How to Effectively Manage Void Properties
Minimise Void or Vacant Properties
Void properties and units are a landlord’s worst enemy, more so on leasehold properties where your asset quickly morphs into a liability with service charges, ground rent, and council tax bills to pay! This article aims to show how you can best manage your void property and optimise your investment.
Avoiding the Void
If you have a good tenant in place, aim to keep them. Reward them with reduced rent or special offers as a way to retain them (loyal, respectful tenants will look after your property)
Below is an example of 2 years’ income with 4 x 6-month contracts vs a long-term tenant.
|Income and Expenses||Unit Price||4 x 6 Month||2 x 12 Month||1 x 2 Year|
|Tenant Find Fees||£ 360.00||£ 1,440.00||£ 720.00||£ 360.00|
|Check-in Inventory||£ 40.00||£ 160.00||£ 80.00||£ 40.00|
|Check-out Inventory||£ 30.00||£ 120.00||£ 60.00||£ 30.00|
|Deposit Registrations||£ 20.00||£ 80.00||£ 40.00||£ 20.00|
|Renewal Fee||£ 100.00||£ –||£ –||£ 300.00|
|Rent*||£ 500.00||£ 10,000.00||£ 11,500.00||£ 12,000.00|
|Total Income Due to Landlord||£ 8,200.00||£ 10,600.00||£ 11,250.00|
*Assuming 1 month for turnaround based on £500pcm
Over two years, assuming a one-month turnaround, the difference is around £3,000GBP – which does not include the additional two months of council tax you are liable to pay.
How can I keep my property tenanted?
Here are 6 steps to help reduce property voids:
- Price your apartment competitively – benchmarks within your local area are a great way to do this.
- Find out what the market rent in the area is.
- Stay competitive by beating the market average by five per cent to increase your chances of finding a tenant.
- Buy rental property on which the market rental rate is no more than 30 per cent of the average wage.
- Ensure the unit is visually appealing and if you are struggling to let it, consider having it dressed.
- Avoid accepting a tenant that is risky to fill a void. A bad tenant is much worse than no tenant – they can cause tremendous damage and stress to landlords.
- Keep in touch with your agent when your apartment is void and politely request updates on your property. Build a rapport with them and discuss ways of increasing the chances of finding a suitable tenant.
- Use a professional service to vet a tenant for you and highlight any important information before sending a tenancy agreement.
- Look at their rental history: did they pay rent? (can this be backed up?
- Are they currently employed? (How long have they been at their most recent employer?)
Use a professional company to take on the management tasks – reduce the hassle
Taking on all of these roles as an individual is time-consuming and likely not the reason you invested in property, to begin with. The best strategy is to hire a professional agent to manage it for you.
Estate agents and property management managers can do the busy work for you. All you need to do is find the right one for you and your investment.
Not all companies are created equal
Find an established company with a focus on your property type. Check their vacancies and enquire about their rental turnover. Ask for references or look for testimonials on their website.
Some property management or estate agents have full wrap-around services which cover the full spectrum of needs.
Avoid the traps
It may seem like the property manager or agent who promises the highest rental return or consistently-full units is superior. That is not always the case.
Neither is a guaranteed indicator of success. In the short term, they may deliver. But poor vetting and low retention rates will be destructive long-term.
Which property company is right for me?
Getting this right is important to your long term strategy. Depending on what kind of property investor you are will affect your decision.
If you are just starting; with one or two residential properties – look for local estate agents or bespoke property managers who have smaller stock, as they will be able to give a tailored service and guide you through the process as you learn.
With more properties comes more responsibility and likely increased coverage. Find an agent or manager that has knowledge and experience in the locations you have investments.
Large scale new developments will need a block management style service, as unit numbers get up into the 100s it is wise to pick an agent or property manager that can deliver – especially if you have a portfolio ranging across multiple cities or internationally.
Providing a sustainable level of service at this level requires solid frameworks and processes to run smoothly and keep everyone satisfied. The block manager or agent company should have a solid understanding of your investment and be transparent with what their fees cover, how they report to you and what happens when things go wrong.
What to expect from a property manager or estate agent
- Professional client and tenant management
- Regular updates for marketing that are in line with current trends
- Awareness of area competition
- Knowledge of the property market and tenant needs
- Strong communication, and rapport
- Ability to stay on top of maintenance and repairs
- Drawing up budgets and ensuring transparency with costs
Optimising your investment will take some research but will give you fantastic returns.
Consistency is key – if you or your managing agent are inconsistent, expect your results to mirror this.
Patience is an important factor as not all problems can be solved overnight, especially when it comes to property.
You need to be able to stick through the long-term and see the wider picture.