Time to sow again

Tuesday 13th June 2017 18:51 EDT
 
 

A couple of weeks ago I went to see an elderly couple who had the fearlessness to invest in a BTL property a few years back.

They originally came to see me about a year before they purchased, expressing their intention to purchase something. Good to their word, they followed through; even though they are at a ripe old age, both retired and had never invested into a BTL property. They had the realisation that property investment was the direction to go in. This decision was taken for several reasons, namely to preserve wealth, and to make money in a safe and long term manner. The ultimate aim was to ensure their next generation do not have to scrimp and save as they had done; often this is the biggest factor amongst Asians for investing in property.

They agreed to purchase a property in St. John’s Wood, NW1. It was an ex council flat, and was the ‘penthouse’ of the block. It was on the sixth floor of a purpose built building and consisted of 773 sq. ft. The apartment also had a balcony which stretched across the whole length of the flat, giving views across St. John’s Wood; only seconds away from Regent’s Park, and minutes from St. John’s Wood station.

The couple agreed to purchase the property blind, i.e. without seeing it. The purchase was done back in November 2013, at a purchase price of £585k.

Ex council flats in central London are great long term holds for two reasons: One, the lease tends to be long, and when an extension is required the cost is usually very reasonable. Secondly, the service charges tend to be low. We have just closed a deal for a two bedroom ex council in Westminster, for £375k, where the service charge is only £600 per annum and this includes building’s insurance.

After three and a half years the value of this couple’s property is now £850k. A massive uplift of £300k. The return on cash is even more impressive. £200k was invested back in 2013 and it has more than doubled over a few years. And it is worth bearing in mind we are currently in a low point in the market. This property also generates a cash positive of £1,200 per month after paying the monthly mortgage. This gives the family a valuable income and also means the money invested is yielding 7%. The capital growth is in addition to the strong monthly return.

Having completed the deal, and experienced the strong returns, they have decided to take the plunge again, and reinvest. A good time to do so.

There is a one bedroom flat in Notting Hill which would suit them. It’s in the prime part of Notting Hill, opposite Kensington Palace Gardens, in a cul-de-sac.

The property is a probate deal, it will come with a 999 year lease on completion.  It requires some light modernisation.  We are hoping to get it for around £530k; after the programme of works, I’m confident the property will value at £650k.  In a few years I expect this property to have risen in a similar way to the previous deal in St. John’s wood.

Agony Agent

Each week, we answer a reader’s rental property question, from first-time landlords to experienced owners. Agony Agent, is here to help!

Q: I want to gain access to my property to carry out repairs, how do I do this?

A: You need to know in what circumstances you can obtain access to a tenanted property that you own. Legally, when you grant a tenancy you give the tenant exclusive possession i.e. the right to exclude the world, including you and your agent. Entry without the tenant's permission, unless you have the right to do so, is a trespass and the tenant could take action to claim damages or an injunction to prevent entry by the you or your agent. Access can be permitted in one of two ways, either by a provision in the tenancy agreement or where the law grants right of access. Access will normally only be needed to carry out repairs, or to inspect the property to see whether repairs or other works are needed.

The tenant can always give permission to you or your workmen to enter. This permission must not be assumed. There can be arguments to whether permission has or has not been given. If you are going to rely on permission make sure that the tenant fully understands why you need to go in to the property. Even if the tenant appears to have given permission to enter, the permission may not be valid at all if you have misled the tenant as to why you want to go in or if you have not informed the tenant about the reasons for access. For extensive works, if you are going to rely on the tenants permission then make sure you get it confirmed in writing by the tenant, for example, via email or text, something that has a time and date stamp.

Remember there is a difference between repairs and improvements and unless your wording in your tenancy agreement covers both then your tenant can refuse you access.

Please make sure that the below clauses are included in your tenancy agreement, as this will allow ease of access:

l Section 11 of the Landlord & Tenant Act 1985

This allows access to carry our repairs on at least 24 hours' notice. It also permits access to carry out inspections to see if repairs are needed again on at least 24 hours' notice.

l Housing Act 1988

This term should be in all tenancy agreements, requesting tenants to give reasonable access to allow repairs to be carried out at the property. Again 24 hour written notice is required.

It should also be remembered that unless access is legally authorised then allegations of harassment on the part of you or your agent may arise. Feel free to give me a call if you need assistance.


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