Minimise your costs during void periods
In my last article, I warned you that councils around the UK are most likely to charge council tax when your property is empty – this could kill your buy-to-let cash flow. The council tax exemption has disappeared, and councils can now choose whether to offer an exemption or charge anything up to the full council tax liability.
In this last article discussing buy-to-let investment property cash flow, you’ll learn about other bills and costs that you’ll have during a void period. I’ll also offer advice throughout on how to minimise those costs.
When utility bills are the buy-to-let landlord’s responsibility
As soon as a tenant moves out you become responsible for payment of utility bills (gas, electricity and water). It’s important that you advise all utility companies that the tenant has moved on. You should take a meter reading on the day the tenant vacates your investment property, and on the day a new tenant moves in. It’s the period in between for which you are liable.
While a utility company cannot legally hold you responsible for unpaid utility bills, it may ask you for a copy of the tenancy agreement to confirm that payment of unpaid bills is the former tenant’s obligation – this is why you have specific clauses in the agreement stipulating who pays the utility bills (the tenant).
A tip here is to always get a forwarding address for your departing tenant. If a utility company decides to send a bailiff to collect on unpaid bills, they will send them to the last known address of your ex-tenant. If this is your rental property, it can be quite a shock for your new tenants to be faced by bailiffs, and they’d probably want to move out.
How to minimise utility costs during void periods
The void period might be for a few days, or it could be for a few weeks. If your investment property is in good repair, then there should be little reason why new tenants can’t be moved on the day following the previous tenant’s departure, and after a full clean, of course. A good investment property management services company may be able to source new tenants super quick.
You’ll want to carry out a property inspection (before the tenant vacates) and avoid the inventory mistakes that buy-to-let landlords make. You’ll want to have the property cleaned from top to bottom, too, in preparation for the new tenants. If you’ve been on good terms with your tenant, you should have enough notice to make such arrangements in plenty of time.
While your buy-to-let property sits empty, you’ll still have to pay the mortgage and council tax, and service charges (if applicable). The last thing you want (or need) is to be hit with an unexpected utility bill. Having advised the utility companies that your tenant has moved on, always do the following:
- Make sure that all electrical appliances are switched off and unplugged. Leave fridge, freezer, and washing machine doors open (otherwise they could go mouldy and kick up a terrible smell).
- Turn off the hot water tank. Timers will have the water heating up, cooling down, and heating up again. It’s an expensive operation, and totally necessary.
- Don’t turn the central heating off completely. A little heat in the property will make it more welcoming to potential tenants when they view. And in the winter you’ll avoid pipes freezing and bursting.
Make good use of void periods
Void periods are usually seen as a pain in the backside. Mostly because costs keep flowing and income comes to a stop. However, they can also be the ideal opportunity to get into your property and ensure all those small, niggly maintenance jobs are done. It’s easier to redecorate during a void period. Light fittings can be checked, and gas safety certificates renewed. Smoke alarms should be checked, too.
If the void period becomes extended, it might be a good security measure to fit an automatic light switch that comes on and off for a few hours in the evening to deter trespassers and burglars.
Void periods don’t have to mean extra work
One of the gripes of buy-to-let landlords is the extra work that void periods place upon them. They have to carry out property inspections, arrange viewings, vet prospective tenants, write tenancy agreements, and liaise with utility companies and the local authorities.
Our investment property management services are not only geared up to keep void periods to a minimum but to also make sure that any void period is as hassle free as possible. In constant touch with tenants. We’ll be able to plan a void period to disrupt your life as little as possible. We’ll do all the donkey work. Including finding new tenants as quickly as possible, allowing you to be a property investor rather than a property landlord.
Your expenses checklist
Now that we’re at the end of this series on buy-to-let cash flow. Here’s an itemised list of the expenses and costs that buy-to-let landlords incur. Some of these will only become applicable during void periods. Others (such as stationery costs) will only be incurred as and when. Some costs such as mortgage payments will be payable monthly. While others (like service charges) may be collected monthly or annually.
When you fill in your expenses and costs sheet, try to be as accurate as possible and remember it is always better to overestimate costs and underestimate income when projecting property investment cash flow.
If you’re new to buy-to-let, or would simply like a guide to completing your cash flow calculations, contact one of the Ezytrac team today on +44 1522 503 717. We’ll be happy to work through your cash flow with you and make sure that the numbers do stack up.
Yours in effortless property management,