Ever notice how costs seem to appear from nowhere when a property is unoccupied due to voids and refurbs? It’s bad enough not having any rent coming in, when all of a sudden you start receiving bills for things you hadn’t factored into your cashflow projections.
All landlords and other property investors will have an unoccupied property at some time or another. If it’s empty in between tenants, it’s known as a void period. Over 80% of landlords carry out refurbs when they add to their portfolio, according to Paragon, during which time the property is likely to be unoccupied.
The good news is this blog post gives you 7 practical tips to reduce costs that landlords and property investors can incur during void periods and refurbs, and reduce the risks.
Quick links: Reduce costs and risks during refurbs and voids
- 1. Check if council tax is still payable if a property is empty
- 2. Have the right landlord insurance during voids and refurbishment
- 3. How to reduce gas and electricity standing charges during voids
- 4. How to reduce water and sewage charges when property unoccupied
- 5. How to improve security when a property is unoccupied
- 6. The importance of regular inspections when property is empty
- 7. How to find tenants for next to nothing
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1. Check if council tax is still payable if a property is empty
When a property is tenanted, the renters are usually responsible for council tax (except for some HMOs). However, council tax often needs to be paid by landlords while a property is empty. That said, the policies of local authorities differ considerably, as the two contrasting examples below show.
For instance, Maidstone Borough Council charges the full council tax for empty properties, regardless of whether they are being refurbished. There are no relevant exceptions for landlords or other property investors. The policy is the same for furnished and unfurnished properties. For the average buy to let in central Maidstone, which is in Band C, council tax is £179 pcm for the tax year 2023-24.
Cambridge City Council has a different policy. Owners of empty unfurnished properties have one month’s grace period in 23 months when no council tax is due. After the end of the month, the full council tax must be paid. This discount doesn’t apply to furnished properties.
However, if the property remains empty and unfurnished for two years, the council adds an empty home premium of 100% onto the council tax. This applies the property itself, so a change of ownership won’t affect it. That said, if an empty unfurnished property is undergoing major repair work or structural alteration, no council tax is payable for up to 12 months.
As the rules vary so much between council to council, it’s important to check the exact policy of the local authority. Don’t make any assumptions, and do claim any discounts for major repair work, if the council offers them.
2. Have the right landlord insurance during voids and refurbishment
Landlord insurance can be a tricky area when a property is empty for any reason. Mortgage broker Andy McKinney from Gameplan Financial explains that whilst most insurance providers will allow between 30-90 days of cover whilst unoccupied, it’s not always the case. It’s important to check the terms and conditions of your policy, and let your mortgage broker know if your property is going to be refurbished, or if there’s a long void.
I’ve certainly witnessed this with my own portfolio. One insurer charged a higher premium while the property was unoccupied, and reduced the premium when it was tenanted (I received a partial refund). Another insurer gave me a grace period after buying a property, to give me time to refurbish and let it. However, the cover was restricted to Fire, Lightning, Aircraft and Explosion during this time, and the excess was doubled. I also had to advise them when the property was occupied. The Schedule of Insurance was then changed to show that full coverage was in place.
The moral of these stories is to speak to your mortgage broker so you have the right insurance, depending how long the property is likely to be unoccupied. If it’s a substantial back to brick refurbishment, you may need specialist unoccupied property insurance. It’s a good idea to get multiple quotes from insurers, to make sure you’re getting the most competitive quote. Take a look at my guides below for tips on how to keep the insurance costs to a minimum, and what the different types of insurance cover.
>> Related Post: A Guide to Landlord Insurance and Unoccupied Property Insurance
>> Related Post: How to Shop Around for Competitive Landlord Insurance
3. How to reduce gas and electricity standing charges during voids
When the property is untenanted, the landlord is responsible for the gas and electricity charges until the first day of the tenancy. Here are some simple tips to help keep the cost of the utilities down while the property is empty.
One of the first things to do when a tenant moves out or when you complete a purchase, is take the meter readings, if not in an inventory report. Unfortunately sometimes tenants and sellers don’t submit the correct meter readings to the utilities companies. It’s therefore useful to have your own photos as proof what the readings when you became responsible for the utilities.
If the property doesn’t already have smart meters like the one above, now is a good time to order them. Even if If there are smart meters, it’s still good to take a photo of the meter readings, just in case there’s a fault.
It’s a good idea to switch to a tariff without a standing change if the property is going to be empty for more than a few weeks. A standing charge is a daily fee that you pay, even if you don’t use any electricity or gas. The daily fees certainly add up when a property is empty. By switching to a tariff without a standing charge, you’ll only pay for the gas and electricity you actually use.
I also turn the heating off (if it’s summer), or onto a very low setting if it’s winter. No point heating an empty building, and when a refurb is underway, builders often leave doors open!
These simple things help landlords save costs during refurbs and void periods.
4. How to reduce water and sewage charges when property unoccupied
One area that is usually less problematic for landlords when the property is empty is the supply of water and the standing sewage charges. Most water companies will not charge during a period of refurbishment or when the property is unoccupied, unless there is “excessive” water usage. Some cap this period to 30 days.
However, the water companies need to know the property is unoccupied. It’s therefore important for landlords to call the water company and submit the meter readings at the start of a void, so that they’re not charged. Landlords also need to call them back when the property is tenanted, and give them the meter reading.
5. How to improve security when a property is unoccupied
Security can be a big issue when a property lies unoccupied for more than a short period. I know of property investors who have had fittings and even windows stolen during a refurbishment. Here are a few tips to reduce the risk of theft and break-ins, and specific products I’ve used from Amazon (these are affiliate links).
CCTV can be a deterrent and help you monitor the site. However, often there is no wifi, and if the camera is outside, it needs to be powered. A good solution is the Reolink security camera, which I bought on Amazon last year. It’s solar powered and runs off a 4G SIM card. I took the above photo when I placed it in a tree to keep an eye on the property. (Of course the tree was on my property).
Making the house look occupied to a casual passer-by is a sensible precaution. Cheap options include timers for sockets, to enable lamps to turn themselves on and off at different times in different rooms. Here is a pack of 3 timers from Amazon, for under £15 at the time of posting. Smart bulbs are another solution, but they need wifi. Hanging curtains in the front room also stop prying eyes.
I always get to know the neighbours during a refurb, and they’re normally happy to keep an eye out.
Do make sure that you check whether your insurance requires you to take any particular security measures. Finally, encourage any trades people not to leave valuable tools and materials in view overnight.
6. The importance of regular inspections when property is empty
If a property is empty for any reason, it’s a good idea for someone to visit the property once a week. Some insurance companies require this.
So many things can go wrong when a property is empty, like a water leak, wind damage or frozen pipes if the heating. isoff in winter.
If the owner is unable to inspect the property themselves, the letting agent may do this for an extra fee. The management services provided by letting agents are normally suspended when a property is empty, so it’s important to be clear if they need to do something.
A more cost effective solution might be to use a specialist contract service provider like Viewber, who can provide a DBS-checked property professional (who they call a Viewber) to inspect the property for a small fee. It’s a great service as it turns a fixed cost into a variable cost as you only pay for what you use. It also can give you peace of mind that all is well with the property.
It’s also useful for self-managing landlords like myself who have a trusted port of call if something needs attending to, but can’t get to the property for any reason.
Viewber provide a wide range of useful contract property services from viewings and inspections to supplying and fitting a key safe. If you’d like to find out more about Viewber, you can click this affiliate link here to register with Viewber, and also help support this free blog at the same time.
For more tips on turning fixed management costs into variable costs, take a look at my blog post on managing a growing portfolio.
7. How to find tenants for next to nothing
One of the big concerns for landlords when a tenant leaves, is the cost of finding new renters. This is particularly the case for landlords who use high street letting agents.
A good way of reducing this cost considerably is to use an online platform like OpenRent. Their Rent Now service only costs £49, yet the property will be advertised on the portals like Rightmove and Zoopla. I was so impressed when I used it myself in 2022, that I’ve since joined OpenRent’s Affiliate Programme. I also found another set of tenants with a new buy to let in July 2023 and still recommend OpenRent highly.
>> Related Post: How to find renters without letting agents
>> Related Post: Landlord Guide on How to Choose Good Tenants
Final thoughts
Forecasting cashflow is so important for property investors, particularly during a refurbishment. Risks also increase while a property is empty.
Knowing how to identify and manage the specific risks properties face when unoccupied during refurbishment or void periods can help landlords and property invesotrs avoid unpleasant surprises.
>> Related Post: How to avoid 5 Classic Landlord Mistakes
