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worried1

Regulated Tenancies

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I have been used to seeing flats and houses going to auction 'subject to a regulated tenancy' where it has to be let out at a rent way below the market rate.

I thought that this had been phased out years ago, but then I came across this:

http://www.auction.co.uk/residential/LotDe...amp;S=C&O=A

This one was assigned in October 2008 to a tenant at a rent of around half what it would get on the open market.

Great news for the tenant, but why would someone want to invest in this? A studio flat like this might have been £165k at peak, and would get perhaps £110-£115k now. That is a return of under 7% even if the flat had a normal rent of £650 per month, half that in this case.

For it to make any sense at all as an investment, it would have to sell for below £60k, otherwise the potential investor may as well go and buy a 'normal' studio via an EA?

Is there an incentive from the LA that encourages people to grant these regulated tenancies?

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I have been used to seeing flats and houses going to auction 'subject to a regulated tenancy' where it has to be let out at a rent way below the market rate.

I thought that this had been phased out years ago, but then I came across this:

http://www.auction.co.uk/residential/LotDe...amp;S=C&O=A

This one was assigned in October 2008 to a tenant at a rent of around half what it would get on the open market.

Great news for the tenant, but why would someone want to invest in this? A studio flat like this might have been £165k at peak, and would get perhaps £110-£115k now. That is a return of under 7% even if the flat had a normal rent of £650 per month, half that in this case.

For it to make any sense at all as an investment, it would have to sell for below £60k, otherwise the potential investor may as well go and buy a 'normal' studio via an EA?

Is there an incentive from the LA that encourages people to grant these regulated tenancies?

Buying regulated tenancies can be quite good business especially in the downturn..... they are much cheaper than the properties worth without the regulated tenancy, some landlords do it and buy the tenants out, others just wait for them to die, and in a recession of course if they can't pay the rent then the tenancy ends and they get the property. often these things are houses split into flats on one title and the gais down the line can be quite large..... but you need to knwo what you are doing, bit like buying freeholds to large buildings.

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Buying regulated tenancies can be quite good business especially in the downturn..... they are much cheaper than the properties worth without the regulated tenancy, some landlords do it and buy the tenants out, others just wait for them to die, and in a recession of course if they can't pay the rent then the tenancy ends and they get the property. often these things are houses split into flats on one title and the gais down the line can be quite large..... but you need to knwo what you are doing, bit like buying freeholds to large buildings.

It will be interesting to see what it sells for. Allsop's guide prices have tended to be low in past auctions I have looked at (e.g. 2 bed flat guide £125k, sold £225k last month), but if this goes for near £85k it will be ridiculous.

Any idea how you get into one of these tenancies? If I could find a nice 3 bed house for a fixed £900 per month I could stop worrying thinking about house prices altogether!

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It will be interesting to see what it sells for. Allsop's guide prices have tended to be low in past auctions I have looked at (e.g. 2 bed flat guide £125k, sold £225k last month), but if this goes for near £85k it will be ridiculous.

Any idea how you get into one of these tenancies? If I could find a nice 3 bed house for a fixed £900 per month I could stop worrying thinking about house prices altogether!

While I don't think its illegal to offer a regulated tenancy, landlords don't do it for obvious reasons.

The price they go for normally depends on who the tenant is ... if she's a 95 year old granny then it'll go for roughly what it would have done without the tenancy, if its occupied by a married mother with 3 children then it'll look very cheap.

I'm not an expert on this but believe each case will be different and none will give you a real steer on prices unless you knwo the bcakground to the tenancy

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It will be interesting to see what it sells for. Allsop's guide prices have tended to be low in past auctions I have looked at (e.g. 2 bed flat guide £125k, sold £225k last month), but if this goes for near £85k it will be ridiculous.

Any idea how you get into one of these tenancies? If I could find a nice 3 bed house for a fixed £900 per month I could stop worrying thinking about house prices altogether!

You can't "get into one of these tenancies". The only ones remaining date from pre 1988 (I think) so the same tenant has lived there since before the advent of ASTs etc, so still has the greater protection afforded under the pre-1988 law.

Many of these remaining tenants are now pretty elderly, so buying a flat with a sitting tenant like this is a gamble - you pay loads less than the current open market value, and hope the old biddy dies or moves soon, allowing you to make a quick profit.

If you were evil, you would buy such a flat very cheap, then pop round and find someone who's got swine flu, catch it yourself, THEN pay a visit to your new elderly tenant and ......... mwahahahahaha...

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You can't "get into one of these tenancies". The only ones remaining date from pre 1988 (I think) so the same tenant has lived there since before the advent of ASTs etc, so still has the greater protection afforded under the pre-1988 law.

That is what I thought, but this one clearly says that it was only granted in 2008.

It is amazing how many of these come up at auction. I only know one person who has such a tenancy - he is about 50 and pays £400 per month for a flat that would probably be worth three times that if rented without the regulation. I certainly hope the landlord bought that one cheap!

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my colleague's mother has rented the same flat in brighton since the early 1960s [from the same family] and has one of these. both the current LL and anyone else who bought the flat are stuck with her as a protected tenant. she's in her mid to late 70s and reasonably fit so, i'd imagine, will be in there for a while yet.

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my colleague's mother has rented the same flat in brighton since the early 1960s [from the same family] and has one of these. both the current LL and anyone else who bought the flat are stuck with her as a protected tenant. she's in her mid to late 70s and reasonably fit so, i'd imagine, will be in there for a while yet.

SWINE FLU!

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That is what I thought, but this one clearly says that it was only granted in 2008.

I think 6th October 2008 was the date on which the present rent was officially registered (with Rent Officer or whatever) rather than the commencement of the tenancy itself.

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