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Non-UK resident & I wish to know if I can manage BTL using online agent

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Author Topic: Non-UK resident & I wish to know if I can manage BTL using online agent  (Read 197 times)
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« on: August 13, 2021, 02:54:18 PM »

Hi there,
My husband and I are actively searching for a BTL property in Bath and I'm currently doing my research in order to understand how this is even possible since we reside in Malta (we're Maltese, not UK nationals). Unfortunately, when I calculate my initial investment costs (property & taxes) against rent + tax + property management company - this really becomes not worthwhile. Nevertheless, I'm determined to make this happen! Our aim is to yield a 3% return (taking the above into consideration), however this only becomes possible if I remove the property management fees (so far I have a quote at 12%).

My question is: is it feasible to own property in the UK and have it managed completely using these online agents (I'm so far in contact with Howsy). Am I safe in doing so? Is there something I'm likely to miss out on if we use such a company rather than the high street agents? I have read the blogs on this site and it seems like they essentially do the same thing - it's just that online agents don't have overheads etc.

But I'm scared that I'll be missing something, some kind of safety checks and so on. I imagine worst case scenario happening where tenant ends up with some kind of water damage and there's no one there to help them. My question to companies like Howsy is, what's the catch? How can they afford to be so significantly cheaper than the high street ones?

If there is anyone here with a similar experience, or who can shed some light on my queries, I'd be so appreciative!!

Thanks
Martina
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« Reply #1 on: August 13, 2021, 03:51:48 PM »

I don't understand where you are coming from.You say your calculations indicate this is not worthwhile,but you are determined to make this happen.Not only that but doing it from another country,using a form of agent that would strike me a being very risky.Why??
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« Reply #2 on: August 13, 2021, 11:40:42 PM »

"Unfortunately, when I calculate my initial investment costs (property & taxes) against rent + tax + property management company - this really becomes not worthwhile. Nevertheless, I'm determined to make this happen!"

Anyone for a serving of Cognitive Dissonance?

Martina... why? Why the UK? Why Bath? Why not something more local to you? What's the driver here? You've not really elaborated... do you sense something key in the UK property market? Many Landlords on here will tel you it's just getting harder and harder each year... just like you suspect... some of us might not even consider expanding today, because of how hard it's getting, some of us may be looking at other stuff (possibly holiday lets in somewhere like Malta?)... or cryptocurrencies... some of us may well be looking to get out of the game entirely (not me, I love it)... I don't advise leaving management to an Agent... that being an on-line one or a 'proper' Letting Agent... I advise doing it yourself (always)... then I secondly advise trying your hardest to live near the property you will support... many do, some don't.

I feel that you miss out on all these targets... and I also feel that you know it deep-down. Far be it from me to pour cold water on your aspirations... but isn't that what you've really come here looking for?

I think so.
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« Reply #3 on: August 14, 2021, 11:00:23 PM »

It must be possible because lots of overseas investors buy property in the UK. Some of them leave theirs empty but others do rent them out. But if you can't make the sums add up it doesn't make sense to do so. You can always read up on what checks are needed (electrical safety check once every 5 years, annual gas safety check) and buy all sorts of insurance cover to cover burst pipes. broken boilers etc.
Cost involve finance, maintenance, void periods, letting fees and management fees and tax.
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« Reply #4 on: August 19, 2021, 11:41:17 AM »

Hi all,
Thank you so much for your replies. I'm only just seeing them now! Sorry :) I thought I'd receive replies by email (will check settings). Let me elaborate a bit further :))

1) My husband and I absolutely love the UK. We have this dream where when we're semi-returned (which my husband may well be approaching in the coming few years), we'll spend 3-6 months a year in the UK. Malta's lovely but the summer months are simply too hot / crowded. So in our mind, we could perhaps buy a BTL property which we would make use of in the future. We have young kids but we really hope they choose to continue studies in the UK in future.

2) Re costs. Yes unfortunately my calculations are not making this venture worthwhile. Yet I am determined :) I believe that if we find the right property at the right price, we could yield a good return. The agents are my current downfall.

3) Nevertheless, even if our rental experience isn't too great, I think owning a property in the UK (we're looking at Bath specifically) will always be a good investment? We're going for a 2 bedroom apartment in central Bath in a Georgian building, so surely this will retain or increase its value (I hope!?)

Please feel free to give me more feedback, I really appreciate it. Also to answer your question, we are in fact investing in Malta but we wish not to put all our eggs in 1 basket. We worry that malta in the future might experience a glut of empty properties for various reasons. England is also very familiar to the Maltese. Many maltese own properties in London and we've had many years of trade between us. Your systems seem so well-organised that it entices us to invest.

May I ask a little question: we're interested in a few properties right now, but we feel we should wait to purchase - do you think prices are likely to go down following the current SDLT holiday tax (end Sept 21)?

Thanks again! Tina
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« Reply #5 on: August 19, 2021, 11:53:05 AM »

You can instigate price falls yourself by low-balling your offer(s)... then explaining why if you're asked. A rejection of a BTL offer should never be taken personally - I have never paid asking price for an investment - I have had plenty of offers rejected. You are putting yourself into a strange position though, because you are going to be emotionally invested in what should be an unemotional purchase.
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« Reply #6 on: August 19, 2021, 12:37:48 PM »

Yes true re emotional investment, that's what my husband keeps telling me to beware of. However, I think, in my naivety, we're choosing to invest in something that combines different elements: 1) brings rental return, just not yet at the rate we wish to see 2) it appreciates in value, hopefully 3) added bonus of loving the country.

Thing is we could easily invest in another European country or more property in Malta etc - but there is the 'romantic' element pulling us to the UK. My feeling is that it doesn't make it a poor investment (being emotionally invested).
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« Reply #7 on: August 19, 2021, 12:45:55 PM »

Will property always appreciate in value? Sure. On a long enough timeline this will be as good as guaranteed... failing a massive uptake of cheaper 3D-printed housing happening... but they won't be apartments in a Georgian building.

What I'm saying now is that there are things other than costs to look at. Let's fast-forward to the time you're retired and splitting your time between two locations... say for 6 months at a time... what will you do with the property in the UK then? Will you let it out on 6 month contracts? That's risky. You could easily get overstayers that scupper your plans massively. Or will you leave it empty while you're away? Many years ago I lived in two properties for a while... one in a city centre through the week and one in suburbia at the weekend... the costs rose dramatically and it's what actually got me into the Landlord game (prior to that I had no interest, really). I'd not recommend either path you could go down here... because of the risk and the costs (for me it was even down to the micro level of keeping fresh bread and milk at both locations... not just Council Tax, good broadband etc.).

So if you're happy that your investment will always increase in value and you're happy that your emotions are leading the way over your calculating brain... just figure out what the worst that could happen is, then go for it.

At least you see this... many don't.
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« Reply #8 on: August 19, 2021, 03:30:53 PM »

The management of the property is something that could make or break your dream. I had never heard of Howsy,but I looked at Trustpilot.The reviews are either 5 star,written in gushing terms naming one specific employee,or 1 star,usually saying "I wish I could give these people no stars". At weekends the out of hours service for the UK is apparently handled by a call centre in Portugal. Not great,when you have a tenant with water pouring through the roof at midnight.Bath is lovely,but also gets pretty busy in summer. Our summers are cooler,but of all the reasons to come to the UK our generally miserable wet climate is not often cited!
I know all about the historic link with Malta,and the mutual liking and respect.You do seem to understand that your emotional investment could cloud your judgement. You also sound less naive than I thought,and I wish you good luck. The famous teacakes in Bath are nice with lots of butter.
 

   
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« Reply #9 on: August 20, 2021, 08:20:59 AM »

Thanks again for repliesÖ one way or another weíll go ahead with this decision once we find the right property.

The management of course is the worrying part, Iíd love to think I can manage things myself from here but the reality of that wonít work. In an ideal world I would find a local person I trust who I could pay to letís say open for the plumber when tenant is unavailable, basically be on site when itís absolutely necessary.

Iím wondering if itís possible for me to build a sort of database of contractors who Iím able to call on when there are problems. Then the rest of the work can be done remotely say applying for licenses/ certifications and so on.

We also thought of using a high street company say for 1 year until we learn the ropes a bit ourselves.

Like you said the management could make or break us so Iím weary!

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« Reply #10 on: August 20, 2021, 09:17:19 AM »

We also thought of using a high street company say for 1 year until we learn the ropes a bit ourselves.

This doesn't make your challenge any better. You're saying this like it's your get-out-of-jail-free card... sure, you'll pay a bit more, but you'll get a great service and - somehow - be able to "learn on the job". Name me a good high street bricks-and-mortar Letting Agent and I'll name you five bad ones. The reputation the industry has isn't undeserved. It's very well deserved. Most Agents are terrible... as a small-fry Landlord they'll not have any incentive to look after you, especially. They'll have other Landlords with ten, fifteen, fifty properties on their books. They'll get all their attention. Just because they're on the high street doesn't mean they're successful... that's just how it used to be, because it was the only way.

Please don't pin your hopes on this.

I think it's one of my ow personal mantras for Landlording - live near your properties. I know many Landlords don't. And it doesn't protect me from issues... no way... but I can't imagine living 200 miles away from a property I let out and having to consider some works... you'd either have to go, have implicit trust in someone or just take a chance that the wool is not being pulled over your eyes. You can do a lot with photos and even video calls, sure...but nothing beats sometimes being there. Covid has also proven tough for this. I really cannot imagine living in a different country and needing to go there.

I think your best bet is to come over here when you let the property. Obviously there'll be parts of the purchase transaction you will be here for, so I expect that's acceptable to you. I would interview all of the prospective Tenants by doing my own viewings and I will be clear, open and transparent with them... you might find, like I was once pleased to find, a Tenant who works as a Handyman at a hotel and said that he'd "probably never call me" because "I can do most stuff"... and I was happy with that... he did call me, because the boiler leaked and it dripped all over the programmable thermostat (who puts an electrical device directly underneath a boiler? Barratt!) so it needed replacing... but that's not my point... my point is if you find that Tenant who is very self-sufficient then you will help yourself in the long-run -but be wary of the Tenant who says they can do everything... but actually ends up breaking everything.

An Agent will do none of this sorting and sifting for you. They'll just want the first person they can get in there and they'll want to push you onto their Full Management offering... £s. Agents aren't there to help you fulfil your dreams... they exist to spoil them.
« Last Edit: August 20, 2021, 11:19:11 AM by Hippogriff »
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« Reply #11 on: August 20, 2021, 10:27:51 AM »

If you are in any way inclined to be a worrier, I think having a property overseas would be very stressful.As Hippogriff says,finding a good agent is a matter of luck.You really don't know if you can trust them until a real drama occurs.I have had some lovely attentive people who have done a great job, then they move on and get replaced by morons or slick chancers.
If you are thinking of apartments you need to read up on the world of pain that is  leasehold ownership in England. Basically,don't do it,buy a house.   
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« Reply #12 on: August 20, 2021, 11:34:28 AM »


Anyone for a serving of Cognitive Dissonance?

Martina... why? Why the UK? Why Bath? Why not something more local to you? What's the driver here?

It's true that returns may be a challenge, but there is also long term property appreciation. I think she's explained that being already invested in her local Maltese property market, she's looking for diversification into other property markets.
In that case, Western Europe, specifically the UK (due to language issues) seems like a fair choice. With people moving away from cities due to more remote working, University towns such as Bath would seem like a reasonable idea.
Malta after all is a 3 hour flight away, she could go and come back on the same day. This seems like a good investment hedge for her overall, or am I missing something.
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« Reply #13 on: August 20, 2021, 11:49:10 AM »

At the time I was trying to tease-out from the OP as to why the UK in particular, why Bath in particular... and the OP did come back with some rationale. I wanted to test whether it was all just a romantic dream. I think there is a level (sic) of level-headedness to the OP... so I would rather put it in the category of determination and I'd advise persisting with the dream... as long as our reality hasn't been forgotten about. Just like another poster mentioned, anything Leasehold also worries me (personal experience has not been that kind to me, and I wouldn't do it again) - although reform is likely on the way in this space... who knows when?
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« Reply #14 on: August 20, 2021, 01:18:18 PM »

At the time I was trying to tease-out from the OP as to why the UK in particular, why Bath in particular... and the OP did come back with some rationale. I wanted to test whether it was all just a romantic dream. I think there is a level (sic) of level-headedness to the OP... so I would rather put it in the category of determination and I'd advise persisting with the dream... as long as our reality hasn't been forgotten about. Just like another poster mentioned, anything Leasehold also worries me (personal experience has not been that kind to me, and I wouldn't do it again) - although reform is likely on the way in this space... who knows when?

Got you Hippogriff.. valid points. Thanks for replying  :)
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« Reply #15 on: August 21, 2021, 08:21:10 AM »

1) brings rental return, just not yet at the rate we wish to see 2) it appreciates in value, hopefully 3) added bonus of loving the country.

In reference to SDLT... https://www.bbc.co.uk/news/business-58274811
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« Reply #16 on: August 24, 2021, 11:43:57 AM »

Interesting article. I was told by someone based in Bath that recently there has been a been influx to the SW of UK. He mentioned SDLT incentive as 1 reason but also mentioned COVID and the exodus from cities and so on. He also told me it is a sellers market so I should wait till prices decrease somewhat after the summer. This article seems to say that prices are still on the rise... Who knows? :)
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« Reply #17 on: August 24, 2021, 02:55:21 PM »

As an agent, I will sometimes lose letting business to a firm like Open Rent as they are cheap and offer good value so long as you know what you are doing but I have yet to find a landlord (or tenant for that matter) who feels they have been well-served by an online managing agent. I think trying to manage it yourself would be a mistake but, if you tried, then taking out a  comprehensive Homecare package with British Gas (or another local provider) would be my first priority. So much though depends on the type of tenant you get as some are only too happy to hang around waiting for contractors and others simply do not see that as a tenants responsibility. Please also remember that the headline rate for some managing agents may disguise an expensive hourly rate for their contractors An old Georgian house sounds great but what are the maintenance bills like as it may be listed so you could easily spend the equivalent of a months rent on upkeep. If I was going to own a flat that eventually I was not planning to live in for half  the year then I would look to buy a modern apartment with a concierge for security.
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