Landlord Tips

The Cost Of An Empty Property

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Written by Sarah Walker

If you have a void period, yes, you’re missing out on rental income – but don’t forget there are also extra costs that can rack up.

Deposit-free renting company, Dlighted, recently estimated the real cost of an empty property at £774 a month, but Ezytrac Property Group adds in lost rental profits and puts it higher, at £909.

Obviously, the cost will vary considerably, depending on what type of property you have and where in the UK you’re investing, but here are the key things you need to be aware of and investigate.

Mortgage
This is likely to be your biggest monthly outgoing and the cost can have quite an impact on your finances if you don’t have any rental income to cover it. Most buy-to-let landlords have around a 75% loan to value, which equates to roughly £500 a month for an interest-only mortgage payment on the UK average house price of £224,144. (Land Registry, March 2018.)

Insurance
Most policies state that if the property is unoccupied for more than 30 days, your insurance becomes invalid. Not every company will insure a vacant property and you have to be prepared for your premium to rise. On top of that, you’re likely to have to satisfy a number of conditions, including draining down the heating system and making frequent checks on the property, as it’s at a much greater risk of being broken into, vandalised, etc.

Council Tax
Empty properties used to be exempt from council tax, but this is no longer the case. So if you don’t have tenants paying it, you’re liable. If the property is unfurnished, you get one month free before the full charge kicks in, but if it’s furnished, you have to pay as soon as it’s empty. After 2 years – and hopefully you’ll never hit that! – it rises to 150% of the charge.

Utilities
Assuming the utilities remain connected, you’ll need to keep checking that everything is okay (this is likely to be a condition of your insurance). You’ll have to cover the standing charges for things like meters and phone line rental, and if it’s cold outside, you’ll need to pay some heating costs to keep the property in good condition.

Cleaning
Things like dust and dead insects will do nothing to attract new tenants – plus, if you’re having viewings, the carpet will get dirty – so you really have to keep the property clean. Once a month will probably be enough, but if you don’t have time to do it yourself, you’ll need to pay someone reliable to keep it fresh.

Garden
Again, you need to keep the property looking its best, so you’ve got to spend some time and money maintaining the garden. During the summer months, lawns and shrubs are growing more quickly; during the autumn and winter you’ve got leaves and other debris to clear up.

Potential damage
Empty properties are at a greatly increased risk of being vandalised and broken into – you might even get squatters! – and the cost of repairing the damage could be significant.

One final tip: Even if you have insurance, you’ll need to be able to prove you’ve been making the checks specified in your policy, so keep a log and take photos and meter readings every time you’re at the property.

 

Image credit: Soaringbird

About the author

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Sarah Walker

Sarah Walker is a freelance writer and editor with extensive knowledge of the property investment industry.

A former estate agent and television presenter, Sarah has spent over a decade writing for industry publications and leading UK property companies, producing a wide range of marketing and PR content, including consumer guides, newsletters, website copy, articles and reports.

She has ghostwritten a number of property investment books, edited several others on property, business and branding, and continues to work with entrepreneurs to produce literature that supports their business enterprises. Sarah has been both a landlord and a tenant herself and has invested in the UK and overseas.

Away from her laptop, she’s a keen photographer and loves exploring the Scottish Highlands. Skiing is her sporting passion and she’s an enthusiastic member of her local amateur dramatic society.

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