Many landlords answer the same way when asked about void periods. They say the cost is just the monthly rent and that the cost is incurred for every month the property lies empty. They may even offer to pay some kind of tenant retention fee. This is because many landlords do not understand that a void period is far more expensive than lost rent. Let’s look at the other costs incurred when a property is empty.
The lost rent is the only truly optional cost, though in some cases it can be difficult to avoid. Council tax is, however, not optional and is often charged at a higher rate than when there is a resident in the property. Standing charges for utilities are still payable, even if there is no one to use the water or electricity in the property. Building insurance can also become more expensive once the property is empty. This is often because the property is covered on a standard landlord insurance policy. These policies often require the building to be occupied by a tenant before the cover can be triggered. This can, however, be avoided if a special ‘unoccupied’ policy is arranged, which costs more. If the property has a mortgage on it, then mortgage payments are also still payable, even if the property is not generating an income.
In addition to these costs, some work is also usually done when a property is empty. This can include redecoration, cleaning, and updating the inventory. In some cases, safety certificates such as gas and electrical certificates may be required. The property must also be ready for a new tenant to move in, so safety equipment such as smoke alarms must be present and working. For advice from Cheltenham Letting Agents, visit https://www.meandyouestateagents.co.uk/lettings/
If a property is empty and the only cost incurred is the lost rent, then the total cost can be easily calculated. However, if there are other costs incurred in addition to the lost rent, then the total cost of the void period can be far higher. For example, if the property has a mortgage on it and the mortgage payments are £1,200 per month, then the total cost of the void period would be £1,200 + £900 = £2,100.
In some cases, the cost of finding a new tenant may also be incurred. This could be in the form of an agent’s fee.
