All landlords will be looking for ways to prevent void periods and boost their rental income. This simple trick can help you achieve both…
The UK’s rental market is continuously stable over the year, with prices usually fluctuating between 0-3% annually. However, throughout the year, price movements can make a huge difference to a landlord’s annual rental yield.
London estate agent Portico reports that each summer, almost half a million students graduate from the UK’s universities, with many of them flocking to the success that London promises.
It is this annual influx of new tenants that profoundly influence’s the capital’s rental market. With tenancy agreements usually lasting 12 months, many tenants continue to look for new properties at that time of year until they buy their own home.
The graph above shows that tenant demand surges by 64% in September, while available rental stock drops by 10% when compared with the monthly average. In September, Portico sees almost double the number of enquiries per property than in a typical month and four times the level of interest per property when compared to December.
This upswing in demand has two significant effects: Firstly, tenants often have to compete to secure their chosen properties in September. It is quite common for landlords and letting agents to receive several asking price offers on the same day, which pushes up the rent price achieved.
When Portico measured the impact of the supply/demand imbalance on the rent price of an average two-bedroom property, it found that prices achieved were around 11% higher in late summer than in December.
Secondly, void periods between tenancies are dramatically shorter in September too. In summer, Portico expects a void period of only one to two days, which is just enough time to get the property cleaned and have another inventory compiled. In winter, void periods of over a week are common.
If you are facing a void period, you can ensure your investment is still protected while it is empty with Unoccupied Property Insurance.
If your tenancy agreements are all due to end in the winter, all is not lost, however.
By adding a well-timed break clause at the next renewal point, it is normally possible to re-synchronise your tenancy dates to take advantage of higher rent prices and shorter void periods in summer.
If you do this, you are likely to boost your returns by a significant margin, without needing to spend a penny, and help provide properties for tenants at the time of year they are most needed.