Helping your landlord clients ensure rental yields, voids and profitability remain robust

The latest Q4 2022 BVA BDRC Landlord Panel research report outlined that rental yields held firm at the tail-end of 2022, softening by just 0.1% to an average of 5.7% across the country. Rental properties in Wales secured the strongest yield figures of 6.4%. HMO properties went back to the top spot to offer the strongest yield by property type, at 6.4% for the quarter, followed by multi-unit blocks at 6.2%.

There was further good news in terms of rental void periods. The incidence of voids reported by landlords fell to a historic low with only one in four landlords reporting a property without tenants in the preceding three months. The typical void period also fell by an average of 12 days to 70, suggesting it was easier for landlords to fill properties than at any point in the last six years. Larger landlords were said to experience shorter than average voids (44 days for those with 11+ properties)

Turning our attention to profitability, 81% of landlords said they were making a profit from their letting activity, while this was down 5% on the figure reported in the previous quarter, for those landlords who have four to five properties, 90% said they continued to make a profit.

As we might expect, landlords who have a small number of properties are being hit hardest by the rising cost of letting a property including potentially increased mortgage costs. When combined with a sustained lack of available properties across the private rented sector, this is likely to result in many landlords raising rents as they also seek to realign their properties for the local market.

This demonstrates the dynamic approach required by landlords in 2023 and advisers will play a key role in supporting their needs to ensure they continue to achieve strong rental yields and in portfolios remaining profitable. 

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