worried1 Posted May 10, 2011 Share Posted May 10, 2011 Just having my normal browse through the Allsop auction catalogue, and came across this place: http://www.auction.co.uk/residential/LotDetails.asp?A=711&MP=24&ID=711000022&S=C&O=A Not the best, being above a shop and opposite a busy bar, but it is in a good part of town where even bad two bed flats go for £1,000pcm or £250k to buy. I understand that all rental agreements prior to 1989 were regulated, but the owner of this place appears to have entered into one in September 2009. If my understanding is correct, the landlord has made it very difficult for themselves to get any increase on the £336pcm rental or to ever get the tenant out. If the guide price is right, the flat is also worth about 50% of it's value without this tenancy. Why would someone agtee that that unless they had to? Quote Link to comment Share on other sites More sharing options...
White Craw Posted May 10, 2011 Share Posted May 10, 2011 Just having my normal browse through the Allsop auction catalogue, and came across this place: http://www.auction.co.uk/residential/LotDetails.asp?A=711&MP=24&ID=711000022&S=C&O=A Not the best, being above a shop and opposite a busy bar, but it is in a good part of town where even bad two bed flats go for £1,000pcm or £250k to buy. I understand that all rental agreements prior to 1989 were regulated, but the owner of this place appears to have entered into one in September 2009. If my understanding is correct, the landlord has made it very difficult for themselves to get any increase on the £336pcm rental or to ever get the tenant out. If the guide price is right, the flat is also worth about 50% of it's value without this tenancy. Why would someone agtee that that unless they had to? I read 2009 as the starting date of the property's present leasehold term, I don't see any details about the regulated tenancy (apart from the fact that there is one). Quote Link to comment Share on other sites More sharing options...
CrashInHand Posted May 10, 2011 Share Posted May 10, 2011 Maybe they arn't a scumbag? Quote Link to comment Share on other sites More sharing options...
worried1 Posted May 10, 2011 Author Share Posted May 10, 2011 I read 2009 as the starting date of the property's present leasehold term, I don't see any details about the regulated tenancy (apart from the fact that there is one). I think that the lease started in 1989 and the tenancy in 2009. Quote Link to comment Share on other sites More sharing options...
roger196 Posted May 10, 2011 Share Posted May 10, 2011 Sometimes it is because the landlord and tenant are related. Sometimes it is being done to create what is effectively a tenancy for life. Sometimes it is to reduce IHT by reducing the value of the freehold and creating value for the tenancy without there being a transfer of value. Just guessing as I do not sufficient detail. Quote Link to comment Share on other sites More sharing options...
_w_ Posted May 10, 2011 Share Posted May 10, 2011 Sometimes it is because the landlord and tenant are related. Sometimes it is being done to create what is effectively a tenancy for life. Sometimes it is to reduce IHT by reducing the value of the freehold and creating value for the tenancy without there being a transfer of value. Just guessing as I do not sufficient detail. Indeed. And sometimes I think the landlord IS the tenant, just trying to cash out his property 'winnings' while securing his home. Quote Link to comment Share on other sites More sharing options...
worried1 Posted May 10, 2011 Author Share Posted May 10, 2011 Maybe they arn't a scumbag? I suppose not, but locking yourself into a lease agreement that only gets you about 1/3 of the market rate and devalues the property should you want to sell it is pretty generous. I want to find a landlord like that! Quote Link to comment Share on other sites More sharing options...
_w_ Posted May 10, 2011 Share Posted May 10, 2011 I suppose not, but locking yourself into a lease agreement that only gets you about 1/3 of the market rate and devalues the property should you want to sell it is pretty generous. I want to find a landlord like that! You'll get better luck looking for a unicorn. Quote Link to comment Share on other sites More sharing options...
White Craw Posted May 10, 2011 Share Posted May 10, 2011 I think that the lease started in 1989 and the tenancy in 2009. Yes, completely my misreading. "Effective date: 24th September 2009" in fact is the date the present rent became effective and will tell you how long it will be before an application can be made to review the rent. It's not the date the tenancy started. Quote Link to comment Share on other sites More sharing options...
worried1 Posted May 10, 2011 Author Share Posted May 10, 2011 Indeed. And sometimes I think the landlord IS the tenant, just trying to cash out his property 'winnings' while securing his home. That's an interesting approach, particularly selling at auction! In this example, the owner would be saving £700 per month in rent, but at the cost of around £130k upfront (if it gets guide price). That would mean they would need to wait 15 years (ignoring inflation) for it to pay off. I guess it is ok if the owner is quite young. Quote Link to comment Share on other sites More sharing options...
worried1 Posted May 10, 2011 Author Share Posted May 10, 2011 Yes, completely my misreading. "Effective date: 24th September 2009" in fact is the date the present rent became effective and will tell you how long it will be before an application can be made to review the rent. It's not the date the tenancy started. Thanks, that explains it. No wonder BTL was not popular before 1989! Presumably, this legislation is quite strict on the rent reviews? The original rent must have been somewhere in the region of market rate, but the landlord has then just not been allowed to raise it significantly meaning it has fallen so far behind. Quote Link to comment Share on other sites More sharing options...
tim123 Posted May 10, 2011 Share Posted May 10, 2011 Thanks, that explains it. No wonder BTL was not popular before 1989! Presumably, this legislation is quite strict on the rent reviews? The original rent must have been somewhere in the region of market rate, but the landlord has then just not been allowed to raise it significantly meaning it has fallen so far behind. Regulated tenancies use the concept of "fair rent" which are some way below market rent. You're allowed to apply for an increase no more frequently that every third year Quote Link to comment Share on other sites More sharing options...
The Eagle Posted May 10, 2011 Share Posted May 10, 2011 (edited) Thanks, that explains it. No wonder BTL was not popular before 1989! Why? BTL is popular in Germany (60% of the population are tenants) despite their "tenancy for life" regulations. In Germany it's normal to buy an investment property with a sitting tenant, in fact it sells quicker than an empty investment property since the revenue stream is assured from day one. The main difference is German property investors don't bank on a rise of the value of the property, they invest to get a steady revenue stream from the rent payments (which is higher than savings account rates). It's the perverse "get rich quick" mentality (encouraged by the banksters) of UK property speculators that has ruined the UK, not BTL in general. Edited May 10, 2011 by wise_eagle Quote Link to comment Share on other sites More sharing options...
White Craw Posted May 10, 2011 Share Posted May 10, 2011 Why? BTL is popular in Germany (60% of the population are tenants) despite their "tenancy for life" regulations. In Germany it's normal to buy an investment property with a sitting tenant, in fact it sells quicker than an empty investment property since the revenue stream is assured from day one. The main difference is German property investors don't bank on a rise of the value of the property, they invest to get a steady revenue stream from the rent payments (which is higher than savings account rates). It's the perverse "get rich quick" mentality (encouraged by the banksters) of UK property speculators that has ruined the UK, not BTL in general. It certainly wasn't like that in the UK during the time of rent control (and still isn't as regards surviving regulated tenancies). Quote Link to comment Share on other sites More sharing options...
Laughing Gnome Posted May 10, 2011 Share Posted May 10, 2011 Not sure of the age of the Assured Shorthold Tenancy. Prior to this there were "Furnished" and "Unfurnished" tenancies, and an overhang of regulated tenancies from a previous era. Furnished tenancies were insecure, but the landlord had to provide furniture. The Assured Shorthold tenancy is just as insecure as the old "Furnished" tenancy, but no furniture need be provided so potentially every six months you have a major moving trauma. Thanks Maggie. Quote Link to comment Share on other sites More sharing options...
johnny5thumbs Posted May 10, 2011 Share Posted May 10, 2011 Not sure of the age of the Assured Shorthold Tenancy. Prior to this there were "Furnished" and "Unfurnished" tenancies, and an overhang of regulated tenancies from a previous era. Furnished tenancies were insecure, but the landlord had to provide furniture. The Assured Shorthold tenancy is just as insecure as the old "Furnished" tenancy, but no furniture need be provided so potentially every six months you have a major moving trauma. Thanks Maggie. The old Regulated tenancies were such a low rent bargain for the tenant that absolutely no landlord in his right mind wanted to let property any more. Result - no properties available to let. Something needed to be done. Even now, with 'landlord-friendly' A.S.T. legislation, there are tenants who stump up 1 months rent & 1 months deposit, pay nothing more, and spin out the eviction and court proceedings to 4 or 5 months or worse, move on, and do the same again to someone else. I know there are some bad landlords around, but these scumbag tenants are not sticking it to the man - they're just f*cking it up for every other renter. Quote Link to comment Share on other sites More sharing options...
snowflux Posted May 11, 2011 Share Posted May 11, 2011 The old Regulated tenancies were such a low rent bargain for the tenant that absolutely no landlord in his right mind wanted to let property any more. Result - no properties available to let. Something needed to be done. Even now, with 'landlord-friendly' A.S.T. legislation, there are tenants who stump up 1 months rent & 1 months deposit, pay nothing more, and spin out the eviction and court proceedings to 4 or 5 months or worse, move on, and do the same again to someone else. I know there are some bad landlords around, but these scumbag tenants are not sticking it to the man - they're just f*cking it up for every other renter. Surely it cannot be beyond the wit of humankind to come up with legislation that grants secure tenancy so long as the rent is paid while providing for rapid eviction if it isn't? Quote Link to comment Share on other sites More sharing options...
porca misèria Posted May 11, 2011 Share Posted May 11, 2011 Thanks, that explains it. No wonder BTL was not popular before 1989! In the 1980s you couldn't get a tenancy at all in the private sector. Instead, you got a 'license' to live in some hole. The AST when it came was a huge improvement, and (together with unplannedlords in the housing bust) served to start a rental market that wasn't exclusively slums. Quote Link to comment Share on other sites More sharing options...
tim123 Posted May 11, 2011 Share Posted May 11, 2011 Not sure of the age of the Assured Shorthold Tenancy. Prior to this there were "Furnished" and "Unfurnished" tenancies, and an overhang of regulated tenancies from a previous era. Furnished tenancies were insecure, ITYF that's an urban myth tim Quote Link to comment Share on other sites More sharing options...
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