Author: thesecretlandlord

My tenant is causing damp to my flat.

thesecretlandlord

6.15pm I make a pina colada. Before you ask, just because.

6.16pm the phone rings.

I glance down and scowl, it’s a handyman. I take a sip and answer the phone. The coconut cream has barely a chance to touch my tongue when the acrid taste of being a landlord overwhelms my senses.

‘I’m really sorry to bother you SL, I didn’t know who else to call.’

I hold my tongue, I want to say the agent, but manners dictate I reply not.

‘I’ve come to this property where there’s been a report of damp and it’s crazy.’

‘OK, what’s crazy?’

‘Well, this flat, this guy who’s moved in a couple of months back, there’s black in places where I’ve never seen black. I’ll send you photos now.’

I take a deep breath. I don’t want photos. I don’t want to hear about condensation mould. I eye my drink longingly and look at the Spotify music list I’d been about to play. I sigh and flick to the WhatsApp photos pinging through.

I’m pretty pissed off when I see them.

‘How has this happened?’ I ask.

‘The guy says he can’t afford to put the heating on. But he’s there brewing cider and there were four or five other people just sat on the floor drinking – they were all drunk!’

‘Sorry, did I hear you right? We’re in lockdown and what’s happening?’

‘There’s no furniture SL, there’s no bed, he’s just sleeping on a quilt. Can you see it in my photo I sent? Not even a cover on it! There’s no tv, no chairs, they’re just all sat around on the floor drinking his homebrewed cider. They’re well pissed, and they’re loud, making a right racket. I’ve had to get out of there as they’re making allegations.’

‘What sort of allegations?’

‘They’re saying the building is unsafe and so he doesn’t have to pay his rent.’

‘How is the building unsafe?’

‘They’re saying about this black mould everywhere.’

‘That he’s caused by not putting the heating on, by brewing cider and by having loads of people around like it’s a pub? Not to mention breaking the law given it’s a national lockdown!’

‘Exactly, that’s what I said to him. I said to him, “Listen mate, this is rented as a home not a pub, I’m telling the agent.” And then I called Mrs Violet at the letting agent and told her she needs to do an inspection straightaway to put the guy to rights, but she told me she wasn’t allowed because it’s lockdown and I says to her, “But how can I be allowed to come here and its lockdown?” and she says it’s because I’m maintenance. And so, I had to call you SL.’

‘I understand, well thank you,’ I reply.

‘I don’t want to be telling you all this bad news, but you know I have to be straight. If you don’t do something pretty quick that whole flat is gonna be covered in black within the next month.’

‘I understand, thanks.’

‘Oh and there is more…well, I bumped into the neighbour down below the flat where this guy is brewing cider and he’s not happy.’

‘I can understand.’

‘No, you can’t, it’s not just the noise and all them people, one of the cider vats fell over last week and leaked all through his ceiling, he was showing me the damage.’

I take a very large sip of my now bitter tasting pina colada.

To be continued…

Why I Hate Property Educators.

thesecretlandlord

So I read in the news today that allegedly some uber successful businessman is buying the UK’s “largest” property education network.

I use alleged and air quotes freely as I have no clue as to the veracity of these claims.

And I wonder about the rest.

Anyway, if I’m to believe what I read then said successful businessman has decided to capitalise more on his company’s success and bought said company from the property educator.

Now, I don’t know what you have to do to bag the title of ‘property educator’, I wrote a book – The Secret Diary of a Landlord, and so I’m wondering does that get me into this hall of fame?

I think not.

You know the reason why not?

Because I tell the truth.

I do not share any secrets (apart from life in property is way less glamourous than what any sucker will have you believe) and I do not charge any subscription fee. I also have no course to sell.

I have no retreat for you to holiday at.

I have no deal to spin you.

I have no secret knowledge to impart other than the words on the pages of that book – which you can read for free if you have Kindle Unlimited. There is no further upsell.

Seriously, I have nothing to sell you other than the experiences in that book.

You see, dear reader, I am a real property investor.

I do not make money by selling smoke and smiles and promising you really big things that you dream about and will make your life great.

No, I present to you the reality of property. The battles and the fights, the legal wrangles, the fuckwits you will have to deal with and the stress that will likely see you want to top yourself at some point in your career.

Because, in all honesty, that’s how this business is.

It is not all smiles and holidays and jamborees and sexy deals over dinner.

No, running a property business is much like any other business. It’s fucking hard work.

It takes time, it takes money, it takes effort, it takes sleepless nights, it robs you of joy, family time, friends and peace of mind.

In short: there is no quick win to being a property millionaire.

But that, dear reader, is not what man on the street wants to hear. He wants to hear how easy it is, how you just have to cross a palm (any palm will do) with gold and breathe three times and do a twirl and some other NLP shit and everything will be alright.

Do you know what: WAKE UP!

It’s because people are not willing to put the work and effort and understand the truth about this business why property educators continue to flourish.

When you decide to finally build a property business you want to be proud of and that will make you money: Start it.

Take action. Understand life will be hard. Really hard. Then get over it and learn to work your business.

Business means business, treat it as such and stop looking for an easy answer and a quick buck.

OMG I got a letter about cladding

thesecretlandlord

Unless you’ve been living under a rock, you’ve heard of the cladding horror.

I’ve read enough and heard enough heart-breaking stories to know cladding is truly the scourge of the housing market. People have been left with homes that are effectively dangerous and worthless, and they are trapped in them.

It is horrifying how this happened or even been allowed to happen.

So being the prudent person that I am, I risk-assessed the leaseholds owned a couple of years ago. I was relieved to see the buildings were not classified as tall (high risk), and knowing I didn’t own in any tower-blocks (old or modern) gave me some small comfort.

Over the last three years I’ve seen management agents toughen up on fire regulations (a good thing), and I’ve upgraded various doors and contributed towards various changes which meant we complied.

So it was with terror, and I mean terror, that I opened a letter from a managing agent to inform me they were investigating cladding at a building where I own a leasehold flat. They had organised a survey and they would let me know in due course.

My first move?

Straight onto the property details. Scanning all over the property, all I could see was a small section, some four metres by five metres of decorative timber work, above the archway to the carpark.

Phew, I said to myself, that must be what they’re referring to.

But then my mind decided to catastrophize. Because, you know, in these sort of situations this type of thinking is helpful. Not.

Cue the rabbit warren of the internet.

It is a dangerous place to be.

Especially, when you’re searching for the latest updates on cladding. I learned:

  • There’s no longer a vertical height restriction (previously only buildings of over 18 metres and 11 metres were deemed to be at risk).
  • To sell a property, even if it hasn’t got cladding, you need an EW1S form and there is a huge delay on getting these surveys.
  • Without an EW1S form you will struggle to get a mortgage (although there were some changes to government policy, but it wasn’t clear lenders were fully on-board).
  • Even if you get an EW1S form the value in some cases was being set at zero.
  • The cost of putting-right works was enormous.

And as you’ll know when you search on the net, a little bit of knowledge is dangerous. You soon think yourself an expert, when clearly you’re not.

And so I found myself watching a YouTube video on how to identify cladding on a building.

Cut onset of sicky tummy.

You see, prior to watching this video, I had believed we had concrete painted rendering on the outside of our two-storey built block. But now, with my internet expert hat on, I started to wonder if that was actually the case.

Was it in fact polystyrene?

Was my flat clad in flammable materials?

Would it need to be removed at huge cost?

What should I do?

My mind went into overdrive as I compared and contrasted various schemes from stories I found online and searched through the bills people had received. They were eye-watering. I’m talking six-figure sums.

And so I started making some notes to try and figure out how much of a bill it would be…And before you know it, questions and costs started spiralling.

So then I decided to search through the planning documents of the building and see if there was anything there about the materials used. Alas, given it was built in the 1980s there was nothing available online.  

So I called my friend for advice. And he told me to call the managing agents.

Good call and dumb move I hadn’t thought of the obvious before.

So I call the agents to discover I, like many other owners, had called in rather panicked. They apologised profusely for the ‘lack of specificity’ of the letter and explained the survey was just for the timber clad area.

Relief flooded through me.

I know I’ve been lucky. This cladding scandal has only just begun.

Leasehold Shock: The Scandal of Section 20 Notices

thesecretlandlord

Today started well. I woke early and decided to accompany my morning tea with a programme about Dorset rather than the news.

It made me feel way much better about the world.

And then I decided I better put the rubbish out and on the way back I should check the mailbox.

I wish I hadn’t.

What had started as a good, sunny, promising day has rather gone backwards.

The reason being?

I have just opened a Section 20 notice for £8,371.63.

Of this, I had no warning and no idea this was about to hit. I am stunned. This is my 8.33% contribution of the total £100,459.50 block costs towards works for brickwork repair, concrete repair, overhaul repair and redecoration of timber windows and frame and bay roof covering renewal.

I have no idea where the bay roof renewal comes in, as there is no bay roof at the property.

And it gets worse: this is just for the rear of the property.

Stunned.

Truly, I thought I was prepared for most things, but suddenly opening this bill for these works has side-swiped me.

And the worst thing is?

Despite the invitation for observations, I know I will get nowhere. No matter what I bring up (like how the hell does this work cost so much, it’s not even new windows????), I know every single thing I try will fall on deaf ears.

And the reason for that being?

There is already a long term qualifying agreement with the contractor and thus, the job for them is in the bag, regardless.

Me trying to observe how ludicrous this sum of money is, how we should get comparison quotes – none of this will be addressed. I will be informed there is a long-term qualifying agreement, I was informed about this before yada-yada and to be frank, it’s a waste of an email.

It’s a waste of time me even trying to rail against what is frankly a scandalous system.

And it pains me to admit defeat before I’ve even started.

But, that is the system when estate managers have agreed long-term qualifying agreements: You get no say.

The estate managers will inform you, something along these lines: ‘we told you we were entering into this agreement and you had a chance to make observations’. But very often, these contracts are wide-scale and based on a number of different estates they manage (and of which I have no knowledge) and thus trying to make any sort of competent observation about these matters is fruitless.

I know this, because even when I was specific about our site and brought up the issue of the caretaker not being around for the last 18 months and yet we’re paying an annual salary of £37,670, I was ignored.

I was told the caretaker was there.

Despite the fact he wasn’t, and I couldn’t even sort access for the gas man to undertake works.

But I digress.

Fact is, this is the reality of owning leasehold. There is very little control. And that is the shocking reality.

The Ministry for Housing, Communities and Local Government (MHCLG) estimates there are around 4.3 million leasehold homes in England. That’s an awful lot of people not being in control and having the potential shocker of a bill to wake up to one fine day.

Right now, the best I can hope for is a decent payment plan over an extended period of time.

And that shocks me. It shocks me because I have quit on even trying to argue. Even trying to attempt to argue.

And that feels wrong on so many levels.

Why I’d prefer a non-paying tenant over an empty property.

thesecretlandlord

I know. I sound insane. But we all have to make business choices, and this one is mine to make. Keep reading and I’ll explain more.

I’ve been reading more and more about landlords who are scared to rent their properties right now. They’re worried the tenant won’t pay and they will have a nightmare to evict them.

All of these things are true.

There is nothing I can say to make that situation any better.

Maybe rent protection insurance? I have no idea if it works or what the small-print says because I’ve never taken a policy.

Not even now.

Not even now in these uncertain times.

The reason why I don’t?

I believe in active and close management. That means no matter what, you always, always ensure lines of communication are kept open.

Trust me, I know it’s hard when emotions get in the way and you think/ know you’re being fleeced. But communication is really the only way to solve any issues.

So, I’ve had a property come empty lately and we’re about to tenant it again. Unsurprisingly, it’s going to somebody on benefits (lost their job through Covid) and to be honest I feel happier with that.

Now, I know a lot of landlords don’t like taking tenants on benefits, but I gotta say, right now that is a pretty secure option. Even if you do take a tenant on who’s got a job, you have to be mindful they are only one pay check away from being made redundant.

I know that sounds harsh, but this is the reality of the situation.

To be frank, this was always the reality, but I don’t think a lot of people realised it.

So, why am I still willing to rent a property even if the tenant stops paying?

Because empty properties are expensive properties.

When you have an empty property it is you who’s footing all of the bills: council tax, water, electricity, gas. They’re all yours to pay. And then you have the mortgage and the insurance – which by the way for an empty property – will increase in premiums and lower in the risk coverage.

Empty properties are also a target for thieves and squatters. Scrap metal is still a booming business and opportunists will take any opportunity they can to strip your place of copper, lead and anything they think they can get any value from.

In March this year I had a property empty for one day.

One day.

Later that night, thieves broke in and stripped the wall lights, the plastic cover of the electric shower and the bathroom door. I have no idea what was so special about this list of items – but what I can tell you is the resulting bill to put these things right was thousands. I ended up having to rewire, install a new shower (frustrating given the one that was in there was just a few month’s old) and supplying and fixing a bathroom door.

It sounds bad and maybe you’re thinking the property is in a high crime area – it’s not.

I got unlucky.

The agent (now fired) had left the lean-to door on the yale lock and not locked the kitchen door with the mortice lock (invalidating my insurance policy). That evening a freak wind storm brought down the back fence panel leaving the property exposed and on view.

All it took was a random passer-by with bad intentions to apply a little pressure to the yale lock and bingo – full access was theirs.

Unfortunately, unbeknownst to me at the time, I wasn’t aware the previous tenants had taken all the curtains and so to anyone passing by, it was quite clearly an empty property.

And so, as I say: empty properties are expensive properties.

Which brings me back to my earlier point and why I’d prefer a non-paying tenant over an empty property.

And it’s to do with risk assessment.

An empty property will always be a risk. There is always a risk something may happen. Somebody may break in, somebody may illegally move in, the roof may leak and you may not know about it, the boiler may blow up and you don’t know about it.

Every which way I cut this cake: an empty property is a risk – and it’s one that costs me money rather than making me money

A non-paying tenant?

The risk, I believe, is smaller.

Firstly, most tenants are paying their rents. That means you already start out with more chances of getting your rent than not.

Secondly, landlords should thoroughly reference check and get a guarantor where you can.

Thirdly, welcome people on benefits and feel secure in the knowledge the state is paying.

I know these are scary times and the world is shifting, but it’s critical to assess the risks. Not doing anything, can also be a risk.

Why the British are falling out of love with property investment

thesecretlandlord

Read any news report about the property market in the last few weeks and you’d be forgiven for not realising we are in the middle of a pandemic with a recession looming, prices just keep rising.

And yet, landlords are selling and no tranche of newbies are making their way to take their place. RICS data shows in the years from 2017-19, demand for rental properties has been steady, but there has been a consistent decline in new landlords.

Hamptons data shows the number of UK landlords has hit a seven-year low and The Mortgage Works’ (TMW) Buy to Let Barometer research in April this year, found landlord confidence in the future of their letting business had fallen to record lows.

Of course, you could say this is to be expected. Landlords are in the frontline for dealing with the fallout from Covid-19 and non-paying tenants. The eviction ban and then the introduction of a six-month notice period to regain possession, along with massive court delays, meant landlords watched helpless as their assets got further and further out of reach.

Commentators popularly voice it’s all about the money – landlords are cashing in due to the tax situation and ever-changing legislation which are seeing expenses multiply and profits dwindle.

In part, I agree with this. But, I don’t think these explanations really get to the heart of the issue and the reason why the British have fallen out of love with property investment.

Control is what I really believe this is about.

Back in the early days of buy-to-let people invested for their future, for their pension, a nest egg they could sell up, a bit of extra cash on the side. Owning and renting out a property you could go and see, touch and feel, was more real than stocks and shares. Plus, with a property you also had the chance to do it up – you could add value, you could control your asset and maximise it to your heart’s content.

Of course, you could also leverage. And, unlike the stock market, the property market is not as volatile. Plus, where a stock may be worthless in years to come, a property will always be worth something – and even if prices drop – you could always go and live in it yourself.

Property, therefore, was seen as a safe bet.

But 2020 has shown us, while property is fundamentally the most basic human requirement and we all need somewhere to lockdown to, property can also be a liability.

Owning a property where the tenant is not paying rent and yet the landlord still gets stiffed with the ongoing maintenance and repairs bill is a dangerous concoction. Add to that the government stitch-up of landlords footing the never-ending bills to meet ever-changing legislation and yet not being allowed access to their asset, makes this a situation about to blow.

Who in their right mind would invest in an asset class where you have no power to make the customer pay and yet get lumped with all the expenses? No business can continue without income and only mounting bills to pay.

Landlords are now exercising the only control they have left: to sell.

3 Things I Wish I Had Known Before I Became A Landlord

thesecretlandlord

1. Everybody lies

Look, I know people don’t always mean to lie and sometimes they thought they were telling the truth, when in fact the opposite was true, but that’s life.

Everybody lies.

The sooner you get used to this line of the thinking, the easier your landlord life will be.

And when I say that, don’t think for one minute I’m just talking about tenants, nah, I’m talking about everybody.

I’m talking about the solicitor you use to purchase a buy-to-let and who says everything’s fine and then you learn two years later there’s a clause that prohibits you from letting the property and the freeholder’s on your back threatening you with a multitude of sins and you’re thinking WTF?

I’m talking about the builder you pay handsomely to install a new bathroom and who you think has done a good job to only learn months later they didn’t bother to put a frame in and the bath pulls away from the wall and floods the downstairs flat.

I’m talking about the housing officer who wants to rehome a vulnerable family and who promises you the property will be monitored and looked after and who does a disappearing act – along with the vulnerable family – and who leave your property smashed up and in smithereens.

I’m talking about so many things I could go on and on and it would burn your ears with the boredom, but the fact remains: Everybody lies.

Get used to it and get on with it.

2. There’s no Lamborghini in the drive

I swear when I started out in property there was a promise of untold riches. Before long, I thought, I’ll be on a helicopter jetting off to a 5-star isle and all will be well in the world.

No.

For the run of the mill landlord, that’s not the case. For the very few, it will be, but my golly you need a lot of bloody good stock!

A few years ago a good friend of mine said to me ‘Why buy another house, it won’t make you happy’. And I looked at him and I thought, what a dick. What a dumbass thing to say. I love property, of course I should buy more, how else am I ever going to get my lambo!

But later that night, I realised he was right.

It was a turning point in my life when I realised, you know what: I have enough. I don’t have the lambo and the helicopter and the rest of the shebang I figured would come, but I do have a lot. I have way more than so many others and so I should be happy with what I have.

And I don’t remember the Buddhist saying, but it’s something like the pursuit of happiness which will make you unhappy. And something to do with clinging onto things and stuff.

As I say, I’m clearly not Buddhist, but I have reached a new level of understanding and meaningfulness in my life where I know money and even the pursuit of it will bring me no joy.

And I’m ok with that.

I’ve made my peace and I know, while the council and many others seem to believe I have a magic money tree at the end of the garden, I know magic is only for fairy-tales. And I’m way too old and far too cynical to believe in all that razzmatazz now.

3.Get rich quick is for suckers

In the beginning I read about property prices doubling every seven years. There was a graph that was touted about which had all these rising lines showing how rich you could be if you invested in property.

This is not the case across the whole of the UK.

Yes, I agree some places have seen stratospheric rises, but there are many areas where growth has yet to get back to 2003 levels.

Yes, there are some developers who make shedloads of money by flipping and selling and I’ve been fortunate to have done a few deals, but as an ongoing business model, it’s tiring and time-consuming. My developer friend tells me his life is like ‘feast or famine’, I would add it’s also a roller-coaster of risk and I’ve known many to lose the shirt off their backs on a particular deal.

And that’s the other thing – who knew you could lose money in property? I certainly didn’t when I started almost two decades ago. Back then, I was thinking it would only be a couple of years in the game and then I’d be out partying with aforementioned lambo not giving a shit about anything coz I would be bathing in riches.

Again, not true.

Yes, of course you can make money in property, but it’s a slow, hard, long game. Play it quicker and maybe you’ll win, but maybe you’ll lose.

What I can tell you is all this time on, I didn’t think I’d still be renting out property for a living.

*

When I started, I didn’t really have an end-game; I had a goal, a dream. And if truth be known, none of it included me still being a landlord all these years later.

And don’t for one minute think I’m having regrets about my life, because I’m not. I’m just sharing some of the things I wish I’d known then, before I started.

But the truth, regardless of everything I wish I had known before I became a landlord, is that I would do it all over again.

Get Ready To Learn The Truth Behind Buy-To-Let

thesecretlandlord

‘Parasite? The Secret Diary of a Landlord’ is set to take the property world by storm – sharing the truth the other side of the door.

Publication date 15th October. Buy your pre-order copy here

Buy your pre-order copy here

Cashflow is king for landlords to make it through Covid-19 (& the aftermath!)

thesecretlandlord

In real estate terms, I’d classify as a baby. I may have nearly two decades of experience, but in terms of market cycles, that’s not so much. Yes, I have lived through and survived the financial disaster that was 2008, and I managed to hang onto my hat, but still I don’t take anything for granted.

I was fortunate to reap the benefits of cheap credit and some stunning mortgage deals scored before the 2008-mess, but as I’ve learned: Good things never last.

Enter George Osborne.

As a portfolio landlord with properties nationwide I can assure you his plans were pretty disastrous for somebody like me, especially when that somebody like me didn’t own the properties in a company due to previous tax planning that then got scrapped.

But there we are, life has a habit of happening while you make plans.

Osborne’s tax changes worked – especially section 24. He forced me to sell some good stock to keep my business going and made me wonder what to do about some of the lower priced/ higher yielding stock that had yet to recover any values – despite being held for over 15 years.

Perhaps many people will be surprised to learn that, they’ll think – but the property market has been amazeballs these past few years? You must be a crap investor. I would reply, yes, but not everywhere. The UK market is big and unequal and is one of the reasons why I have no interest in ‘averages’.

It’s a questionable and galling process to sell off good stock (I term that the stuff that really exploded in value) to keep the bad stock (those where capital values are firmly pancakes but earn decent yields).

And it’s something I debate often with myself when I look again at places I sold and what they’d be worth now (don’t recommend this).

But the thinking then, as it is now: I cannot pay a gas bill with capital gains unless I sell.

Equity is meaningless unless you sell (or remortgage – but this doesn’t work for me with S24)

First and foremost, for any business to succeed you need cash flow.

Cash is what pays your bills, ensures you keep your stock in good condition, gives you the ability to pay the tax and run your business. It’s a bugger I have to pay so much, but I remind myself often: Paying tax is a sign of success (dress it up anyway you want to make yourself feel better!)

Anyway, I’ve been selling off for a number of years now and I know that goes against a lot of what other investors do, but I’m OK with my decisions – I’ve also been buying more, but that’s a different story.

Anyways… in March this year, I decided to start selling more. I’ll get in on the ‘Boris Bounce’ was my thinking.

You know as you sit there reading this, that didn’t happen.

What did happen is Coronovirus and a complete freezing of the property market. Viewings weren’t allowed, house moves weren’t allowed, evictions still aren’t allowed. Pretty much anything to do with the normal functioning of the property market wasn’t allowed.

Which is a mighty big sucker of a suck.

Of course, the media claims the market has now turned, properties are all shiny and sought after again, but when I called up a few agents (and some were even in desirable commuter belts down South) the response I got was not what I thought.

And so I’ve been mulling on this for the last few weeks (and when I don’t know what to do, I do nothing) and then I said to myself: What have I learned this time?

I know we’re going to hit a massive recession, lots of people are going to lose their jobs and the outlook for the next five years is bleak.

So why am I not selling, when I intended to sell?

Despite everything – the world falling apart, loads of gloom and doom on the horizon, everything going to pot yada-yada – people will always need somewhere to shelter.

People will always need somewhere to lockdown and to hide from the world.

Regardless of anything else happening on the planet, property is a key need, and that’s my business.

I fully expect the government to mess about more with policies and taxes and for me to question again why I’m in the market, but for now, I still believe what I have are assets. The market will fluctuate, nose-dive, top-out and everything else in-between, but the most important thing is to remain on-board for the ride and come out the other side.

Your property planning may not be perfect and things may not turn out quite how you wanted, intended, hoped for or anything else. But if you’ve got cashflow, you can go the journey. It may be bumpy and lumpy and you may have regrets for signing up for the ride, but remember this: everybody needs somewhere to live, love and lockdown in.