Initial vacancy period
A vacancy period occurring at the start of a newly acquired or newly built rental property's operation, before the first tenant moves in. It differs from ongoing rental vacancy by its inaugural nature. Some GLI policies cover initial vacancy after a waiting period. It represents a financial risk that the broker factors into their yield analysis.
Key points
- It occurs only at start-up, unlike ongoing vacancy during operation.
- Some GLI insurance policies cover initial vacancy after a contractual waiting period.
- It represents a cash-flow risk that the broker factors into the yield analysis.
- In new serviced residences, it can last several months depending on the sales pace.
Frequently asked questions
How does initial vacancy differ from ongoing rental vacancy?
Initial vacancy refers to the period from delivery of the property to the arrival of the very first tenant. Ongoing vacancy is an interruption between two tenants during operation. Both create a shortfall, but initial vacancy is foreseeable from acquisition and must be provisioned in the financing plan.
Does GLI insurance systematically cover initial vacancy?
No, initial vacancy cover is not automatic. It depends on the policy taken out: some GLI insurance includes an initial vacancy guarantee with a waiting period (often one to three months) before compensating the landlord. It is therefore essential to read the general terms carefully and check whether the initial vacancy clause is included or offered as an option.
How does the broker factor initial vacancy into their yield analysis?
The broker adds a negative cash-flow item corresponding to N months of instalments paid without rental income at the start of operation. They verify that the investor has the cash reserves needed to cover this period and that the overall structure remains viable even with a three-to-six-month initial vacancy. This period is included in the calculation of the true net yield over the full holding period.
In practice
An investor acquires a new flat delivered in March. After customisation works and letting procedures, the first tenant moves in in July. These four months constitute the initial vacancy period: the investor pays the loan instalments without receiving any rent.
Official sources
- Housing and financing information · ANIL
- Mortgage credit (official guide) · Service-Public.gouv.fr