PRS - Increasing net yields - summary report
Submitted by Laura Shepherd on 12/09/2013 - Senior Marketing Manager
LANDLORDS IMPROVE YIELDS VIA FURNITURE RENTAL
Landlords stand to improve net yields significantly if they can reduce void periods by offering a furnished rental option. Reducing void periods by two weeks where half of the portfolio is furnished can improve yields by almost 3%. These are findings from new research commissioned by Roomservice by CORT, which analyses how offering a furniture rental service can improve the bottom line for build to rent developers and institutional landlords.
A recent ARLA survey shows average void periods have increased to 3.6 weeks, which equates to around 7% of gross annual rent, therefore every week that can be shaved off the void period equates to valuable percentage points on the yield figures.
The report ‘PRS – An opportunity to improve net yields’ has been prepared to coincide with the RESI 2013 conference, where opportunities in the private rental sector will be a major theme. The research explains that one of the most viable ways to reduce void periods is to widen the potential tenant market to both those who want a furnished and an unfurnished property through the addition of furniture rental service. It warns institutional landlords that by only marketing properties unfurnished, they are immediately excluding those who want a furnished property and given that just over half of all properties across the UK rental market are let unfurnished or part furnished (52%), this is a significant proportion of the market.
Graham Smith, Managing Director of Roomservice by CORT, comments: “As the private rental sector gathers pace, institutional investors are rushing to invest in this growth area while looking for ways to maximise yields. We have developed a flexible furniture rental service to meet the needs of the growing private rental sector. By offering properties unfurnished alongside a furniture rental option, the potential tenant market is widened to both those who want furnished and unfurnished property, which leads to increased lettings and a reduction in void periods.”
Roomservice by CORT can provide a comprehensive furniture rental programme directly to tenants, giving them a hassle-free choice of furnishings to suit their taste, lifestyle and tenancy length, rather than having the furniture chosen by the landlord imposed on them. As the furnishing relationship is between Roomservice and the occupier, there are no capital, management, maintenance or compliance costs for the landlord. This also allows the property owner or operator to concentrate their cash and energies in their core business.