In business a sustainable income is key to growth and success and when letting out an investment property that means keeping your tenants in the house, happy and paying.
But so many landlords neglect their tenants and think once the contract is signed and the keys handed over that’s it.
Or worst they trust an agent without really knowing the quality of service they will provide. Now I’m not saying all Landlords and agents are like this. I would know because in my property business my tenants come first, I provide high quality hassle free houses they can turn into a home which keeps them happy and in the property. My average tenancy is coming up to 5 years and I’ve had my longest property from about 10 years.
There are so many benefits from this besides the rent coming in, you as a landlord can free up time trying to find tenants, fix problems and generally getting distracted from the main reason you got into property in the first place.
Freedom and flexibility.
So according to a Direct Line and their landlord research report
- On average, Tenants get moving after 18 months
- One in 11 tenants vacate a property before the end of their contacts
- Aberdeen has the highest rate of turnover when it comes to tenants walking out of a contract
- Birmingham has the lowest tenant turnover with renters staying for 2 years on average
- The average landlord spends a whopping 22 days finding a new tenants
The above are just some of the headline figures and you would need to do some more research into your area or the area you’d like to invest it. If we look at the time it takes to fill a property again 22 days on average that could be a loss of £500 – £700 on average.
Now if you have multiple properties great as you can cover void periods but again if multiple properties lay empty you’d want to make sure you have a contingency fund to cover these voids. Having 5 property lay empty for 22 days could see you lose £2500 – £3500
I’d suggest that when you are looking to make your next purchase to factor in those void periods into your yields and ROI calculations. This way you will make sure you have sufficient resources to meet any mortgage payments, ground rents etc.
Below are some tables taken from the reports to highlight the implications that can arise from not looking after your tenants and the costs to you.
Table One: Average tenure of private tenants in rented properties across the UK
|City||Average length of time a tenant remains in a property (months)||Percentage of renters who vacate a property before the end of their tenancy|
|Bristol||1 year, 2 months||11%|
|Bradford||1 year, 3 months||5%|
|Aberdeen||1 year, 4 months||19%|
|Manchester||1 year, 4 months||7%|
|Sheffield||1 year, 7 months||13%|
|Liverpool||1 year, 7 months||6%|
|Edinburgh||1 year, 7 months||5%|
|Leicester||1 year, 8 months||4%|
|London||1 year, 9 months||9%|
|Birmingham||2 years, 4 months||10%|
|United Kingdom||1 year, 6 months||9%|
The research also found that landlords can’t always rely on occupants remaining in a property for the duration of their tenancy agreement, with one in 11 (nine per cent) moving out early. The highest rate of tenancy turnover is north of the border in Aberdeen where a fifth (19 per cent) of tenants leave a property before the end of the tenancy agreement with Leeds and Sheffield both close behind at 13 per cent.
Nick Breton, head of Direct Line for Business, said: “This research highlights the pressure landlords are under to replace outgoing tenants in their properties. Vacant properties are obviously a worry for landlords but it’s vitally important that they take into account void periods when calculating the affordability of owning a rental property.
“Staying on top of the on-going changes within the industry can be time-consuming and a battle for landlords and we fully appreciate the challenges they face when it comes to managing their rental properties. To help alleviate some of the stress, we have developed the Mobile Landlord app which can manage up to five properties. The app can track income, calculate yields, set handy reminders such as when a tenancy agreement may be coming to an end and also keep landlords up-to-date with any new changes in the market through its Knowledge Centre.”
Table Two: Time taken for landlords to fill vacant properties and potential losses in rental income
|City||Number of days to fill a vacant property||Estimated loss in income due to uncollected rent during this time|
Top tips for landlords wanting to keep their tenants:
Your tenants are people too and as markets shift so should your rents. This will keep you competitive. Rental price is one of the biggest factors influencing tenants and tenant demand. If they feel like they are paying a fair price this will go a long way in helping you secure a long term tenancy.
Once a certain level of trust has been established it might be worth increasing your flexiablility on certain elements of the contact. This goes back to being fair. After a year or two I often let tenants paint the house in the colours they like. Change the garden around and even allow pets. This increases their satisfaction, respect and makes you stand out as a landlord as they mostly likely won’t be able to make these changes if they move.
One of the main reasons tenants leave a property is because its in a poor state, often this is a result of penny pinching and it my opinion a false economy.
Make sure that you are approachable and when your tenants tell you about a maintenance issues you listen as stopping a small problem like a leak in the upstairs bathroom can literally save you thousands in renovations costs, time and money when the ceiling comes crashing down.
Nip these problems in the bud
Being proactive in the tenants / landlord relationship can go a long way.
For instance if your tenants have been living in the property awhile and they love socialising in the garden it might be worthwhile getting some garden furniture or even a BBQ this would cost less than having a void period and would reinforce the positive relationship and keep then in the property for longer.
Think long term win / win solutions.