Voids Cost More as Rental Income Rises: What London Landlords Must Do Now

Why Rising Rents Mean Higher Void Costs

Recent data from Letting Agent Today highlights a pressing issue for landlords: as average rental incomes rise, so does the financial impact of void periods. When a property sits empty, landlords lose not just rent but often continue to incur fixed costs such as mortgage payments, insurance, and maintenance. With higher rents, the absolute value of these lost earnings during voids increases, amplifying the financial strain.

In London, where average rents have seen steady growth over recent years, the cost of a void month can now run into several hundred pounds or more, depending on location and property type. Unlike previous years when lower rents somewhat softened void losses, landlords today face a more significant income gap during unoccupied periods.

What This Means Practically for Landlords

Void periods are an inevitable part of letting, but the stakes are higher now. For single-unit landlords, a month without rent can severely disrupt cash flow, especially if mortgage outgoings are fixed and high. HMO landlords or those with larger portfolios face compounded risks, as multiple voids can multiply losses quickly.

Accidental landlords—those who own properties they previously occupied and now rent out—may find budgeting more challenging if they have not accounted for increased void costs.

Key Implications

• Financial Planning: Landlords must revisit their budgets to factor in higher void-related losses, including reviewing mortgage affordability and contingency reserves.
• Operational Focus: Minimising void length becomes critical. Efficient tenant turnover processes and proactive maintenance to ensure properties are market-ready reduce downtime.
• Tenant Relations: Strong tenant retention strategies help avoid voids altogether. Offering lease renewal incentives and addressing tenant concerns promptly keep good tenants longer.

Immediate Steps Landlords Should Take

1. Monitor Void Periods Meticulously: Track void durations property by property. Understanding typical local vacancy times helps set realistic expectations.

2. Review and Adjust Budgets: Incorporate higher void cost assumptions into cash flow forecasts. Establish a dedicated reserve fund to cushion financial impact.

3. Implement Effective Marketing: Use targeted advertising, professional photography, competitive pricing, flexible viewing times, and virtual tours to attract tenants swiftly.

4. Enhance Tenant Retention: Communicate regularly with tenants, conduct mid-lease inspections, and promptly address maintenance issues to encourage renewals.

5. Consult Financial Advisors: Discuss how rising void costs affect your portfolio strategy and tax planning with your accountant or advisor.

Tailoring Strategies by Landlord Profile

• Single-Unit Landlords: Build a cash buffer covering at least one month’s void and streamline tenant vetting to reduce turnover delays.
• HMO Landlords: Stagger leases to avoid simultaneous voids and maintain consistent income flow.
• Portfolio Landlords: Use portfolio-level analytics to identify properties with longer voids; consider repositioning or refurbishing these units.
• Accidental Landlords: Seek professional advice to adjust financial planning and consider property management support.

How Rentals & Sales Can Support You

Our team offers tailored services to help London landlords navigate these challenges:

• Portfolio Review: Identify void trends and income gaps across your holdings.
• Compliance and Operational Audit: Ensure properties meet standards that attract and retain tenants.
• Pricing Strategy: Benchmark rents to balance competitiveness and income maximisation.
• Financial Planning Advice: Connect with trusted advisors to safeguard your cash flow.

Final Thought

Voids are an inevitable part of property letting, but their financial impact grows with rising rental incomes. Landlords who act swiftly to monitor, plan, and optimise their letting processes will protect their income and maintain portfolio health.

This article provides general guidance and does not constitute financial advice. Landlords should consult professional advisors for personalised support.