Hello readers. It has been a busy month so far and there has been lots of fallout from the Autumn Statement. We also had the last session of The Property Vault Medway for the year, but don’t fret as it will be back next year on 24th January. We raised £1097.44 for charity over our first three meetings, and the proceeds will be donated to Samaritans in Strood. Our next charity will be one that supports the homeless in Medway and I am very excited to give more details about that at the next meeting.
Our next guest is Georgina Burnett who is best known for being a BBC presenter, as well as for her YouTube channel and blog Property Porn. So book below and put January 24th, 2017 in your planners!
I am really looking forward to hearing her speak and you can book tickets by following this link.
Today I am posting about a large four bedroom property on Rock Avenue Gillingham. It is in quite a distressed state and is offered at a guide price of £250,000.
Many of my landlords talk favourably about the properties on Rock Avenue, Gillingham due to their good-sized rooms and convenient location. Indeed the rooms in this one are very large as you can see in the floor plans below.
Starting with the basement room, the room looks to be over sixteen metres squared. On the ground floor, the lounge could be converted into a very large second bedroom by adding a stud wall. On the first floor, I would convert bedroom four into a second bathroom and keep three rooms upstairs. This gives you five rooms in total, three very large and two smaller. I think the large rooms should achieve between £480-500 per month and the smaller rooms £425-450. At the lower estimates this should achieve a monthly rental of £2,340. With 2 weeks void period per room this comes to an annual income of £27,410.
Looking at similar properties in the area and the condition of this property, the guide price seems a bit high so an appropriate offer may well be accepted. Don’t forget to budget for: a Stamp Duty bill of £10,000, full redecoration of the property £3,000-4,000, new bathroom £1500-3000, new kitchen £3,000-5,000, interlinked smoke alarms and other electrical safety items £3,000-5,000, fire doors £2,500. There may be further and unexpected costs to make sure you have a contingency fund and prepare a full specification of works before purchasing the property.
So total spend, with purchase price, could come to £279,500. So overall this comes to a 9.8% yield or a 30% return on investment (at a 75% LTV mortgage). However, if you can get an offer accepted this yield/ ROI could of course increase.
The good news is that terraced house prices on Rock Avenue have been outperforming the rest of Gillingham house prices, having increased 11% in the last twelve months and 43.8% over the last five years, compared to a Gillingham average of 10.1% over twelve months and 45% over the last five years.
Right to Rent Update
I wanted to also let my landlords know about important legislation contained in the Immigration Act 2016 that came into effect on December 1st, which further strengthens the process that landlords must carry out on new tenants to make sure they have a right to rent.
Previously, landlords could only face civil penalties but from 1st December it is now a criminal offence that could lead to 5 years imprisonment or an unlimited fine. I would also stress that landlords must check ALL occupants of the property, whether they are named on the tenancy agreement or not.
You must now report occupants without the Right to Rent via a gov.uk Eform. You can access the form here.
There are also issues around direct and indirect discrimination, and if you are not performing the same checks to all of your tenants you could open yourself up to such claims against you. Further, the requirement to take copies of sensitive data and retain them for 12 months after the tenancies have ended mean that you must take steps to ensure sensitive date is protected within the confines of the Data Protection Act. I would recommend making use of secure password protected cloud storage.
If you need advice on this or if you want advice on a rental or need a property sourced, I am always happy to hear from you. My email address is email@example.com and you can ring me on 07944 726 676.