Landlords face surging void costs

Landlords are facing a steep rise in void costs as the gaps of no rent being paid grow longer and costlier across England.

The findings from lettings and estate agency Benham and Reeves reveal a 19% rise in lost rental income when the property is unoccupied.

However, landlords in some areas are witnessing a staggering 65% leap in lost income.

And landlords can expect the situation to worsen when the Renters’ Rights Bill becomes law and tenancies become periodic, the firm says.

Voids will become longer

The agency’s director, Marc von Grundherr, said: “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 Renters’ Rights Bill on the horizon.”

He added: “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 are 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.”

Average void is 24 days

The agency’s research highlights how the average void period has stretched from 22 days to 24 days within 12 months.

Alongside this, monthly rents have climbed 8.9% to £1,375, amplifying the hit to landlords’ wallets.

This translates to an average loss of £1,085 per void period for a landlord – a hefty 19% increase since last year.

London landlords see the highest void loss

Regional disparities paint an even bleaker picture with landlords in the North West seeing a typical void ballooning by 10 days to 30 days.

Rents there have risen by 9.8%, or £79 monthly to deliver a rental income loss of £876 – that’s a massive 65% jump year-on-year.

London landlords aren’t far behind as they face a 36% annual surge in lost revenue, with the capital’s void period toll now averaging £1,611, the highest in England.

The South West ranks third, with a 28% rise pushing its figure to £920, just shy of the South East’s £981.