Buy To Let Updated:
Investing in a buy-to-let (BTL) property can make a lot of financial sense, especially if you want to make use of the new pension freedoms and invest in an asset that can give you a regular income. However, those who want to get a finger in the BTL pie need to take into account the cost of any void periods between tenants, as the average time spent by a renter in the UK stands at just 18 months.
This finding was discovered by Direct Line for Business, and may come as a surprise considering that more and more people are using the private rental sector as their long-term home. Cardiff was found to have a particularly high turnover, with renters staying less than a year on average. Renters in Birmingham, on the other hand, were found to be the most reluctant to move, staying an average of two years and four months in the same property.
Having a high turnover of tenants isn't necessarily a problem, but it can prove to be a headache if a replacement cannot be found quickly. Given that demand for rental houses is so high, it is easy to fall into the trap of thinking that vacant homes will be snapped up - but the research shows that this isn't always the case. On average, the survey found that it takes landlords 22 days to find a new tenant, which results in the loss of £547 on average in rent. Even London, which has a soaring rental market, appears to have some difficulty in finding a speedy replacement for a rental home - estate agents claimed it takes around 20 days to fill an empty property in the capital. Given that average rents in the capital surpass £2,000 per month, this could lead to a staggering £1,869 in loss of income.
Landlords may also find themselves advertising their home before they expect to - the research showed that one in 11 tenants (9%) leave their tenancy early, which could leave landlords scrambling to fill a home in order to minimise losses.
Nick Breton, head of Direct Line for Business, said: "This research highlights the pressure landlords are under to replace outgoing tenants in their properties. Vacant properties are obviously a worry for landlords but it's vitally important that they take into account void periods when calculating the affordability of owning a rental property."
If you fancy yourself as a landlord, then you need to be sure that it will secure you the returns you desire. For this reason, you need to weigh up the costs of void periods between tenants to ensure that the investment remains affordable. It's a good idea to talk to an independent financial adviser if you are thinking of taking the plunge - they will help you weigh up how much you can expect to charge in rent and what kind of income you could generate. If you still want to go ahead, you then need to find the perfect BTL mortgage. To start your search, check out our buy-to-let mortgage best buys.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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