There was a deal lined up which was exceptional, on paper at least. A flat in Bounds Green, literally a few minutes from the station. Worth about £350K with a lease extension, which would cost about £25K.
We were picking up the deal for £200K. It was an obvious deal, nothing really complicated about it at first glance. It was at the bottom end of the property pyramid. Yes, £350K for a property in London is classified as nearly scraping the floor. You would be hard pressed to find boroughs in London where the average property price is below £300K. At this price range, the demand comes from more of a need for shelter, rather than those looking for an investment and speculating.
The kicker in this deal is we could have exchanged for £1 and had a delayed completion of six months. Enough time to negotiate the lease and resell the apartment back on. However, the circumstances surrounding the deal were very precarious. The deal was a probate. Probate had been granted overseas and converted so it could be exercised in the UK. The claimant was an overseas person, and she was in a position to sell the property here. However, it transpired there was a parallel will floating around, and the other party was of the intention to also put a claim on the property. If this was done between exchange and completion it would have scuppered the deal, as we would not be in a position to resell the contract.
Hence the reason to exchange with £1, and that too in a separate company which we could simply close down and forget about the property, should any issues come to surface. IF we did manage to sell the property on and a claim did arise, it could put us as sellers at risk, since we had knowledge of the situation. We were told in order to secure our position we should put a tenant in the property immediately from the date of exchange, as the saying goes, possession is nine-tenths of the law. The potential upside in comparison to what we had to put in, and the structure, seemed like this was a great deal to be in. However, once you enter any legal issues, costs mount up and it takes a lot of time and energy, irrespective of whether you are correct or not.
Perhaps five years ago I would have jumped into this deal, without a second thought. However, having more experience under my belt, I have learned that it’s very easy to enter a deal, but when things don’t go to plan it can be tough to exit.
Agony Agent is here to help!
Q: Is it necessary for me to get an electricity certificate for my BTL property?
A: Yes. Your electrics should always be covered by an in date Electrical Inspection Condition Report (EICR). It is not a legal requirement to have one, however, if you rent out a property and your tenant is electrocuted due to unsafe electrics then you could be prosecuted.
Claiming that you were unaware of the condition of the electrics will not be a valid defence by the way. In many areas, the local council will insist on a Condition Report for licencing rental properties such as HMOs. Having an EICR is great practice to have done at the start of any purchase or refurb, as this should show up any hidden dangers! I was asked to let a property, which had undergone a quick mini refurb, the owner had not arranged for an EICR. The property looked very nice, but for some reason the kitchen had not been touched and was very outdated. The property wasn’t letting due to the kitchen, so it was decided that the kitchen should be replaced. It was only when we did this did we notice a series of electrical death traps hidden within the walls.
A check at the start would have saved some costly work. You should also check your insurance, as many landlord’s insurances will require an electrical report or a visual report at the very least.
Do get in touch if you need any property management assistance.
THE POWER OF GOOD DECISION-MAKING
In the 15th century, Portugal was the first European state to start traversing the world building the first of several European empires which vastly enriched this continent. The Portuguese arrived at this table of riches before the Spanish, before the French, before the Dutch and before the British.
When Christopher Columbus sought funding for the voyage that discovered the entire Americas, he first approached King John of Portugal. King John turned him down. Columbus did sail. His voyage was funded by the Spanish monarchy. His discoveries led to an enormously wealth laden Spanish empire. As soon as his voyage had completed triumphantly King John realised his massive mistake.
The Spanish empire soon eclipsed the Portuguese. The fate of a nation, like that of an individual, can be determined by a single decision. This is the nature of life. It is our responsibility not only to try to make the right decision, but to be conscious enough to recognise the significance of the decision that is in front of us before making it. An empire may depend on it.