For many private landlords purchasing a property represents a major investment reports Andrew Oulsnam of Robert Oulsnam and Company. Owning a rental property that is not occupied by a tenant provides no return on that investment and is a waste of a major asset for landlords. Not only does an empty property not provide any income for the landlord, it also racks up significant costs. Often private landlords or renting agencies have no idea quite how great the losses they accrue over a period of time are when they own an empty property.
The reasons for the lack of occupation may come down to poor marketing to find a tenant on the part of the landlord, or refusing to take up offers of rent that do not suit them. Whatever the reasons for the lack of a paying tenant, the costs that must be met by the landlord can run into tens of thousands of pounds.
The primary loss for owners of empty property is in rent that is missed out on whilst there is no paying tenant. Further significant costs are accrued in necessary maintenance costs – empty properties are at risk of developing leaks and damp that may go unnoticed for larger periods of time in which the problems grow and become more costly to put right before anyone can move in or even be shown round with a view to renting.
Security measures must also be put in place as empty properties are much more likely to attract thieves, vandals, and squatters. Legal fees will also be incurred to remove those who squat in an empty property. Ongoing council tax payments must be paid by the landlord, despite the property being empty. There are no concessions for properties in private hands that are to be used at some future point for rental purposes.
If there is insurance already taken out on the property then premiums will increase significantly for the duration of the untenanted period, and for as long as there is no one living in the property its overall value will depreciate.
Figures released by the lettings company LetMC.com reveal the cost of lost rent to landlords who keep a property empty. Leaving a property empty for just two months can cost a landlord 20 per cent of that year’s rent. If rent is set at £450 per calendar month then leaving the property vacant for 6 months will cost the landlord £2,700 just in lost rent. If the property is subsequently occupied for the remainder of the year then the rent payments will be equivalent to only £225 per month over 12 months.
Similarly, for a rental property of £750 per month, 6 months of vacancy will cost the landlord £4,500 in lost rent, and yield the equivalent of £375 a month over the year if the property is occupied for the rest of the year.
The solution for landlords is to ensure they find tenants. Not only will this result in rental payments coming in, but also extra security for the property, a marked reduction in outgoings on things such as council tax, and an increase in the overall value of the property.