According to research carried out by the National Landlords Association (NLA), 90% of landlords are completely unprepared in the event of a rental void. 19% of landlords with only one rental property were prepared to use their income from a main job to cover the deficit; 17% would rely on savings; and 16% would just stick their head in
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the sand and hope that the problem went away.
Portfolio Landlords Cope Better Of those landlords questioned who owned several rental properties, 34% of them said they had had to cope with a void period in the last twelve months. A quarter of these landlords said they would be able to cover any void periods with income from other properties in their portfolio.
Do You Have a Business Plan in Place? The NLA is keen to stress to new landlords that it is essential to have a sound business plan in place. Becoming a landlord is the same as running any business and as such you need to make plans to cope with any eventuality, including rental voids, particularly if you are paying a mortgage on the property. Unfortunately a lot of new and prospective landlords underestimate the financial impact of rental voids that can occur when tenants leave unexpectedly or a tenant stops paying the rent.
The NLA recommends: “…budgeting for 10 months’ rent in any 12 month period to allow for missed rental payments and voids. It’s also essential that landlords carry out checks on potential tenants to minimise their risk of non-payment.”