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ChumpusRex

My flat has been bought by a fund

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I was going to write hedge fund, but I'm not sure it is.

I had quite a good relationship with the landlord, who although a bit tight, nevertheless took an interest as he lived just down the road - and was quite happy with me doing the odd bit of maintenance (mainly corrections of the place being incorrectly built).

Anyway, I'd seen the block up on rightmove at a yield of 7.5% - I had kind of toyed with the idea of buying it, to the point of running the numbers, but I knew how badly built the place was, so in reality, it would have been way too much trouble and anyway, the finance required and the SDLT penalty would have been intolerable. (While I'm not too fussed about having a 30 kg water pressure vessel fall off the wall at 2 am, because it was only attached to single thickness plasterboard with wallplugs, and I was quite capable of dealing with the resulting flood before going back to bed, and patching up the enormous hole with some MDF later; I'm not sure that the other tenants might be quite so calm, and that would not be the sort of phone call I'd be welcoming as an LL).

Anyway, the new landlord is an unpronouncable set of symbols and numbers, representing one of the residential funds operated by Mill Group  (got this wrong - see below), who seem to be a specialist residential investment firm. 

The managing agent is an EA 250 miles away, and I wasn't aware that they had any branches nearby - I guess they must sub out the management to someone local. However, they're obviously set up for scale, as they have a very slick IT system - with online account management, rent statements, an online ticket system for maintenance, etc. so on the face of it they look quite professional (but it's one thing to have a slick storefront, it's another to be competent).

Edited by ChumpusRex

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I am aware of traditional investment banks moving into the build to rent sector. Maybe this is part of portfolio building. 

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Nothing wrong with this. I would prefer a professional company target than an amateur landlord who resents doing repairs. 

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Agreed 100%. A bespoke rental product would be cheaper and massively better than the shit BTL landlords buy and prevent from being developed properly by owner-occupiers

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1 hour ago, stuckmojo said:

Agreed 100%. A bespoke rental product would be cheaper and massively better than the shit BTL landlords buy and prevent from being developed properly by owner-occupiers

Careful what you wish for.

Personally I think big cooperations owening large swaths of UK housing stock is a bad idea, a very bad idea. 

The working population who couldn't afford to buy wouldn't be 'debt slaves' anymore they'd just be slaves.....

BF

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11 minutes ago, BLOW FLY said:

 wouldn't be 'debt slaves' 

Is the debt slave dream still possible in London + suburbs? 2012 seems like the last opportunity. Debt alone won't do it now needs to be beefed up with BOMAD or six figure scratchcard win. 

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It's only the mega crash that has any chance of stopping London becoming majority renting. 8 years is the latest estimate. You need to decide who you'd prefer to hand over a large chunk of your pay packet to every month: Legal & General or Mr and Mrs 'look how successful we are' with their 3 borrow-to-lets planning their next cruise.. 

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1 hour ago, stuckmojo said:

Agreed 100%. A bespoke rental product would be cheaper and massively better than the shit BTL landlords buy and prevent from being developed properly by owner-occupiers

Agree x2, but small scale landlords still have a significant tax advantage vs corporations (through both avoidance and evasion) . This is especially true for those who rent out their only home, incentivising bizarre behaviour like "we're going to travel the world for two years, but first we want to buy a house to rent out".

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5 hours ago, BLOW FLY said:

Careful what you wish for.

Personally I think big cooperations owening large swaths of UK housing stock is a bad idea, a very bad idea. 

The working population who couldn't afford to buy wouldn't be 'debt slaves' anymore they'd just be slaves.....

BF

I would second that..... at present there are lots of customers (tennents) and suppliers (landlords) and the average rent charged cannot be dictated by any one of them.

Companies could buy up large parts of a town and effectlively run price-fixing oligopolies especially without much better regulation to counter balance it.

 

That said I do wonder if there is a case to have mutal Landlord companies, a bit like a building society, where the tennents are automatically shareholders in their landord.

 

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6 hours ago, BLOW FLY said:

Careful what you wish for.

Personally I think big cooperations owening large swaths of UK housing stock is a bad idea, a very bad idea. 

The working population who couldn't afford to buy wouldn't be 'debt slaves' anymore they'd just be slaves.....

If they can buy shares in the company then over the course of 25+ years they may end up getting dividends that post-tax cover the rent.

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Got the buyer wrong. It's possible that some of the early VC in what appears to be a start-up came from some of the big funds (e.g. the one listed above). 

Anyway, here is their web page:

https://www.propertypartner.co/

 

Appears to be some sort of crowd-funding, buy a share in a rental property. Each individual property is encapsulated in its own Ltd company - some leveraged (apparently this group's preferred lender is Coutts), but some owned outright.

Interestingly they claim to have got a 40% discount on the asking price for my block! Dividend yield is trifling compared to the rent received - the management costs must be extortionate. Bought with a 45% LTV mortgage - that makes a bit more sense. But expenses equal to 60% of rent received - so even so, that's pretty high.

46 minutes ago, ThePiltdownMan said:

If they can buy shares in the company then over the course of 25+ years they may end up getting dividends that post-tax cover the rent.

That's exactly what this appears to be. 

They even have an individual market for each property on their website, you can see the depth of market and trade and everything. Lol.

 

Edited by ChumpusRex

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44 minutes ago, ChumpusRex said:

Got the buyer wrong. It's possible that some of the early VC in what appears to be a start-up came from some of the big funds (e.g. the one listed above). 

Anyway, here is their web page:

https://www.propertypartner.co/

 

Appears to be some sort of crowd-funding, buy a share in a rental property. Each individual property is encapsulated in its own Ltd company - some leveraged (apparently this group's preferred lender is Coutts), but some owned outright.

Interestingly they claim to have got a 40% discount on the asking price for my block! Dividend yield is trifling compared to the rent received - the management costs must be extortionate. Bought with a 45% LTV mortgage - that makes a bit more sense. But expenses equal to 60% of rent received - so even so, that's pretty high.

That's exactly what this appears to be. 

They even have an individual market for each property on their website, you can see the depth of market and trade and everything. Lol.

 

You might well want to look at this thread about Property Partner then. For what it's worth they don't seem to be a bad outfit landlord-wise. As far as I can see they haven't raised rents on any of their properties yet (they've owned some of them for two years now). 

 

Edited by Patient London FTB

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I do a bit of work with VCs and they are very suspicious of crowdfunding in general. Apparently there are some legalities which make things very complicated if a company goes under, which can seriously screw the investor.

This particular venture looks like it's trying to attract the old BTL crowd. 

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