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How much does it cost to be a landlord, when the property is empty?

How much does it cost to be a landlord

It’s an important question to ask: ‘How much does it cost to be a landlord, when the property is empty?’

One of the downsides to property investing in the UK is that you will need to recruit tenants and the aim is to get those quality tenants who want to live in your rental property for a long time.

Otherwise, you’ll be searching for new tenants on a regular basis and run the risk of ‘void periods’, this is when your property is empty.

And when it’s empty, there’s no one paying the rent, which means you will not be making an income and you will have expenses to meet.

Financial liabilities for your empty buy to let property

Here, we explain more about the financial liabilities for when your buy to let property is empty.

The main reason for keeping void periods to a minimum additional costs such as:

  • Your buy to let mortgage
  • The landlord insurance.

There will also be other costs, including the re-advertising of your property and also the checking the references of potential tenants.

You also need to produce new tenancy agreements and meet the mandatory checks, including the Gas Safety check and also the electrical wiring, if these are due.

However, a void period is also a great opportunity to carry out maintenance and redecoration work and if you do this yourself, then you simply pay for materials. Otherwise, you’ll need to pay a professional to do this for you.

Having an empty property is a natural part of being a landlord when a tenancy comes to an end and there are financial liabilities that can become very expensive.

Landlords and council tax

When your property has no tenants, then it’s you as the landlord who is responsible for paying the council tax bill.

However, some councils offer landlords a discount on an empty property and most councils will charge even when a property lies empty for a single day.

You need to enquire about whether your local authority has a Landlord Council Tax Exemption scheme and apply for it.

Be aware that if your is empty for two years, then the council may demand a surcharge of up to 50% of the council tax though many councils will have the discretion on how much council tax they will charge, particularly if it is empty because the landlord is carrying out refurbishment work.

Landlord insurance

Landlord insurance

We have already mentioned that a void period will have an impact on the landlord insurance and if your property is to be unoccupied for a lengthy period, then you may need to find new, cheaper landlord insurance quotes from providers.

That’s because you will need special insurance for your property to be properly covered. This particular type of insurance will help when:

  • You are in-between tenants
  • You are redecorating or refurbishing your property
  • Yours is student accommodation and is empty during holidays
  • You’ve just bought your property and there are no tenants lined up yet.

The other issue to consider is that your landlord insurance may not provide cover to protect your property when it is empty from vandalism or theft. You should check the small print to ensure that you are covered and whether there are any clauses as to how long the property can remain empty before there’s an impact on the insurance itself.

Unoccupied property insurance

empty propertyYou may be wondering why unoccupied property insurance is such a big deal and it’s down to the fact that insurers will see an empty property as being a higher risk of things like damage or theft.

The insurers appreciate that when your main residence is unoccupied it is not going to be for a long period, but if you’re a landlord and you’ve got a property to let then you may face longer periods of non-occupancy that would not be covered by standard insurance policy.

Indeed, when you have a landlord insurance policy you can find a deal that will offer coverage for when your property is empty for 30 days or more, and some insurers will offer cover for three months and up to a year.

The bottom line is that when you’re wondering about the financial liabilities when you have an empty property, and if you don’t have the right insurance cover, then you’ll need to pay for any theft or vandalism damage out of your own pocket.

Costs a landlord will need to pay during a void period

Other costs a landlord will need to pay during a void period will include:

  • You will still need to pay your letting agent fees
  • Service charges if your property is leasehold

And since a tenant will stay on average 18 months in a rental property, these are costs that all landlords will need to budget for.

One survey reveals that properties in London are empty for an average of 24 days – and in some boroughs it can take 37 days to find a tenant to move in.

There are other costs that need to be considered – and these will not usually occur to novice landlords:

  • Your rental home will need to be cleaned when the tenancy ends and when the new one begins. If you have a high turnover of tenants, this is going to be a hefty bill.
  • You also need to pay for an inventory when a tenancy ends when a new one begins. Or you could carry out this work yourself.
  • You will still need to pay for safety checks such as electrical safety and have the smoke alarms tested.
  • And you will still need to pay for the utilities while the home is empty, including the electricity, gas and water.
  • There may also be advertising fees to pay in the search for a new tenant.

Essentially, the landlord wanting to know what financial liabilities they have during a void period, then these are costs that are hard to avoid. So it is always worth spending the time to recruit a good tenant who will remain in your rental home and look after it for you.

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