Currently, we are engaged with a few sellers’ lawyers with regards to purchasing some properties; we are going through a few contacts. We are planning to drop the prices on some of them just prior to exchange. Why? Well the one reason everyone is using is the one beginning with B. Actually, truth be told, we’re just jumping on the bandwagon. We have confidence in the London market. It’s resilience and ability to bounce back has proved itself time and time again; after all it’s a 500-year-old property market.
Of course, this is not the whole of the market. Like any market it’s made up of sectors. People often forget there is a fundamental housing need which is not being fulfilled; and will not be fulfilled in the foreseeable future. Instead they get caught up in speculation. If you concentrate on investing with the fundamentals in mind you will unlikely go wrong. The lack of confidence exists mostly in the minds and psyches of the populace, and not in fundamental reality. So, we believe in the London property market. Our clients are still buying. It helps most if the others do not. Therefore, this can be used to negotiate a price drop.
There is an art to doing this. It cannot be prescriptive. Each situation is unique and needs to be looked at individually. To look for the weakest link in the deal and press it. Generally, our approach has been from the outset that the deal needs to make sense, and worse comes to worse, we’re happy to purchase at the price we agreed. A further drop would just be a cherry on the pie, and market sentiment is currently on our side.
Once the deal has been agreed, money starts to be spent, both on the lawyers and the valuers. Therefore, it’s important it doesn’t get spent in vain. A price drop needs to be thought out and justified. During the conveyancing process things will come out of the wood work. Typically, for flats it will be management information, particularly relating to service charges. Agents are notoriously bad at investigating and disclosing this information upfront. Therefore, it only comes out after an offer has been agreed and money has been spent.
As this information comes out, it can be used to negotiate the price down. It is best to do this at the point of exchange. When money is in the lawyer’s client account and s/he has their finger on the button. If the seller knows the deal will be done in the next few hours this could sway the decision. After all, a bird in hand is worth two in the bush. Generally speaking, it’s worth getting the agent on your side. Particularly if the seller lives in the country or abroad he may be reliant on the agent for all his decisions. In such cases, getting the agent on your side is the equivalent of
having the seller on your side as well.
Technically, the agent acts for who they get paid by, in this case the seller. The trigger point for them to get paid is getting the deal done. Therefore, they will do what’s necessary to get the deal done and be paid ASAP. There are a host of other factors which can be used. We will explore them in the next article. Do get in touch if you would like us to source investment property for you.
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Q: What responsibilities does a guarantor have as far as my tenants are concerned?
A: A guarantor will more than likely be a close friend or family member. So, to start with they will have a personal interest in the people in the property, along with any financial implications within their role as guarantor.
A guarantor would be responsible for any and all short comings or non-payments with the rent and
damages to the property. So, if your tenants fail to pay, you are fully within your rights to approach the guarantor and furthermore take legal action against them. Now, when they signed the tenancy agreement, or a Guarantor Indemnity, there should have been wording to cover that either the guarantor guarantees the rent proportion for the tenant that s/he is acting for; or the guarantor will guarantee the total rental. The wording is a little more detailed than that, but the nuts and bolts are simply one person’s rent share or the complete rent share.
Should you be renting your property out to students, I would recommend one guarantor per student. To reiterate, the guarantor has agreed to accept the liabilities on behalf of the tenant/s. Basically, in the event of a tenant being unable to meet their obligations under the Tenancy Agreement, if it is for overdue rent, damage to the property or whatever, the guarantor is legally bound to accept the liabilities on behalf of the tenant. To ensure this is enforceable, MAKE SURE you have the correct wording in place at the start.
If you need any other lettings guidance, please do get in touch.
Richard Bond
