Last week I wrote about a deal we were expecting to close. This duly exchanged yesterday, albeit at a higher price than we were anticipating to purchase it at. The client in this case took it upon himself to go to the auction and bid. Dangerous, as I know from previous experience that he doesn’t let deals go, irrespective of how high the price goes. This is the equivalent of letting a person with a gambling addiction into a casino.
There should be an injunction placed on such people. But go he did, and a fellow bidder helped to drive the price up, to £705K. Way above what I would have wanted my client to pay. There are many unknowns with the property, as there have been no internal viewings allowed due to the unsafe works carried out in the property. My local investigations revealed that the previous owner decided to work on the property without taking permissions, e.g. scaffolding went up illegally, and was taken down in three days due to action from the council. He also managed to annoy all the neighbours in the process with various other bits of work.
This means any work we do we will need to be extra mindful of the neighbours’ sentiments. The property is in a conservation area, where judging from first sight there are restrictions from doing any kind of extensions. This is apparent from looking at the street, no one has done any work. If it was allowed, the owners would have extended their properties. This is good in one sense, as it preserves the character of the area. This street is a quaint street which leads up to the prestigious Harrow Boys School. The aim for this property is to utilise the concessions around the regulations for HMOs and focus on yield. Basically, turn this into a cash cow and hold the asset. This is the plan, we will see how it transpires once we start the project.
We have just closed another smaller deal. This one is interesting. The property is very close to a station, only a couple of minutes away. In line with the stream of deals we have been doing, it is a probate deal, where the grant of probate was granted in a British Colony, and then was transferred over to the UK.
We have knowledge that despite the grant of probate, there are other parties who wish to put a claim on the asset. For this reason the deal has had to be structured in a way which provides some measure of safety. The property will be exchanged for only £1 and completed in an SPV, Special Purpose Vehicle, set up for this purpose. This then can be folded, should the unforeseen happen between exchange and completion. This property is worth £325K. As this is towards the bottom end of the market we are confident of being able to sell this on quickly without too much of an issue. If not, its vicinity to the station will ensure it is never without a tenant.
Agony Agent is here to help!
Q: I have just found out that my tenant’s sister is staying with her. Does she need to be on the tenancy agreement as well?
A: This is a good question, and actually tends to be a common query that is raised when landlords happen to find out that their tenants have a guest, visiting family or a new partner. Simply answered, no, she does not need to be added to the tenancy agreement on the proviso that she is not staying longer than two weeks in any six month period (a term that should be reflected in your tenant’s agreement).
There are three ways that a tenant is perceived in a landlord’s mind. One, the tenant is the person named in the tenancy agreement; two, the tenant is the person paying the rent; or three, the tenant is the person that lives in the property. Whilst technically all are true this does not mean that you should just add the guest to the agreement. It all depends on the circumstances. Use your judgement, as it could be that they have a parent visiting them from the other side of the world, so no point adding them. However, a friend that is looking for a new flat and will be staying until they find one might be worth adding.
Written into the tenancy agreement, the tenant has a right of quiet enjoyment; guests are certainly part of that enjoyment and are allowed, but remember only for a limited time. I would recommend that you watch out for a few warning signs that may indicate your tenants’ guest is looking to stay longer: guests who pay rent, receive post at the property, spend every night at the property, moved in furniture and the best one is the guest is making maintenance requests.
Be mindful that there is a thin line between what a guest and a tenant are, and if you have already accepted rent from a guest, you might have initiated a landlord and tenant relationship. If so, your new tenant could claim to have the same rights as any other tenant, and will not be easy to remove as an unwanted guest. Such situations of guests becoming tenants can generally be avoided if you have an honest and open conversation with the current tenant, and simply just say that the guest is not to stay longer than two weeks, and if they are to stay longer then you want them added to the tenancy agreement. So, the guest would then have to agree to the terms, and you will have a legal record who is living there, along with a legal agreement.
If you are still finding yourself at a loss then please contact the office for some initial free impartial advice.