and tape measure with her, to measure ‘her bedroom’!!! Everything checked out with them and my gut feeling were that they were lovely people.
In their agreement I agreed to lower the rent after six months and keep it at that rate for another 18 months. They are still with me now after almost 3 years and have never missed paying the rent by so much as a day. After the 2 years had passed I made a small increase, just enough to cover the maintenance rises and to me it is worth it’s weight in gold, receiving a steady lower rent with a good tenant than being greedy and asking a rent that people will struggle with and get in arrears.