Estate agent & letting agents - who to trust?

[NatFrenchie]

Hello

I would like to buy a buy to let property but am struggling with knowing who to trust in terms of being sure that what I buy will be easy to let and easy to sell ultimately.

All the agents locally have sales and lettings departments and therefore have a vested interest in selling one of their own properties, and of course will say anything to convince me that whichever property I'm looking at would be perfect for rental and resale!

I have had one agent say that a certain property would not be worth buying as the cheaper one would gain the same rent, yet the other agent says that the property would gain a significantly larger rent than the other - agghh - I am so confused and I don't want to get it wrong.

Any advice would be gratefully received...

Trust your own judgement having thoroughly researched the local market.

Ask them for actual examples of properties they have secured a letting on and what the rent achieved is. Also look at advertised rent figures - what would your competition be? It's not easy being a landlord and it's no get rich quick scheme. You want to be clear the agents actually correctly know the law, read their standard AST documents and check what their fees for you and the tenants are, including for renewals.

Do properties let to couples and singles or to families? Are the properties going to be quick to turn around and rent out. Will the agents relate well to your target market or put them off?

I've reduced the rent payable in the past in order to keep a good tenant who needed a bit of financial help - she'd never missed a rent payment and looked after the place so it made sense to keep her rather than risk a void period.

Thank you wowfudge for your good advice. I've done a ton of research but it's quite hard here to assess what is the best type of property to buy as I live in an tourist area so most properties are either holiday lets or second homes.

That said, it means there is a huge demand for rental property as not only are homes unaffordable here, but there are very few rentals available.

Your idea of asking for examples of properties the agents have secured lettings on is very good - I will do that. I think the target market here is all that you mentioned, I guess it depends on the property, a house would be for a family, a flat for a couple/single person.

I think I just need to assess whether a house is better or a flat, and cost them both and take it from there.

With a flat there is often a service charge and look carefully at freehold and leasehold ownership and responsibilities. Who manages the flats? There can also be neighbour issues in a way you don't get with houses.

Yes there are definitely service charges associated with all the flats I'm looking at & of course the neighbour situation can be a problem, but it's case of beggars can't be choosers and to get a low maintenance easy to let property, it might be that a flat is the best option. I have looked at a couple of conversion flats which are top floor (have the advantage of being on top of any noise and the best view), but am also looking at a couple of ground floor flats - one with and one without garden.

A lot of the houses I have looked at have needed quite a lot of work to bring them up to scratch but are also at the top end of my budget which means I can't afford to do the work necessary to make them easy to let.

I do agree with you though - a house would be preferable in many ways.

We have had BTL flats and houses. The flats have never made as much % yield. Partly because of the maintenance charges, but also because they attract younger renters who are far more mobile than a family or an older couple - so they dont stay as long and this is what kills profits, the voids the regular letting fees, the in between cleaning, damages, redecoration....
I also find younger renters alot more demanding of the latest fads and fashions and regular updating costs money.

Choose your property and your market carefully.

who to trust: any advice would be gratefully received...

Ask your solicitor. They deal with loads of transactions every month and know the local hotspots, going rates for rental, general gossip, etc.

Well I've had an offer accepted on a ground floor garden flat (communal grounds) which seems fine. Unfortunately my budget couldn't run to a house in the area I live in. Although after I received your message sunnyshores I did wake up in the middle of the night panicking that I had chosen the wrong property!

It's a two bed two bathroom flat with direct garden access so I'm hoping that it could appeal to a wide range of tenants. The owners actually want to rent it from me for 3 months after completion so I've somehow got to draw up some kind of agreement with a three month break clause as I understand minimum ASTs are 6 months.

Fingers crossed I've made the right decision in going for a flat!

I think the owners would have to move out - not sure you can complete with them in situ?

Re AST. If you join the NLA about £100 a year you get free advice and training and various legal forms.

The flat does sound as if it would appeal to older tenants too. Not sure a family would go for communal gardens.

Nat - sale and rent back (the scenario that you have outlined) is now carefully controlled and can only be done through someone registered with the FCA, so do be careful there.

www.fca.org.uk/firms/financial-services-products/mortgages/sale-and-rent-back

Happy for you to PM me if you like.

GaryBaldy thank you for your advice and Sunnyshores too.

I looked at the link re SRB but it appears that is for a longer term rental period and only applies if the property has been sold at a discounted price which is not the case here. Is that right?

I will look into joining the NLA perhaps but maybe I should get a solicitor to draft a tenancy agreement appropriate to our situation in the meantime. I am now rather stressed as it seems more complicated than just having vacant possession and re-letting it to a totally new tenant.

When it was suggested, I thought it was a good idea as it would save lme paying out lettings agency fees for the next few months and give me some breathing space but now I'm beginning to wonder....!

For many years, we have owned flats on the outskirts of university cities, which tend to be taken by young professionals or PhD students who want an upgrade from studentville but don't have lots of spare money. As a pp said, they tend only to stay for 12-24 months at a time, which is a pain, but it's very easy to get new tenants. Our voids have amounted to weeks not months. We keep the flats pristine to attract good people, and we react quickly to issues they raise so that we keep them.

It seems to me that those small link houses/starter homes are quite easily rented out to couples who are testing out living together before mortgage/kids etc. Again though, these people's circumstances usually change and they give notice after a couple of years.

A reliable, responsible tenant who stays for several years is gold and should be treated with respect. A friend of mine who rents out an inherited bungalow has one of these - well two, actually, because it's a woman and her Great Dane!

NatFrenchie I dont mean to be rude, but you dont seem to understand alot of what you're doing. Any old solicitor cant just write up a tenancy agreement to say what you want. You need a property law expert. Your current solicitor should also have told you you cant complete with the owners in there, so they dont seem clued up on this purchase either.

The fact you havent jumped at spending £100 to get all that knowledge makes me think you dont even know how much you dont even know - and that could be very dangerous to you and your tenants and very expensive.

Despite what people think being a ll is very complicated, costly and time consuming, on many many fronts.

Sunnyshores I am going to join the NLA so thank you for that suggestion, but was waiting until we had exchanged on the property in case it fell through as there is no point becoming a member until we have a property that requires me to be a landlord.

With regard to the owners, they are friends of friends, so we were going to come to an informal agreement that they could stay as they are moving abroad and would like the time from completion to purchase to find somewhere to live and organise everything.

You are probably correct that I know very little but I plan to learn quickly. This all happened on Friday pm so I've not had time to consult with my solicitor regarding the owners remaining in the flat, so I'll get onto that first thing Tuesday.

Do a simple yield calculation

Yield =annual rent / cost of investment x100. The higher the percentage then the "better" the investment. However there may be other non monetary reasons why it is not a good investment for you eg you may have to realise the investment quickly (in that case avoid areas where huoses take time to sell). The void rates are high, tenancies tend to be short et al. Things that take time to sort out - you may not want this stress.

tell the owners they have to get out at completion. No sensible solicitor will let you do what you are planning for 3 months.

why? Because minimum AST is 6 months, and you CANNOT evict before then. So if these lovely people change their minds, you are stuffed. You also won't be able to get legal expenses insurance for the eviction without a real AST.

and you'll need to do gas safe, deposit protection etc etc etc.

oh, and friends of friends...this is a disaster waiting to happen and YOU will suffer if it does.

specialsubject OK I think I'm going to stop this whole thing right now.

This all sounds very complicated and not the straightforward transaction I had hoped for.

I will contact solicitor first thing Tuesday and speak to estate agent too.

phew!

on re-reading, I realise that you are planning to rent this place out anyway - but it needs to be a proper AST with all checks, insurances, inventory, check-in etc etc. So they need to leave. They could rent from you under a six-month AST, of course.

We are currently re-negotiating the situation.

I have suggested that we exchange and then delay completion for a fixed period. They are now asking for completion to be delayed for two months until 30th November.

My thoughts are that if the period is longer than one month between exchange and completion, then I would like to subtract the equivalent of what would have been one month's rent from the purchase price as I would have been able to rent it on completion had it been earlier than two months.

I am hopeful that this will work instead.

ah - now that's a good idea, and keeps you covered. They won't get their next purchase through in two months of course, this is unlikely even if they find the perfect house the day after completion. But with a definite sale it will make them credible buyers.

remember you need to insure it from exchange.

The buildings insurance is included in the maintenance charge. What kind of insurance do I require at exchange?

that will probably do but check with a grown up . Once you exchange you are committed to buy, even if it burns to the ground in the meantime, so you need whatever insurance covers you for that.

the sellers keep up their insurance until completion day.

Ok will check what's needed. Thank you for advice

check your mortgage offer will still be valid months after exchange

Well there you go - back to original thread title - Estate and Letting Agents - who to trust?

It transpires that the figure the estate agent quoted me from his lettings office is complete fiction. Another agent who I know contacted me and told me that there was absolutely no way I could get that amount and quoted several other rentals of properties that I am aware of.

I then contacted lettings department of agent selling me the flat who confirmed that she had put a note on the file indicating the rental pcm and guess what - it's £100 pcm less than the estate agent told me.

Honestly they are all so full of B-Shit I am furious. So have pulled out of this purchase as it is no longer viable at all.

Sorry had to vent What a waste of time and effort!