The pitfalls of empty lets

Void periods between tenants not only place cash flow constraints on such businesses, but also open up owners to liabilities and responsibilities previously managed by the tenant.

The physical matters are common sense – ensuring adequate heating, or perhaps draining down a property's plumbing system, to avoid the risk of frozen pipes over winter. Also ensuring that properties are adequately secured, and regularly checked, to some extent to ward off would-be intruders, but more practically to ensure minor issues aren’t allowed to develop into more expensive problems.

Unfortunately for landlords, ownership equals occupation when there are no tenants, with most local councils no longer offering grace periods for council tax, and able to charge double rates for properties unoccupied for the ‘long term’ – typically two years or more. In addition landlords can look forward to correspondence and charges from utility companies, as well as several letters about the temporarily unnecessary television licence.

While the above are, at worst, frustrating to deal with, a more significant consideration is insurance. Most policies presume regular occupation of buildings.

As a result, it is commonplace for underwriters to reduce cover after a property is empty for a certain period, typically three months, and whatever cover remains will often be contingent on the landlord having taken various precautions, such as those mentioned above, and having informed insurers of the vacancy.

While a significant void period might be the opportunity to refurbish and improve energy efficiency, the best solution, of course, is to manage the tenancies well enough to minimise the need for a void period and use an agent who can find you a new tenant quickly.

Jack Cooper MRICS, is an associate Land Agent for and on behalf of Balfours LLP