House prices and Labour

This will never pass Parliament however I think that its a generally good policy, I am assuming that the Daily Mail is doing what it normally does.

 

https://www.dailymail.co.uk/news/article-7202337/Labour-planning-introduce-draconian-new-restrictions-buy-let-property-owners.html

Johnson said on sky he will eliminate stamp duty on property beneath 500k

Aren't the tories already doing most of that? I thought mortgage interest deductions are being phased out and no-fault evictions are being scrapped.

I'm not sure I agree with getting rid of the right to sell though. 

I am starting to think that he is a genius.

Finding money for that and more cash for health, housing, roads and defence at the same time as lowering income tax.

You’ve got to be super smart to do all of those.

Sorry are the talking about the buy to let frenzy that ended up a couple of years ago?  Majority of my work has gone from buy to let stuff to owner occupiers and sales by executors.  All the most recent statistics show buy to let investors selling up as well.

Still doesn't address the basic issue of a lack of supply and London's low population density compared to other similar cities.

A new model appears to be popular now as landlords cannot deal with the various new regulations that have made renting out their properties.

company x leases the house from landlord for say three years. Said company pays the quoting rent upfront less a significant discount for accelerated payment. Company x manages said property and essentially become the new landlord and makes money from the difference between what they paid the owner and that which they charge the tenant. Owner has a guaranteed yield , no paperwork work to do, no void period and money in the bank.

i would be worried what would happen if the owner stops paying the mortgage.

That's not a new model.  I dealt with a loan secured against a portfolio let on this basis several years ago.  If the owner stops paying the mortgage the bank sells the property with the lease to the rental company and the occupational tenancy in existence unless there's a break in the corporate lease.

It’s not new, no, I’ve been using it for over ten years on a particular house but I am sure it’s becoming much more popular.   

The headline is utterly misleading. 

This isn't Labour party policy. 

It is a suggestion made in a report written by 4 party members with policy suggestions. It has no more standing than a think tank pamphlet.

Ah ok sails. I very recently looked at a flat, and the particulars described the advertiser as being the agent, and on viewings they confirmed they were the agent. They then told me the flat was let on a licence to occupy as opposed to an AST. I told them in no uncertain terms it was no such thing ( see schedule 1of the housing Act) and there solicitors have given them duff advice. I suspect it is a ruse to evict late paying tenants without serving the necessary notices and obtaining a court order.

they then agreed to let it on an AST basis and when I got the draft agreement it showed them (built asset) as the landlord. I then pulled them on this, and they reluctantly confirmed they had leased the building from the owner and they were the landlord.

when I asked why there was no deposit they said it’s a 5 month agreement and we take two months rent upfront, and the last months rent is not payable. Again to get round the tenancy deposit scheme. Still in this case that means they have taken mire than 6 weeks rent in advance which is illegal under the tenants fees act .

teclis , how much in monthly terms do they pay you upfront . I imagine on a 3 year lease they pay a year up front at half the market rent?

And I imagine getting consent from your mortgage company to enter in to an arrangement of this kind would be impossible?

another time an identical company refused to give me their landline number ,nor did they have an office address, when I pressed them they told me they didn’t want me as a tenant in their flat 

It’s a government department so I have to work within their budgeting systems therefore it’s 5 year lease payable in six monthly chunks up front at 65% market rate.  Plays havoc for my accountant heh.

There’s no mortgage on that particular property, it feeds everything else though. 

(The plan was if I was going to continue expanding my little empire I was going to use equity on that one to cover a couple of new purchases but I decided against it as I’m comfortable enough financially and really can’t be arsed anymore, cheap money won’t last for ever anyway so nice safety net).

Ah ok fair does. So a nice margin for the company leasing the building. Another worry if I were the owner is assuming there is at least a 6 month notice of termination required by either party to terminate the lease what if the company doesn’t pay you during the notice period and just pickets all the rent accruing a 100% profit. People with mortgages to pay would be stuffed

Ebit it doesn't operate the way you think and there's no up front rent payment.  What the company does is pay below market rent to the landlord for a number of years and the company takes the risk on being able to let the flat for more and keep the difference.  Reasonably easy to mortgage as there is certainty of income for say 5 years rather than a risk of a void every time the AST comes to an end so the bank has comfort that loan payments will be made in time.

In your case if you had been dealing with a short lets operator then quite feasible that the place was let on a licence not covered by the Housing Act.

Ebit that's exactly the same scenario as where a commercial tenant stops paying the rent and the remedy is forfeiture and a claim for breach of contract.  You might want to do a little bit more reading about the property world if you're planning to dabble in investing.

Err sails see what tec said he gets 6 months rent upfront at two thirds the market rent..

an AST can be for a week. This was a 5 month agreement which could be renewed. A licence to occupy can only ever be granted if the landlord resides in the same property at the time you took occupancy. Otherwise an AST will always been deemed to have been granted. Given the landlord in this case was built asset management I told them the property regardless of what they say , a AST will have been granted. There lawyer must be awful, this is basic stuff 

In my case, it’s used as free accommodation for staff who are being relocated to a large facility, to give them time to find their own property.  I presume they get given it for six months after taking the job move, so no rent is being paid.

The mathematics of it are that I’m getting a five year guaranteed income of a bit less than market rate but I don’t need to mess about with finding new tenants every year or so, no gaps so no wasted money.  It actually works out about the same but is entirely predictable. 

I lose a bit of rent in exchange for not having to deal with anything for five years, no marketing, no piddling about with agents etc.

And they agreed they would let the property on an AST basis in the end , so my analysis of the legislation was correct and that which their lawyers gave them was duff. They apparently have 150 properties. I doubt their lawyers told them that , it’s just they don’t want to incur the expense of obtaining court orders to get late paying tenants out or even if they just think they can find someone to pay more than the current tenants in situ 

Tec I can see the attraction in your case.would you be so content to deal with the ever growing proliferation of these new companies doing it, who have little track record and file exempt accounts.

as I said one company reused me their landline number or office address...

Which part of “it’s a government department and I only do it with one property” can I communicate better to you?

As Tec said he's on a government scheme rather than a commercial arrangement.  All the commercial ones work as I've said so a fixed rent is paid monthly and commercial tenant takes the risk of being able to keep the property let for more.

Did you not just use Companies House for the office address?

Yeah I did, but it’s obvious that I wouldn’t do anything like this with some two bit company that just wanted to take profit out of my house cheers.  I have no idea why you’d think I wouldn’t behave in my own interests, no one in their right mind would lease on those terms as it sounds like they wouldn’t pass even the most basic of corporate credit checks anyway!

Sails I did check on companies house , but it appears the business was unincorporated. So many of these companies advertise as being the agent but when you get the draft AST you see they are the landlord.

besides the registered office is just a name plate upon which you can serve documents, I wanted their trading address which they declined to give me 

I spent years renting with AST's that named the letting agent as the landlord rather than the actual landlord.  Excellent from my point view as arguably not worth the paper their written on.

Clearly you came across the shifty mob as there are plenty of legitimate operators doing similar.

This intermediate landlord thing is happening a lot in Dublin as well.  Given the details of the law and the mortgage market are quite different there I think that’s because it makes economic sense.  

Looking at history, it is obvious that this system of intermediate landlords has existed in many countries at many times.