A survey of 200 UK-based landlords from 2013 to 2019 by Statista suggests that a typical property will experience an average void period of about 3 weeks per year. In the same sphere, reports from Gulf News suggest that Dubai-based landlords are losing around 8% of their monthly income due to rental voids – and the same can be said for US landlords (where void periods fluctuate the most).
However, the question here is: are void periods really a necessary evil for property landlords? Or have landlords simply been conditioned to accept that they are going to lose a steady chunk of income every year – because that’s just the way “the industry goes?”.
We challenge this widely accepted belief at Luke Capital Group, in the pursuit to convince the industry that property landlords should not be missing out on rental income, every year.
Read on for the full insight.
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The Draining Cost of a Void Period
The bane of a landlord’s life, is the dreaded rental void period. This is, without a doubt, one of the key factors affecting the profitability of a buy-to-let property; and is often considered as being “unavoidable” during certain times of the year.
During a void period, properties produce no income while still being responsible for mortgages, insurance, and other related taxes and charges. So, when an extended void period occurs, it can have a significant negative impact on both monthly cash flow and end-of-year profitability.
While it’s clear that landlords should plan ahead to manage (or avoid) void periods before even purchasing a property, a recent Telegraph report concluded that 12% of UK landlords make no allowances for void periods, despite 6 in 10 landlords being at the risk of suffering every year. In places like Dubai, this can become an even greater problem due to the strict regulations set by RERA (Dubai’s real estate regulatory agency) – as they do not immediately compensate landlords even if the void period is caused by tenants (ie, if tenants are not paying rent).
Unfortunately, unprepared and ill-educated landlords are the ones on their way to becoming cash-flow paupers.
The exact amount that property landlords are losing due to void periods depends on the rent you charge and how long the void period is. But if we take an average monthly rental and an average void period, we can make a good estimate:
A simple example:
|Rent per month on property:||1000.00|
|1 month void period per year: (average period based on UK, US, and Dubai data)||1000.00|
|Total loss over 8 years:||8000.00|
The above example is void of any turnover costs and additional fees such as bills, taxes, and general maintenance costs, so you can assume the total loss of the period of 8 years to be higher.
As well as these frightening numbers, don’t forget those void periods eat up a lot of a landlord’s valuable time. Looking for new tenants, vetting them, organizing contracts, and general property turnovers are among just some of the other headaches landlords have to suffer between each void period. As such, dealing with them frequently can quickly drain a landlord’s bank balance and peace of mind.
Avoiding Void Periods IS a Possibility
The only better thing than managing void periods is avoiding them altogether.
We dug into a plethora of reports and articles about this, and there are very few solutions for property landlords. In fact, the general consensus is to make peace with “inevitable” bouts of zero income, while working on becoming a better landlord, with better marketing, and better tenants.
The trouble is, all the above is easier said than done – and when you consider that the average rental period between a landlord and tenant is around 24 months in the USA, 18 months in the UK, and then a shocking 12 months in the UAE – then the costs can add up at a dangerous speed.
Granted, our industry is cyclical. For the most part, property-to-rent is more in demand during spring and early summer, with the quietest times occurring between October to December. Unfortunately, unforeseen maintenance costs are likely to pop up during this period as well, so if a property landlord is suffering from voids, then even making ends meet can feel impossible.
This begs the question, is there a way of avoiding rental voids altogether? Nearly every article and newsletter will convince you that this can never happen – making the business of landlords seem unrewarding and financially painful.
However, as leading contributors to the industry, we’ve proved otherwise at Luke Capital Group. By asking landlords to hand their properties to us, under a legally binding agreement, we can guarantee rent with no void periods – for up to 8 years.
The Landlord Dream: Guaranteed Rent for up to 8 Years
As a property landlord, you’ll be conditioned to believe that “minimizing the negative impact” of void periods is the skill to master.
However, with Luke Capital Group, you’re guaranteed to avoid them completely, for up to 8 years. Not only does this eliminate the fear of loss of rental income – but you’ll also wave goodbye to ever-increasing costs and stress. In essence, when you hand your property to Luke Capital Group, we genuinely do become “Your best-ever tenant”.
The common concern here is “But what’s in it for you?” – as property, guest, and tenant management is believed to be a stressful endeavor among the best of us. However, our company is looking to hold onto properties long-term, as it helps us turn a profit from our side as well (and also, this is what we as a brand do best).
So, knowing that these agreements are also in our best interest gives property landlords ultimate peace of mind.
As well as:
> No lost income due to void periods
> No lost time and energy, looking for new tenants during void periods
> No property turnovers and end-of-tenancy refurbishments, as you’d have between each void period
The online space is swarming with claims about “unavoidable void periods for landlords” – courtesy of a number of property management companies, experts, and advisors. In fact, a recent article from “www.nolettinggo.com” bluntly states how common these periods are, and how easy they are to fall into.
As such, at Luke Capital Group, we say this certainly doesn’t have to be the case. While many will reiterate that this solution is unheard of, and landlords are better off biting their lip and taking the loss of income with it – we provide an opportunity that guarantees rent, without landlords even needing to vet their own tenants.
After all, prevention is always better than cure, right?
To explore this opportunity of guaranteed rent for up to 8 years as a property landlord, simply visit this page and fill out our contact form for more information. We’re always looking to take more properties off your hands and make your life easier, in the process.