Rental Expenses and Yield Calculation

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From: Jenny F


Ian,
Hope you can advise me how the Rental Yield numbers are calculated in PIA. The thing I need to know is, if you vary the vacancy rate, does PIA take into account an increased number of letting fees (ie a number of discontinuous tenancies in a year) or does it assume a single period of occupancy followed by a single period of vacancy for a given vacancy rate (ie generating only one letting fee per year).

I started using the PIA yield figures to do a sensitivity analysis of rent vs vacancy rates for multiple rent values. It suddenly occurred to me that PIA may not be accounting for increased letting fees when you have "stop-start" tenancies as your vacancy rate rises.

Thanks
JMF

 

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Reply: 1
From: Webmaster (Somersoft)


The PIA software is clever, but not quite that clever. Letting fees are not linked to the vacancy rate. The default for the first year is set at one weeks rent. You are welcome to change this figure for your particular investment and you are welcome to change the default for any new files you create (see Set Default Template). By default, the letting fees are assumed to increase in line with the rest of the rental expenses, but of course the projections can be varied year by year if you wish.

 

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Reply: 1.1
From: Jenny F


Thanks Ian
Regards
JMF