When you bear in mind that UK base rates are rumoured to be on the way down potentially hitting a low of 0.25% it is no surprise that more and more people are now looking to the buy to let market. You will need to do plenty of research before entering the buy to let arena but the criteria is simple, find a value for money property, find long-term tenants and use the rental income stream to either cover borrowing costs or fund future projects.
However, there is one additional issue you should be aware of, the problem of high tenant turnover and how this can impact your return on investment.
Why do tenants move on?
There are many different reasons why tenants will decide to move out of a property, they could be looking to buy their own, their employment status has changed or perhaps they are looking to settle down with a partner. Even the most stable of tenants will at some point move on but if you have a regular turnover of tenants this can start to get cumbersome and impact the return on your investment.
If you do have an issue with relatively high turnover of tenants then the simplest thing is to ask your tenants why they are moving out. There will be occasions where you genuinely have no idea why individual tenants have decided to move on but this is an issue which you need to be on top of.
Lines of communication
Aside from genuine reasons why people decide to move on, one of the main issues with relatively high tenant turnover is a lack of communication between the landlord and the tenants. If there is a direct line of communication then you will likely be made aware of any issues which you possibly need to address. This could include the state of the property, relatively high rent payments or perhaps there is one problem long-term tenant causing others to reconsider their positions. If you have a line of communication open with your tenants then over time you should be able to gain their trust and they should be able to come to you with any issues they have.
While creating lines of communication works well for the landlord and the tenant you still need to keep your tenants at arm’s length so that nothing becomes personal which is where emotions can impact decisions.
Is high tenant turnover really a problem?
On the surface you may consider relatively high turnover of tenants not to be a major concern but if you consider the time it takes you to organise a new tenant, periods when the property is empty and potential advertising costs it will start it away at your returns if not addressed. In a perfect world all of your buy to let investments would have reliable and stable long-term tenants but unfortunately this is not always the case in real life. However, there are ways and means of avoiding relatively high tenant turnover and you should always be aware of potential issues which may impact your ability to replace tenants in the future.
There are some areas of the buy to let market where relatively high tenant turnover is commonplace but, as we mentioned above, there is a cost in time and lost rental income if you spend more and more of your time finding replacement tenants.