Last week I attended an auction after a very long time. The purpose was to purchase a small studio in Hallam Street, a stone throw away from Park Crescent. Park Crescent faces Regent’s park, currently half the crescent has been knocked down and an expensive development is coming up in its place.
This is the same road where I purchased another studio on behalf of a client back in 2012, for the tidy sum of £350,000.
This flat is now worth conservatively £550k, this price is currently dampened due to the works going on around the crescent. This is off putting for renters and end users alike, and purchasers are surprisingly short visioned, even when it comes to investing in property.
The investor, for whom we sourced the auction deal, was in the fortunate position of being a cash buyer. She had just days before offloaded on another property we had sourced for her, again in 2012. The property we originally sourced was in a high rise block in Maida Vale, the property was pretty much unmortgagable, save for a couple of very high interest niche lenders. This was due to the construction type and not the fact it was a high rise, this type of block was built just after the second world war and was built to fulfil a housing shortage, since then the properties have not come down and are still standing.
The property being unmortgagable actually suited our client. She was psychologically averse to taking a mortgage and wanted to have property which generated a good rental yield. Since the lack of mortgage options on this property it attracted a discount compared to other properties of the same size. The purchase price back in 2012 was only £215,000. For a two bedroom property in W2 this is exceptionally cheap.
This meant the investor was in the fortunate position of purchasing in cash. This opens up the door for buying in auction and purchasing short lease properties which are unmortagagble. After short listing several, one was selected, a short lease studio property with only six years remaining. Given the instability in the market place now is a good time to be both buying and extending leases.
The property exchanged successfully on the day for £120,000. I was hoping to grab the deal for much less, but there was one particularly stubborn bidder who drove the price higher.
What was amazing from my client’s point of view, was that she sold her current property and purchased of the new one, all from Peru while on a Shamanic retreat for several months. This has been a totally hands free investment for her, as everything was handled by us. We will also be handling the lease extension and the light refurbishment of the property. I imagine the hassle will not be in doing the work, but in getting the permissions from the managing agent.
AGONY AGENT
Each week, we answer a reader’s rental property question, from first-time landlords needing pointers to experienced owners. Agony Agent is here to help!
Normally I am asked questions regarding tenants damaging the property or not paying rent; however, this week’s question isn’t one I get asked very often.
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 form 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 can 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. What happens when tenants make more permanent home improvements to the property 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.
