This morning we are due to be exchanging on two freehold properties in NW1, the properties externally are two houses, but internally they have been converted into three flats.
There has been another buyer snooping around the deal at a higher price than us. Only yesterday evening our lawyer was told by the seller’s lawyers to withdraw from the deal as they had been instructed to proceed with another party.
Luckily after several calls late last night the deal was kept intact, and the go ahead was given to exchange this morning. It’s helpful our lawyer is an early bird, who rises early, does some work, and then goes off to the gym for his morning workout. He lined everything up first, and then called us to report all the ducks were lined up ready for exchange.
The property had a few complications, of which the buyers were aware. For example, the work which was authorised by the council was not what was actually done. There had been some deviations from the proposed works.
It was important to firstly nail exactly what was done, and then decide the impact, if any, on the property, particularly from a lending and resale perspective. This was a concern as the property was Grade 2 listed, going back to the year 1825.
It transpired the change in works were immaterial, one was the removal of a plasterboard wall, and the other was a door which was not supposed to be there. Neither of which made any difference. This was further validated by a planning consultant, just to make sure. A survey was also conducted on the property, we managed to get it arranged on Friday eve, for it to take place first thing Monday morning and arranged the instruction so that we would be sent a summary email later on in the day. All of which occurred like clockwork.
The property was purchased blind by the investors, therefore they were reliant upon the report by the surveyors, planner and the lawyers.
This property will benefit from the multiple dwelling relief which many lawyers are blissfully unaware of. This will save a few hundred thousand off the stamp duty.
The property is actually not suited for rental, it was designed for an end user to purchase. What I mean by this is the reception is grand, and the bedrooms are not of similar sizes. For rentals more space of the property should be dedicated to the bedrooms, and they should ideally be of equivalent sizes. Many tenants in central London want to rent by sharing the property with someone else, this makes living in London more affordable.
Whilst writing this article the call has come that we have exchanged on this deal! This means more work not less, as we need to ensure it is funded and rented before Christmas.
Cut expenses, don’t cut corners!
A story that has caught my eye recently is about a landlord that acted before he thought things through. As most of you may know the only way to remove a tenant is via notice or eviction, this can be a lengthy process but for those that like to ignore the law like the Wembley landlord who illegally evicted tenants from his property, it is important to note that any other way can have dire consequences. This particular landlord has been sentenced to four months' imprisonment and ordered to pay costs of £20,000! Illegally evicting six tenants from his Wembley property cost him £9,000 in costs and £11,000 in compensation.
This landlord owned eight properties in Brent, he was prosecuted by Brent Council for his unlawful eviction of six tenants, as well as for his failure to have a House of Multiple Occupancy (HMO) licence, and for the poor conditions in the house discovered by Brent enforcement officers during an unannounced visit in January 2016.
You may not know that most councils require a licence to be a landlord, even if you let to one person or a group. The rules vary depending on how many people that you have in your investment but if you do not obtain permission you may find that you have a surprise visit from the council.
The court heard that, although the landlord was receiving £3,500 per month in rent, the property was in a state of disrepair with the front of the house being used to dump rubbish. When tenants of the property started to complain to the landlord about the condition of the property, he fraudulently told the courts that the tenants were squatters and unknown to him, and issued a claim to evict them.
He then obtained a possession order from the court and used it to evict the tenants in February 2016, giving all the tenants - including one with two young children – just two hours to move out, refusing requests to wait until children had returned from school. He assaulted one of them in the process, a crime for which he was convicted in May 2016.
This goes to show that trying to do things quickly and cut corners can come back with a vengeance. You need to make sure that from start to finish every action that you take with your investment and tenants is the right one! If you are unsure if your investment falls into an area where a licence is needed, need advice on what works are needed or just need free independent advice about your property investment or current tenants then feel free to call me.
