SMF - Just Installed!

First time Landlord needs some advice!!

Started by Phil2312, November 15, 2017, 07:22:05 PM

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Phil2312

Hi Everyone,

I'm new to all this, and so would appreciate advice from those who know far better than me!!
My partner and I have recently started to renovate the house literally next door to where we live so that we can rent it out and give us a top up to what no doubt will be our less than expected pensions when we retire. We are complete novices in being landlords and this will be our first time, so have a couple of questions to start off with that I hope you can pass comment on please:-

My idea is to rent the property (3 bed semi) out to a Commercial entity rather than individuals as we
Live just off Airport and believe that maybe Airlines, or other multi-national Companies in the surrounding areas may have a need for putting their staff into accommodation that is fully furnished as you would find in a holiday rental property. My question is, renting to individuals has its own set of potential problems as we've seen by watching "Nightmare Tenants & Slum Landlords" on TV, but does anyone believe that renting to the Commercial sector is any better or even worse??

Another question, is it better to have all utility costs included into the rental price, so that I keep control of the payment of these bills rather than have the Tenant take responsibility for them?

Looking forward to hearing from you!
Cheers

bcourtois

Sounds a good idea but do your homework first and check out the financial status of the Company, on Companies House government website. Get the correct licensing to operate and put in fire proof doors, etc. Before signing ask a solicitor to go over the contract with you. Ensure that the deposit is registered under your name within the 30 days or that you have a certificate for the deposit.

Do not take on the responsibility of payments for untility service, leave this to the commercial company or tenants, so that the bills are registered in their name. They could run off leaving you with hugh bills if for example they stop paying you rent.

Hippogriff

I have let property to a company before - Sheffield Wednesday Football Club - and, on balance, I probably wouldn't do it again. I have my own AST written-up for my properties, but if you let to a company you have to use a non-Housing Act agreement, so that immediately meant I was beholden to the Agent to provide me with one at short notice - and I felt a little uncomfortable in doing so. Although nothing went wrong for me, you need to be careful about a few things... for me, it was 1 constant person, not a plethora of new people coming in and out - I know which I prefer. But, still, that person treated the property badly... they didn't care. It wasn't even their money, you see? I had to deal with the CFO at the company, not the Tenant. That was kinda OK, but it just added complexity. When there was a minor disagreement about repairs mid-tenancy I had to also engage with the Tenant's PA, which just added more complexity and another player (sic).

They stayed for almost 2 years and, as is my normal practice, I increased the rent modestly after 1 year - the approval for that, apparently, had to go to The Board! At the end I had to request significant Deposit deductions - mainly for cleaning - and that took weeks and weeks to get approved. The bonus is that you are not required to protect the Deposit in the same way as with a residential let... although I did anyway, the fact is I could've not bothered to protect it at all. In my case, the Tenant / Company paid all bills.

I would not do it again.

Hippogriff

Oh, and BTW... I have also let property next door to me before.

Another bad idea. :-( It seems proximity creates monsters out of Tenants. I could've just got unlucky with these specific Tenants who could not seem to live their life. But to have them call around every time someone dropped a pencil can get old pretty quick. Then the emails... Jesus... most other Tenants might hit me with an average of 20 emails per year - this duo had hit me with 400! And that's with them being next door. There was something very strange in that dynamic that made it different to every other tenancy I've had.

Phil2312

Thanks for the great advice and comments. It's becoming a real eye opener for me, and a forum like this will be so valuable to me!!
Cheers for now!!

Hippogriff

Last bit of advice...

Landlords with 1 property get all the hassle and none of the benefits that come with economy of scale. That said, most Landlords own 1 property they let out. But the real benefits come when you have more. I suppose you have considered renovating and selling-on for a nice juicy profit? That could bolster any pension pot significantly and it comes with none of the hassle of ongoing tenancies. After all, you're probably doing the same stuff to get it to the point of let or sale.