"Not only will they face longer void periods, but they’re also likely to become more frequent, which will further reduce the profit margins of the average buy-to-let investor at a time when we should be encouraging investment into the sector."
- Marc von Grundherr, Director of Benham and Reeves
Benham and Reeves analysed the length of void periods across the rental market in England, lost rental income as a result of void periods, and how this has changed over the last twelve months. The lettings and estate agent found that the level of rental revenues lost by landlords due to void periods has increased by 19% - climbing as high as 65% across some regions.
Void periods have increased to twenty-four days whilst the average monthly rent has also increased, sitting 8.9% higher (£1,375) than this time last year. Therefore, the cost incurred by landlords now stands at £1,085 which is 19% higher than in the last year alone.
This cost was highest in the North West with the average void period reaching thirty days, whilst rental values increased by £79 monthly (9.8%). Consequently, loss of rental income incurred due to void periods now averages £876 – that’s 65% higher than this time last year.
In London, landlords have seen the second-largest annual increase in the level of rental income lost due to void periods (36%). With this figure now sitting at an average of £1,611, the capital is also home to the highest cost of void periods across all regions in England.
The third largest increase in the cost of a void period was in the South West (28%), which is also home to the third largest overall cost at £920.
“Void periods have long been a thorn in the side of the nation’s landlords but it’s an inevitable reality when operating within the private rental sector. However, there’s been a considerable increase in both the time and rental income lost to void periods over the last year and this is a worrying trend that could well continue with the Renter’s Rights Bill on the horizon,” explained Marc von Grundherr, Director of Benham and Reeves.
He said: “The switch to periodic tenancies over fixed-term contracts will enable tenants to jump ship with just two months’ notice, putting landlords back at square one with respect to finding a tenant and once again enduring the income lost due to a void period.
“So not only will they face longer void periods, but they’re also likely to become more frequent, which will further reduce the profit margins of the average buy-to-let investor at a time when we should be encouraging investment into the sector,” Marc concluded.
