It’s rare nowadays to get deals on a plate. There is too much information available about the market. It takes only a few minutes to ascertain the value of a flat in a block. You look at what the past sales were, which is readily available.
One flat is pretty much like another in terms of size and build. There are differences of course in terms of views, light etc. These start to have a sizable impact the higher up you go in price. Of course you can argue also, when markets are moving up or down the comparables can have little validity, as they will be out of touch with the new reality. For example, if you look at a comparable which is say three months old, you’re looking at a deal which was probably agreed three months before this date, therefore, the price is about 6 months out of date. This was a situation I faced when we purchased a house for a client in Shepherd’s Bush. The comparables did not confirm it was a deal. However, I was told the area on ground level was going crazy, prices were moving very fast. It was the local information I relied upon rather than the number from the land registry. We promptly flipped the property and made a handsome profit for our client.
Therefore, subject to a few constraints, it’s still relativity easy to establish whether a property is a hard deal or not. By a hard deal, I mean 30-40% off and in London. Not in the middle of the country where you have flat growth for the next decade. The point I’m trying to make is, with so much abundant information it is difficult to get a deal. This is what the efficient market theory is about; in short, it says if the price of something reflects all available information, then it is
fairly priced.
This of course is a theoretical model, but it has some bearing on reality. As property has become more popular in the UK relative to the rest of Europe, there is no shortage of investor demand. There are also no barriers to entry. Anyone can come and purchase a property, or act as an agent. Many do. You can, time to time, pick up deals just by being in the right place, at the right time. We sourced a deal in Ashmill Street in Marylebone, central London, for only £663 per square foot. The property was freehold, and required no work to it, in fact it was newly refurbished. The going rate in the locality at the time was about £1,100.
But these come rarely. And besides being at the right place at the right time, and having the cash, you have no further claim to the deal. Where there is still profit on a deal is where there is an issue. A problem which looks very serious flushes out most of the demand. The problem could be apparent, meaning it might not necessarily exist, but has the appearance of a problem. What I mean by this is, for example, if something is listed as having an unknown tenancy, buyers would assume this is a protected tenancy. This means the property is potentially worth only half of its value. Or the problem might actually be real and needs to be resolved.
This is when you can procure a deal, and be confident not everyone is able to perform on this deal. We have such a property which has landed on our table, where one is getting the property at a straight 30% off the market value. The
deal is small in size at only £450k in a central location. The issue with it is something we have been fortunate to encounter before, and is not insurmountable. The rewards for this knowledge is about £200k. Call the office now, if you wish to know more.
Agony Agent is here to help
Q: My tenant is doing work without my permission, what should I do?
A: Home improvements to a rental property should be done by the landlord, so what happens when tenants do so without permission? A good Tenancy Agreement should have some wording in it that stops the tenants from making changes to the property, and if they do, they are responsible for restoring it to the original condition when moving out. For most tenants this usually means things like taking down blinds and putting up curtains, or installing child safety gates. Tenants have no problem with putting things back in the original state when they move, and landlords usually aren’t bothered by these types of small changes. However, sometimes tenants take things a whole lot further and start doing more home improvements to the property.
Examples:
Painting walls
Replacing the carpet
Changing light fittings
Changing door locks
Changing appliances
Landscaping changes, like putting in flower beds, a fence, cutting down trees
Anytime a tenant makes such a permanent change, they are breaking the AST and could even be evicted if the landlord so desires. The very best tenants consider their rental property a true home, and go out of their way to take care of it and improve it as much as they can. Often, there’s a healthy relationship in place and tenants can ask permission from the landlord to do the improvements, and permission will generally be given. So, what happens when tenants make more permanent home improvements to theproperty without checking first or getting your permission? What should you do?
There is no right answer for this question, because so much depends on what was done, the type of tenants they are, the relationship you have with them, the condition of the rental property before and after the works (has it improved?), and so on.
There are some steps that you should take in dealing with tenants that make home improvements:
Send a written notice acknowledging that permission was never given and it should have been requested.
Let the tenants know that there should absolutely be no more unauthorised works, and that any ideas they have for making changes should be run past you first.
Outline the consequence of the action, which will vary depending on the circumstances. It could range from doing nothing apart from the warning, to requesting that the property be restored to the original condition immediately or when they move out (at their expense).
Keep a copy of the letter on file and use it to support future actions regarding the works. Just remember even if the work is not costing you anything and it is in fact making the property homelier, nothing should be done without your permission or consent.
Richard Bond
Lettings Manager
Sow & Reap
