Seasonality in lettings
We are now in the dark months when the nights draw in – wet, damp and all that stuff.
SEASONALITY IN LETTINGS
And for landlords, it pays to be aware of the seasonality in lettings.
In our experience, we have found that the worst months to be trying to let a property is October, November and December, with the very worst time of all between 20th October (roughly just before British Summer Time ends) and Boxing Day.
During these times, there is always lots of property to let on the market and few tenants looking to rent. It is a tenants market.
We have found that to get a let away, we have to cut rents by at least 10% below the levels we would have achieved in the Spring and Summer.
So, why is this?
Well, tenants just don’t seem to want to move at this time of year. I guess they are all hunkered down for the winter. And who wants to go looking at properties to let, let alone actually move home, when it is already dark by 515 pm and it is more than likely to be cool and wet? Not many folks.
So, properties that have not let during the busy times in Summer and up to September, (when the squeeze is on in many bigger town and cities, due to students returning), will tend to sit unlet and unwanted.
The result of this is that many landlords and letting agents will end up with empty properties in November and December.
I don’t like empty properties at all, so to get the phone ringing I tend to take drastic action and simply slash the rent, often far below the levels we would have got earlier in the year. I have, in the past, knocked 20% off the rent to get our places let. And it amazes me that this seasonality in rent levels has not been noticed more by other property writers, by tenants themselves and people whose job it is to house tenants in the private rented sector.
But these days I am learning a better way and am now following the advice of an experienced letting agent in NW Kent. (Thanks Justine!)
So, now what I do, is look 6 months out.
Let me explain.
All our initial tenancy terms are usually for a fixed initial term of six months, rolling on after that time to become contractual periodic tenancies. The tenant is committed for the initial term, after which they must give contractual notice, which we set at 42 days.
Now, if I have a property that is let between 10 April and 25th June, instead of issuing a six month term which would end between 10th October and 25th December (i.e. 6 months later), I will now issue an initial term of between seven and nine months, so that the end of the fixed term is always after 25th January.
This means if the tenants do not want to extend after their initial term ends, I won’t need to start advertising and doing viewings until after Boxing Day, when the market has again come back to life. (We always start advertising when there is still a month left of the tenancy). And so, I avoid having to try to let during the dreaded dark days of late autumn/early winter when everything shuts down in the run towards Christmas.
(A point to note! An initial fixed term does not have to be six months. Many landlords are not aware of this. An initial fixed term can, in fact, be any period you like in England and Wales, as long as it is at least 6 months, though it should always be less than 2 years and 364 days for other legal reasons).
SEASONALITY IN LETTINGS
Of course, any tenant on a contractual periodic tenancy, (i.e. once a fixed term has ended), could give notice at any time and I could still be left trying to let in these dark days of late October to Boxing Day, but if that happens I usually try to see if I can offer the leaving tenant an incentive to stay on – this will be in form of a rent reduction. (An alternative, of course, is to issue a new annual 12 or 24 month month tenancy instead, making sure that you avoid a tenancy ending in the “dread months” but that is a lot more work and you and your tenants might not want to do this for different reasons).
But, sometimes, that gets nowhere, especially if say it is a couple who are breaking up and who cannot stand the sight of each other for another day.
In which case, one has to take it on the chin.
Right now, I have just slashed the rent on one central London property by a whopping 18%. It is a case of “needs must”, though this year, the seasonal effect is exacerbated by the Great CoronaPanic which has caused two additional things to happen.
One is that un-lettable holiday and business short term lets and excess student lets are flooding the London long term let market with additional stock. Second, there has been a flight from central London by tenants who cannot see the point of living near the centre of a sad city that is now devoid of vibrancy, entertainment and work.
These are hard times for everyone.
But it is better that our places are filled – and if we have to slash rents to see out these tough times, we will do just that!
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We advise a range of organisations too to help them develop and improve their services and products for private landlords. David Lawrenson, founder of LettingFocus, also writes for property portals, speaks at property events and is regularly quoted by the media.
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