Vacancy rate

Vacancy rate is the proportion of time a rental property is untenanted and earning no income, usually expressed as a percentage of the year or as weeks per year.

Why it belongs in every calculation

Gross yield assumes 52 weeks of rent. Reality does not deliver that. Between tenancies there is almost always a gap for cleaning, maintenance, marketing and the new tenant's start date.

A commonly used planning allowance is 2 to 4 weeks a year, but this varies substantially by location, property type and market conditions.

What drives it

• Location — a tight rental market in a main centre behaves very differently from a small town with one major employer
• Property type and price point — higher-rent properties often take longer to let
• Seasonality — student towns and holiday areas have pronounced cycles
• Condition and presentation
• Rent level — pricing above market is the most common self-inflicted cause

Worked example

A property renting at $590/week with a 3-week annual vacancy allowance loses $1,770 — roughly 6% of gross income. On a marginal cashflow property that is the difference between positive and negative.

Common misunderstanding

Concentration risk matters more than the average. One property with a two-month void is a much bigger problem than a portfolio averaging the same vacancy across ten properties.

A single-employer town can move from low to high vacancy very quickly if that employer contracts. Yield in such locations is compensation for that risk, not a free lunch.

Insurance loss-of-rent cover generally doesn't cover ordinary vacancy — only rent lost after an insured event.

Related terms

Last reviewed: 1 August 2026 · ---

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