Landlord and BTL Blog

Tuesday, March 31, 2015

London Transport Improvements

New rail & tube lines are vital to opening up new parts of London for housing - Savills report http://t.co/S4iFlt2zjS pic.twitter.com/zyTHFBOQBN
— Savills (@Savills) March 30, 2015

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Monday, March 30, 2015

Would subletting changes be fair to landlords?

One of the little known items for discussion about the private rental sector coming out of the Budget was hidden away on page 51 under para 1.193 relating proposals for the "Sharing Economy". Sounds wonderful in the abstract:

1.193. The government wants to ensure that Britain is the global centre for the sharing
economy, enabling individuals and businesses to make the most of their assets, resources,
time and skills through a range of online platforms. This Budget therefore announces a
comprehensive package of measures that will break down barriers, create opportunities
for sharing, and unlock the potential of this dynamic and growing area. Building on the
recommendations of the independent review of the sharing economy, the government will:

However, the specific proposal for the buy-to-let sector and landords is far more sinister. The Government proposal wants to:

make it easier for individuals to sub-let a room through its intention to legislate
to prevent the use of clauses in private fixed-term residential tenancy agreements
that expressly rule out sub-letting or otherwise sharing space on a short-term
basis, and consider extending this prohibition to statutory periodic tenancies

This proposal undermines the primacy of the landlord as owner of their property and the one who controls occupation of their buy-to-let. The reality is that as a landlord you do not want to let your property to X and then get tenant Y. It disregards the whole basis of a tenancy agreement where a landlord goes through a careful process of vetting and selecting a tenant to ensure that the tenancy will work for both tenant and landlord.

The reality is that this bit of hair brain thinking from civil servants makes interesting reading in the context of a budget document but would never stand up to the riggers of examination by legislators as it stands in complete opposition to the basic rule of law on property ownership.

Not even the Labour Party could come up with a more unworkable piece of legislation.

The worrying thing for landlords is if having let the 'genie out of the lamp' Ed & Ed adopt it as their own.

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Saturday, March 28, 2015

Miliband's home would be hit by his mansion tax

Oh the irony: Miliband's London home would be hit by Labour's mansion tax | via @Telegraph http://t.co/3MikBUagmc
— Zoopla (@Zoopla) March 27, 2015

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HMO - cashbuilder

I've was chatting to an old friend this week. His main business is in website development but he has a useful sideline with a Housing In Multiple Occupation (HMO).

I thought I'd share his business model as he seems to be onto something. His property is in a traditional terraced area very near to Nottingham City Centre. Not high value or posh by any means but also not a ghetto. I would guess his 6 bedroom property with 2 bathrooms and lounge & kitchen diner would be valued at about £120,000, so not expensive.

Letting to the immigrant middle classes

His business model seems to be letting to the professional immigrant middle classes that increasingly populate our towns and cities. Rumanians, Poles, Indians... They are mixture of IT, warehouse workers. Note to UKIP supporters. These are not the lazey benefit seeking immigrants. They are skilled paid professionals who have come here to work.

He charges £65 per week for a double room including all bills. As you would expect this type of tenant would demand cable TV and wifi internet access. His footloose tenants like the fact that all bills are included and they just pay a one off weekly rent and that he lets using a licence giving them both a 2 week notice period. I suspect that if challenged he may find that a Court would find that both parties have created an Assured Shorthold Tenancy but in the 11 years that he has been doing it this issue has not arisen.

HMO licence

The downside of renting out his HMO property is that under the Housing Act 2004 because he is letting his rental property to more than 5 occupants he requires a licence from Nottingham City Council as the relevant local authority.

Gross rental yield for this HMO

Clearly the churn of his tenants is much higher than a single let property but fully let the property generates just over £20,000 a year. On the purchase price of £120,000 that's over 16% gross rental yield. Even taking off all the expenses including mortgages costs this property investment is generating a grand profit each month. There is money in HMO properties if you are prepared to put in more work.

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Friday, March 27, 2015

115,000 homes listed to London Rental Standard

More than 115,000 rented homes across the city are now badged under the Mayor’s London Rental Standard.

307 letting agent firms are signed up for the Boris's scheme, including Spicerhaart (Haart and Felicity J Lord); Andrews; CBRE; Chestertons; Douglas and Gordon; Savills; Knight Frank; Leaders; Foxtons; and Stirling Ackroyd.

Boris Johnson commented on the schemes progress following its launch back in 2014 :

“This enthusiastic take-up from agents across the capital is testament to the great success of our new and growing London Rental Standard scheme. With more and more of London’s workforce and young families now living in rented homes, this sector has a vital part to play in helping to meeting the capital’s housing needs. The Rental Standard is improving the experience of everyone involved with a clear code of good practice, and I encourage every agent, landlord and tenant to seek it out and sign up.”

Read more comment from supporters of the London Rental Standard

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