The 10 minute rule

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No, I’m not talking about the procedure that MPs need to follow in order to introduce a bill. The 10 minute rule that I am talking about is the rule that you should follow when purchasing an investment property. 

When you decide that you want to invest in a property, you are obviously going to keep a few factors in mind, such as price, age of the property and location. We’ve all heard the saying ‘location, location, location’, which has been made ever more popular after the Channel 4 programme. But what exactly about location do you need to keep it in mind?

This is where the 10 minute rule applies. Let’s think about it in more detail. You are purchasing a property as an investment, and what drives your investment? Tenants. 

When tenants are searching for a property to rent, it is temporary and usually short term. Properties that carry the most value are those that offer it’s residence the most convenience. We are beginning to see a trend where new developments are increasingly beginning to include a gym and a concierge for this particular purpose. 

So what is the 10 minute rule? 

This is relating to the location of the property. I strongly advise that if you are investing in a property, take a walk from the building to the nearest station. If it is within 10 minutes, this is ideal for investment purposes. You should also apply the 10 minute rule to the property’s proximity to local amenities such as schools, shopping malls, parks etc. 

The more local amenities fall within 10 minutes walk to the property, the better it will be for the value of the property over time. If at time of seeing a property, there isn’t many local amenities within a 10 minute walk, do a little research to find it what could be there in the future. You’d be amazed at how the value of a property can increase because of future regeneration in the area. 

So there you have it. A quick rule to keep in mind when you are searching for a property to drive your investment. 

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Rogue landlords: my thoughts

imageI previously wrote a post about rogue agents, or ‘sharks’ as I like to call them. I guess it would be fair to also talk about other types of ‘rogues’ in the property industry. I have come across an interesting article posted on The Guardian’s website which I thought would be a good read as it gives an example of sharks in other forms. Click here to read the article.

The link I have shared basically discusses why landlords should receive higher fines for letting a property to tenants which is deemed dangerous or uninhabitable, or by profiting from exploiting tenants. The government is proposing an unlimited fine to those landlords, which could be a considerable increase compared to the paltry £5,000 fine they can currently receive as a maximum.

This is great news, especially for tenants. Too much is highlighted by the media on bad agents, but in all fairness, I believe that most agents have a hard time satisfying landlord’s needs. It’s understandable that the landlord would want to generate the most income on their investment by trying to reduce their cost but they should also realise that by dealing with any issues quickly can prevent major, potentially expensive costs in the future. So if you own a property and there are issues, get it fixed!

Reading the article made me think about a situation I had with a new client a few months ago. He instructed us to let his properties, which we did at a higher price than the landlord had ever achieved in the past. As you can imagine, he was extremely pleased with us and gave us some excellent feedback. However, after the contracts had been signed, he had started to call me for general advice. This then turned to conversations on ways in which he could extract money from his outgoing tenants. He explained to me that one of the tenants in his property was abroad, and she had asked him if it would be ok if her boyfriend stayed in the property from time to time, to which he agreed. As long as the rent was paid in full and on time he had no problem. Over time, the boyfriend eventually moved in full-time but no amendment had been made to include the boyfriend’s name into the tenancy agreement. The landlord suspected that the so-called boyfriend was not actually the original tenant’s partner, but actually someone the original tenant was sub-letting the property to, but the landlord had no problem with this as he was still receiving rental payments. Furthermore, the landlord actually lived in the same building as the flat he was renting out so he had often bumped into the ‘boyfriend’ and they also had general conversations and got on well together. I believe he found out from the boyfriend that he was paying the original tenant a rental amount which was greater than what the landlord was receiving. The ‘boyfriend’ remained in the property for approximately 6 months.

I gathered from my conversations with the landlord that he may be struggling financially. In discussions, he mentioned he was currently unemployed and relied on his properties to generate his income, which he completely depended on. He told me that he was thinking of asking the outgoing tenant for a large sum of money or he would take action against her for breaching a term of the agreement, where a clause had been added restricting the tenant from sub-letting the property. I advised him that legally, the most the landlord can do in this instance is evict the tenant through the courts. He wasn’t happy with this information as the tenant was leaving anyway and he became visibly angry, not at me but at the tenant. He was swearing and shouting about how this was unfair for landlords. I pointed out to him that he was aware that the actual tenant was not living in the property for months so the argument against him would be why he hadn’t taken action earlier. His only response was that he would try his luck with the tenant with the hope that she wouldn’t know her rights and would hand over the requested amount of money without any fuss to avoid any further action. I urged him not to do this as he could put himself in an even worse situation, if the tenant decides to report the landlord for harassment or blackmail. After a very long conversation with the landlord, and after what seemed like hours of advising him against his intentions, he finally agreed not to ask the tenant for an extra payment. The situation had been settled with no issues, which was a relief for me.

The landlord only instructed me to let the property on an ‘introduction only’ service. I had no obligation to provide any advice whatsoever, but I genuinely think I saved him from a lot of trouble and a potentially difficult situation that he could have got himself in to. We now speak quite regularly, sometimes just for a general chat and a catch up, and I feel that he genuinely respects me and the company for going above and beyond our contractual obligations to him to prevent him getting into any potential legal troubles.

Back to the point of rogue landlords. The story I have shared with you is a personal one. Looking deeper in to it, if the landlord hadn’t taken my advice, I can’t help but think he would’ve had legal action taken against him rather than the other way round. It’s impossible for landlords to know all the legislation relating to renting a property, especially as it is not their full-time occupation or profession. This is why agents exist – to give advice and guidance, to help the landlord avoid any legal action taken against them, to educate the landlord on their rights and the tenant’s rights. Even if agents are instructed on a ‘let only’ basis, I believe they still have a duty of care to landlords.

The question I want to ask is this. Do rogue landlords exist because of incorrect or inadequate information from agents? I, for one, cannot imagine rogue landlords would exist unless the legal consequences of certain actions by landlords haven’t been explained to them properly. At the end of the day, landlords must have been in touch with an agent at some point in their lives if they have managed to purchase a property. A standard agent will usually tell the landlord what they want to hear. A good agent will tell the landlord what they should be hearing, whether the landlord likes it or not.

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Cooling-off period?

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The cooling-off period in consumer contracts has doubled from 7 days to 14 days, but according to a leading trainer in the industry, not many agents know of this change. I guess the first question we should ask is ‘what is a cooling-off period?’

In a nutshell, the cooling-off period is a specified amount of time whereby a consumer can cancel a contract after they have signed it. There needs to be a notice of the right to cancel a contract which must be given to a consumer before they sign anything. However, there are a few instances where this applies and where they don’t apply. If a contract is signed at the office of the service provider, there is no need to include this notice. However, if it is signed anywhere else, this notice needs to be given. Why? Simple. How many people have knocked on your door in the past and tried to get you to sign up to something that you initially had no intention of buying? Unfortunately, hard selling techniques have led to things being sold under pressure and this piece of legislation protects consumers against this type of sale. On the other hand, if someone signs a contract in the office of the service provider, no notice needs to be given. After all, you cannot force somebody to enter a shop, office or business premise so it is assumed that the consumer entered at their own will.

The initial cooling-off period was 7 days. However, this has recently doubled to 14 days, providing further protection for consumers against sales sharks.

What I find interesting is a statement made by an industry trainer within the residential property sector. Julien O’Dell states that most estate agents were not even aware that there was a 7 day cooling-off period, let alone being aware of the change to a 14 day period. O’Dell said: “On my training travels around the country in recent months, I have come across a significant number of agents who were unaware of the imminent legislative changes affecting the point of instruction.

“These centre specifically on the cooling-off period that applies when a client signs to instruct an agent, and the agent’s responsibilities at that point.

“I have met agents who didn’t know this period was changing, or indeed when.

“In truth, there have even been some agents who didn’t know there was such a thing as a cooling-off period.”

As a professional in the industry, I was initially shocked that agents had no idea of what a cooling-off period is! In an ideal world, a person who enters into an industry should be fully trained to avoid any mistakes, and being up to date with legislative changes needs to be the utmost priority for employees. The reality is, unfortunately, that businesses do not really follow this and push their luck as much as they can. My advice to landlords and tenants who are considering contacting estate agents is to find out if they are a part of a redress scheme, like the Property Ombudsman, or if they hold qualifications and memberships to industry specific groups, like ARLA.

A final thought regarding the cooling-off period. Should changes to legislation be announced in a more obvious way, or is it the responsibility of the company and it’s employees to do their own research to ensure high standards are kept?

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Canary Wharf – Vibrant lights at night

Canary Wharf - vibrant lights at night

One of my favourite pictures of Canary Wharf taken during Christmas last year from a residential property in South Quay. Investors are willing to pay more to own a property with stunning views like this, and so are tenants. This photo was taken from the 20th floor of the Landmark development and was rented for approximately £530 per week. Properties in the same development can be rented for £480-£500 per week. My question is this – would you pay extra to see a view like this everyday from your home?