Jump to content
House Price Crash Forum
bazzzzzzz

Smug Btl Landlord In Guardian Today

Recommended Posts

http://www.guardian.co.uk/guardian_jobs_an...1561514,00.html

Saturday September 3, 2005

The Guardian

A long good buy to all the worries

In July last year we began charting the steps taken by novice buy-to-let investor Vanessa Whitting as she bought her first investment flat in Oxford for £155,000. One year on, was it a bargain or a hell-to-let hovel?

Saturday September 3, 2005

The Guardian

This was the last line of my last report from the frontiers of investment property, back in April. "The tenants have just confirmed that they want to sign on for another 12 months, despite problems with damp and mysterious shadows in the walls. Sparkling wine for everyone!"

The day after the article was published, the tenants informed me that there had been an error. When they said that they were happy to renew for another 12 months, they actually meant that they had decided to move to Spain in August and were giving notice.

Oops.

The property gods are a vengeful lot, I have learned. To celebrate even the smallest of victories is to attract their wrath in Old Testament fashion: famine, floods, white good malfunctions. So it is with no small amount of trepidation that I write of my recent run of apparent good fortune.

This is a tale of trends bucked, of expectations exceeded. It will be a miracle if I am not a pile of ash by the end of it.

Judging by the Jobs & Money postbag, most readers consider letting agents to be lying, thieving, lazy pond scum.

I feel exactly the same way about conveyancing solicitors, but my experience of using a letting agent to find tenants has been entirely positive.

The service has been professional, prompt, and if not exactly cheap, not insultingly expensive either (£400 plus VAT). For that, they advertise, vet the applicants, do a credit check, obtain references and the deposit, and move the tenants in. Before I am swamped by a tide of "are you insane?" letters, I must emphasise that I have never engaged one for a management service.

So I returned to the same agent to replace my forgetful tenants, and within three weeks they had a young couple who were interested.

I have a few rules about potential tenants: no smoking/pets/students/holes in the walls. I prefer Quaker accountants, but they seem to be quite rare in Oxford.

The agent said that their potential tenants were graduate students, he on a cushy fellowship from the US which would easily cover the rent, even with the increase that was due.

We met, and they seemed nice and quiet, if not technically Quakers, so I relaxed my rule about no students.

The following week, I was passing the estate agent's office who sold me the flat, so I stopped in to check on their view of its current value. In the year since I bought it, Oliver the agent has consistently told me it's gone up in value by about £5,000 - the fig leaf with which I have covered the shameful amount of money that so far I have lost on the investment.

Now that the national house price trend is officially retrograde, I expected that Oxford's perennially over-heated market might keep me level with his previous estimates.

So I was stunned when, after a few moments, Oliver quoted me a price of £15,000 more than I had paid. "How does that sound to you?" he asked, rather anxiously.

"Oh, about right," I said, trying hard not to whoop. (I'm getting the hang of this English understatement thing.)

This is not real money, of course, but it is a sign that buying the flat may be the first ever good investment of my life, and that all the hassle and worry that I went through to get it were worthwhile.

Whom the gods wish to destroy, they first give some equity. Sure enough, a brown envelope from the council arrived soon after. Everyone knows that good things never come in brown envelopes. Inside was a demand for £1,014 to cover the tax on the flat for the following year, and offered several ways for me to pay.

I chose the "not pay" option, and explained that new tenants were about to move in. However, there is a gap of five days when the flat will be empty. I am liable for the tax during that time, the council tax woman cheerfully informed me, amounting to £8.42. Hurrah! I have already saved £1,005.58!

Even better, is the announcement of an interest rate reduction, as welcome as the first drop of rain after a drought. If more follow between now and the end of the year, when the fixed rate on the flat's mortgage expires, it will leave less of a chasm to jump when I go into Standard Variable Hell.

However, it seems that all of the Nottingham Building Society's employees have gone on holiday at once.

It's the only explanation for why they have not yet passed on the rate cut, seeing as they pass on rate rises within hours of them being announced.

The outgoing tenants left the flat absolutely spotless. I wandered around, reminded of what a nice place it is, still looking shiny and new.

The settlement crack which dates from the original build in May 2004 is still there, although the builder has assured me several times that it will be fixed.

I am coming to realise that it will probably still be there, years from now, when I finally sell and extract my vast profit from the place.

The new tenants moved in smoothly, with help from the letting agent. The first month's rent arrived exactly on time.

Even now, I can hear the property gods stirring in their luxury penthouse with allocated parking and low fixed rate.

Share this post


Link to post
Share on other sites

I am coming to realise that it will probably still be there, years from now, when I finally sell and extract my vast profit from the place.

Oh Dear!!!

I do hope she means in 8 years when it should go back to positive equity

Share this post


Link to post
Share on other sites
So I was stunned when, after a few moments, Oliver quoted me a price of £15,000 more than I had paid. "How does that sound to you?" he asked, rather anxiously.

How.... Since April

Share this post


Link to post
Share on other sites
How.... Since April

Not quite sure why the letting agent bothered to tell her that her house had risen by a notional 15k. Could he sell it for her at that price? I doubt it.

Oxford I would have thought is a fairly robust letting market. A far more interesting blog would be from the multi-propertied BTLer who raised equity to build his portfolio of houses in the North of England. He is now obliged to take students and DSS tenants to pay the mortgages and cannot raise further cash as even the most optimistic valuer won't risk his future business by overvaluing now.

Think someone's "talking their own book" at the Grauniad.

Fox

Share this post


Link to post
Share on other sites
http://www.guardian.co.uk/guardian_jobs_an...1561514,00.html

Saturday September 3, 2005

The Guardian

the fig leaf with which I have covered the shameful amount of money that so far I have lost on the investment.

The most telling line from the whole article. She chooses not to dwell on this sore point, focusing on the good news!

How can she seriously believe that the flat has gone up £15,000 in a year?

Share this post


Link to post
Share on other sites

I have a few rules about potential tenants: no smoking/pets/students/holes in the walls. I prefer Quaker accountants, but they seem to be quite rare in Oxford.

Only the dead need apply.

What if a mad machine gunner broke into his flat, I suppose you could always pruduce the tenancy aggreement and say “Sorry you can’t fire that in here read this”

I wonder what holds up his electrical accessories?

Share this post


Link to post
Share on other sites

...and the property suffers from damp!!!!!!! :blink:

How much will that cost to remedy? Clearly not factored into her calculations.

A prime example of an amateur BTL landlord getting it very wrong.

Edited by Baz63

Share this post


Link to post
Share on other sites

The numbers are roughly

legal etc. costs £15k

rent income £10k

So she has £5k negative cashflow

There is a notional capital gain of £15k... according to an estate agent valuation. Giving a notional gain of £10k when the 5k is netted out.

...

there is no mention of what her deposit (if any was). If there was one, then loss of earnings from the deposit needs to be factored in to the balance.

Whatever the valuation... she is currently £5k out of pocket.

The main reason businesses fail (though its a symptom for a variety of underlying problems) is "cashflow" problems.

You need deep pockets to be starting out as a BTL landlord at the moment.

Share this post


Link to post
Share on other sites

You forget that house prices can rampantly rise again - £5K down is PEANUTS.

DONT YOU KNOW THAT when it is overtaken by the ££££££££££ when property prices SOAR AGAIN?????? MUHAHAHAHAHAHAHAHA

<_<

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.