Void periods and rental arrears falling, say landlords

The incidence of void periods are falling in the private rented sector, landlords have reported.

Research by BDRC Continental, commissioned by Paragon Mortgages, found that the duration of the average void period has also reduced.

Of the 1,000 landlords that took part in the Landlord Panel, 34 per cent said they had experienced at least one void period in the last quarter of 2013 compared with 36 per cent in Q3.

The average duration of a void period is also falling, standing at 59 days in Q4 in comparison with 64 days in Q3 and 69 days in Q2.

Landlords were also asked, where they had experienced a void, how they covered the financial impact. Those small-scale landlords with only one property were more likely to cover any shortfall using either their own savings (17 per cent) or from other income (19 per cent).

A quarter of all landlords (25 per cent) said they would cover it with rental income from other properties, 10 per cent would look to absorb it and 16% would use cash reserves that had built up whilst the property was occupied.

John Heron, director of mortgages, said: “It is good to see that void periods are less frequent and getting shorter. What is also important to note is the resilience of landlords when coping with a shortfall of income on an individual property, this provides further insight into just why the credit quality of buy-to-let lending is so much better than regular mortgages.”

The same research revealed that landlords in Q4 experienced a reduction in the level of tenant arrears. The average number of tenants in arrears remained low at around two against a portfolio size of 11 properties. Of those landlords surveyed, 28 per cent of landlords said that they were concerned about rental arrears in the next 12 months.

In terms of other areas of concern for landlords, 31 per cent said that they had property which had been damaged by tenants and 15 per cent had problems with anti-social behaviour. Interestingly, just 1 per cent of landlords had missed a buy-to-let mortgage repayment in the fourth quarter.