This week we are looking to close a flat in Notting Hill. The property is run down; it seems as if it was rented, and allowed to degenerate. Perhaps this says something about the landlord, it could be inferred the owner is strapped for cash and unable to spend even a moderate amount to keep the property in good shape.
This reflects on the amount of rent you can attract, and perhaps more importantly, the quality of tenant you will get in your property. This in turn has a bearing on how they will treat the property. That’s not to say you keep this standard for every property. If you give out peanuts you get monkeys. If monkeys are what you want to attract, there’s no issue in giving out the peanuts in the first place.
One landlord, who was not using our management service, recently got his Wembley property back in a dilapidated state. It was hard to imagine how a property could get like this whilst people were living in it. The property requires about £15k to £20k work. A deposit of one month had been taken, however, that would hardly make a dent in the works required.
This is a common problem in places like Harrow and Wembley, as houses are often rented supposedly by one party and then sublet on a room by room basis. At times, with as many as four people in a room, effectively using it as a slum hotel. The property then comes back in an incredibly poor state. It may have actually been more profitable to have kept the property empty for the year. In effect, what is happening is the party renting the property is taking money from the landlord’s pocket, and putting it in his own.
Several quotes were taken for the property. Dismayed at the amount it was going to cost, the landlord attempted to rent the property as it is… Lo and behold, he got two offers; one for £1,700 and one for £2,000. This time there was no concern regarding the condition the property will be given back in, as it could not be much worse than what was given out.
However, the property in question, in Notting hill; is not of this calibre. It should have been decorated to a certain standard, even £20k spent effectively, and well, would have delivered the desired result. The property is worth close to £1m.
It seems this vendor is strapped for cash, this is the vibe you get from the property. He has just had a sale fall through, and is anxious to get the deal done with someone else as soon as possible.
There are a number of angles to this deal. The overriding one is not actually to do with price. If the deal can be acquired under-priced, all well and good. But I see development potential with this property. It has the potential for at least one if not two extra floors. This is the driving force of the deal.
Also, much comes down to not just the price, but also to the structure. What I mean is, it is not only the price which can be played with, but the timing between the exchange and the completion.
This is a deal, which in a stronger market would be long gone. The deal has discount as well as development potential. It can be closed at circa £900k. Get in touch now, if you are interested.
Agony Agent is here to help
This week, rather than replying to a question, I thought I would write about a situation that occurred recently. Last month, we had a leak from one of our landlords’ apartments into the apartment below. Now, the leak was stopped and repaired within 24 hours, however, there was damage done to the apartment below. In such a scenario, we/landlord would make a claim on the contents insurance and all would be well. This owner, however, does not have this in place! This will make it a long and lengthy battle with the owners of the apartment below, and their insurance company, and will be very costly for our landlord who will have to fund the repairs.
This is not a unique case, but a very common one. We all have to cover a car, pet, home or holiday but choosing insurance can be a tricky minefield involving endless small print and differences between what policies do and do not cover. For landlords, the right home insurance cover is vital, but it is easy to get it wrong and doing so can be costly.
Let me tell you another story of a landlord who rented out their home to tenants while they were overseas. They returned to find their house, and all its contents, completely trashed. The tenants had stripped the property of the furniture and other fittings and there was extensive water damage to the walls, ceilings and floors, caused by extremely high heat and humidity levels; indicating the tenants had likely been growing cannabis in the house. Now, if this was not bad enough the couple mistakenly thought their home insurance policy – which was sold to them as suitable for a tenanted property - would cover them for the £100,000 worth of damage incurred. But, when they tried to claim their insurer refused to pay out, pointing to small print in the policy stating that it did not include cover for malicious damage or theft caused by people lawfully in the home. The cover was for theft and damage following a break in.
Although it may seem common sense to assume that an insurance policy for a rented property will provide cover for damage caused by tenants, when it comes to insurance one should never assume anything. Every detail should be checked so you have a thorough understanding of exactly what you are and are not covered for. Sadly these landlords will have to pay the price for having the wrong or no insurance. Too many landlords inadequately insure their property, some mistakenly believing that a standard home insurance policy will cover them.
Like everything in life, it is always best to be over protected than under. At Sow & Reap we can tailor a service to your needs. Please get in touch if you would like any help.
Richard Bond
Lettings Manager
Sow & Reap
