According to Tobie Fourie, the national rentals manager for the Chas Everitt International Property Group, most seasoned investors will make allowance for their rental property to be vacant about 5% of the time - and deduct the cost of this vacancy from their gross income estimates.
“However, it is also important to consult a reputable managing agent to establish the average vacancy rate for the area as a whole - and find out about the factors that could affect this rate in future,” said Fourie.
“At around 5%, there should be steady demand and landlords in the area should be able to achieve moderate annual increases in rent, but when the vacancy rate drops below about 8%, that can become difficult. It may also suggest that the area has fallen out of favour with tenants.”
There are, however, several factors that can change the vacancy rate in the short or longer term, and prospective investors need to explore these with a local expert, he said.