It’s a funny market at the moment. The recent auction results from auctioneers who have a strong presence in the market place shows a drop in sales figures. Savills had a 67% sales rate and Barnard Marcus had 68%. Ordinarily, these figures have previously been in the 80s and even 90s.
This shows the market is uncertain at the moment, and sellers are not adapting to this change. An example of this is where we were hoping to achieve a sales figure of £875k for one of our lots, however, the auctioneer advised us to place it in for a mere £800k; which we are happy to do, as we prefer to sell, and we need to give the freedom to the market to dictate the price, and not impose our expectations on it. The auction is due on the 19th July 2017.
All you need is two people who want the same property, as was demonstrated by a property we were offered in Hyde Park which we were told we could close for £2.7m. Fierce bidding drove the price to £3.25m, this is in stark contrast to the what’s going on in the market. It seems people want what they cannot have; and this is the psychology which drive prices up in the auction rooms. However, if the guide price is high you cannot whet the investors interest to begin with.
We too are in the midst of not a bidding war but a contract race. The property in question is a very large flat, laid laterally, in a well-known block close to Marble Arch.
We have been tracking the property for about seven months now; we went for it originally and someone had offered a higher price. We then sat back down again. Funnily enough I happened to meet the buyer who had managed to get himself an option agreement on the property. The option was due to run out and he wanted someone else to step in and do the deal for a couple of reasons. One, he didn’t want to lose face with the agent, and secondly, he wanted to charge a premium for the privilege of ‘buying’ the deal. However, the sand was slipping from his hands, and soon the property would be offered out again.
Sure enough the property has come back in our laps, although it now comes with a contract race. This means there are two buyers for the deal, contracts are issued at the same time and the one to cross the line wins the deal.
We have been in this scenario a few times before, and most of the time have won the race.
It takes a commercially minded lawyer, one whose every step is not focused on covering himself but on getting the deal done. It also requires one to take views on various variables, which may not be fully known in advance. Things like the service charge, and any major works due etc.
I was not too worried about the race, rightly or wrongly, as it tends to focus the lawyers to get the deal done; and we have the right lawyer on our team, especially selected for executing fast. The last deal he did for us was exchanged upon within three days of receiving papers. When focus is not there, it’s like a piece of string, it can take as long as you give them.
We should exchange on this property within this week, or not as destiny wills. My feeling is that we will grab this deal. It will be a lucrative one for our investor.
The property is a clear 35% below market value, and it’s in a very popular block for rentals and resells.
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Agony Agent
Each week, we answer a reader’s rental property question, from first-time landlords to experienced owners. Agony Agent, is here to help!
Q: I think my tenant has been smoking in the property but I am not sure. What should I do?
A: For the majority of landlords, smoking indoors is a big no. In all of our tenancy agreements, smoking is prohibited as the damage and issues it can cause can be high. However, this doesn’t stop some tenants from breaking the rules.
Cigarette smoke tends to linger even if attempts have been made to cover it. In many cases tenants who smoke indoors will do their best to cover their tracks by using candles and strong air fresheners or plug-in diffusers to remove the stench. As we know, cigarette smoke tends to stick very well to clothes and furniture, and more often than not, you will be able to tell if smoking has been taking place in a room as it will be apparent on curtains, carpets, furniture and bedding. What’s more, cigarette stains can be left on walls, curtains and lamps. The stains will generally be yellow or brown and may only be very small but still could be signs of smoking. Smoke stains will generally show up on wallpaper or paintwork, even if the walls have recently been repainted. Nicotine eventually sweats through even the toughest sort of paint – and attempts to cover stains will generally fail in the long-term. There may be evidence of ash trays, or other items being used as ash trays like mugs, bowls and plates – which you may also spot during a routine inspection. Cigarette burns on carpets and furniture are also impossible to disguise, and if drastic efforts have been made to keep certain parts of the property out of view this should be taken as suspicious.
In other words, if smoking has been taking place in a house, it should be fairly apparent, even if drastic steps have been taken to disguise it. If you know the tell-tale signs to look for, then you should be able to work out for sure if smoking has been taking place indoors. In some cases, if you confront tenants about this, they may admit it. In other cases, they may deny it, but flying off the handle wildly accusing them of smoking is not the best approach, especially if your suspicions have no proof. It needs to be made clear to tenants what is stated in the tenancy agreement so there is no confusion or crossed wires. Some tenants may simply be unaware of the rules regarding smoking, and you will need to make this clear to them. Where damage has been caused, and repairs are needed, you must make it clear to tenants that they’ve signed a tenancy agreement which states that smoking was not allowed in the rental property; as a result, their deposit will have to be used to offset any damage caused.
As a landlord, there isn’t a great deal you can do to prevent tenants from breaking the rules when it comes to smoking. In the vast majority of cases tenants will adhere to the tenancy agreement, but a small minority may break the rules.
Please email the office if you have a lettings question that we might be able to help you with.
Richard Bond
Lettings Manager
Sow & Reap
