I went to see a property in Ealing, it is a probate which had been nobly left to a university. It is in a prime location and is a large lump. There are obvious signs of subsidence, this is normally covered by a policy which covers the whole building. Therefore, as long as this is in place, and there is nothing which will breach the insurance, this should not be an issue. How the lender’s valuer will see and interpret this issue is a different question.
The lease is quite short and there is a question about the cost of extension. But more than this, is that there is a big question mark regarding whether the incoming buyer has the right to extend in the first place. The agent wasn’t able to caste any light on these issues. And instead is pushing for an offer. However, you do not know what you’re buying. On one hand, it may be a property which
has an uninsured subsidence issue with a short lease which no one will fund. On the other hand, it could be that a claim has been filed and the lease can be extended.
From an investment point of view, these are two very different investments. One would trap your investment, about £700K in the property for at least two years, maybe more. The other would only require an injection of £175K, with a probability of it being released in a year. So, depending on the answers in regards to subsidence and the lease extension, the proposition changes completely. The selling agent, however, has a different agenda. They see only the property, and want it sold ASAP. They see nothing else. Like most people, they are motivated by self-interest.
The property consists of 1,400 sq. ft. and is in good decorative order, surprising considering it’s a probate. Although, it would benefit from a touch up. Often, such issues require deeper investigation; the likes of which are beyond the scope of the agent. Therefore, in this situation, it would be better to pull in the contract, understand the product more, and then revise the offer accordingly. There may be other things which might come out of the woodwork once we get the contracts and dig further into the deal.
So, it may be better to agree the deal at an acceptable level; and then reduce the offer as more information comes to light. It’s a reasonable and probably the only way to do this deal. This may mean you end up with just a legal bill and no property; but that’s the risk you take. Waiting to obtain the information up front has a risk, all the information will be publicly available, and until the information comes to light you run the risk of someone else pulling the contract in.
It’s better to take control of the contract and to keep the agent on your side. The real negotiation takes place when you’re ready to exchange; when the trigger is about to be pulled.
Agony Agent is here to help!
Q: Am I allowed to short let my BTL?
A: First, check if your mortgage terms will allow you to short let the property, some will not, others
may only allow it for a short period of time i.e. one month.
Second, check your lease, as the majority of leases will not allow you to sublet or short let; or there may be a clause within the lease that says you must seek consent in order to do this.
Another point you need to be aware of, even if you do have consent from your mortgage provider and the freeholder, is that there is an actual law that governs how long you can short let your property for, before you have to apply for change of use from residential home to guesthouse.
A property can be short let for a total of 90 nights in any 12 month period. For example, if you rent
your property out for 1 month in January, 1 month in March and then another month in October, you then cannot let out your property until January the following year.
The council takes any breach very seriously. For example, if a neighbour reports just a suspicion to
the council, the council will investigate.
If you need any other lettings guidance, please do get in touch.