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  • Location
    South London
  • My goals
    To build a BTL portfolio with healthy profits and good capital appreciation (I've not yet set SMART goals as to exactly how many properties or profit yet, so come back and check soon)

    Having started my property developing business I want to get to a point where I am developing and selling 6 properties a year.

    To build a good network of contacts in the property industry and potentially do a few JV's.

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  1. They don't seem anything out of the ordinary. You've added some things into the fee's which are not controlled by the solicitors, E.g. Stamp duty. If it's a leasehold property the usually charge more, because it's more work for them. I've paid between £350 and £1000 for conveyancing, £350 being a churn and burn place, get the work done as fast as possible and get the next client in (not recommended) and closer to £1000 being a larger firm. My last if i recall correct was around £700 inc VAT.
  2. There isn't a long leaseholder/freeholder section so this is probably the next best place for my conundrum. Sorry for the potentially long read! I am extremely ill informed as to what to do next. If someone could point me in the right direction, whether it be advice on here, or which professional I should be taking to about this - I am happy to pay for a solicitor if that's what's needed The building is a 2 story Edwardian house (semi detached) that was converted into 2 flats in the 70's I believe. The ground floor is one flat and the 1st floor is the other flat. No shared space or communal areas. Both flats have their own external front doors. I've just received the statement of estimates and accompanying notice in relation to the proposed major works at my flat. I've read threads on here so was able to submit my observations and my preferred contractor previously without issue, however the specification was 15 pages and read more like a spec for a large block of flats. My chosen contractor declined the tender and the other flats chosen contractor didn't respond. In total 14 contractors were contacted (3 of which were ones the other leaseholder and myself put forward - the rest the freeholder has sort), only 3 of which gave estimates. the freeholder is choosing to go with the lowest, which is £26k before VAT and all other fees FYI: The original Notice of intention to carry out works was issues in February 2019 (if that makes a difference) The breakdown for the estimate is as follows: Contractor: £26,000 VAT@20% £5,200 Surveyors fee @ 11.5% to include 2% CDM fees: £2,990 VAT @ 20%: £598 Block management company fee @ 5%: £1,300 Total = £36,088 My portion (Half) = £18,044 This seems absolutely ridiculous to me. When i'd spoken to professional roofing companies at the time, they seemed to indicate it would cost somewhere between £12k-£16k plus VAT. And half of that for a one man band that i've used before and has replaced a friends roof for under 10K The surveyor, has said: “that the freeholder is willing to offer payment plans over 3 years at an interest rate of 5.99% per annum on a reducing-balance basis. He would also support us meeting with lessees in person to discuss alternative means by which the freeholder would be able to perform upon its repairing covenants.” - What does this mean? FYI The managing company were originally wanted to do repairs to the roof but they seemed expensive (£3k for replacing some slates and 2 new gully's). At the time a friend had had his entire roof replaced for under £10k so wanted to see if that was a better option in the long run. They then switched to wanting to do a notice of major works for full roof replacement. A few thoughts come to mind a) We had no say in who the Surveyor was, or able to put forward our own. 11.5% + VAT for someone to write a specification and oversee the work seems very expensive. Should the surveyor have been part of the tender process? b) Why does the management company want 5% of this project? We pay £250 per flat per year to the management company (one-man band), all they do is send out a few letters each year regarding insurance and service charges. c) should the management company not be the ones to who write the spec and oversee the project d) The management company has said “ Can you please ensure that funds are available to forward to us upon request”. I've read my lease a few times and it doesn't seen to have a provision for advanced payment, Is this different for Major works? Absolutely any help will be appreciated! Thank you
  3. I would definitely include the mortgage fee as part of your figures for the ROI. Personally, I would make the lower offer and then leave that with them. I'd also make it clear to the agent you are looking at other properties, with other agents and if you find one then you'll need to withdraw your offer. The agent might be more likely to try and convince the seller your offer is reasonable as they'll want the commission and to get it off of their books. Which area is it out of interest?
  4. Seems like you are getting a good mortgage rate, 1.59%? You may have missed the mortgage fee off of the amount invested, which would affect the ROI slightly. The figures do seem to stack up to be a good investment, not incredible in my opinion, but something that I would be very happy with at this point in the cycle. On the other, if you think that the area is going to be good for capital growth then it is a very good investment indeed.
  5. Hey Djpix, Just wondering about your mortgage rate including fees - it zero fee or is it £1k-2k added to the mortgage? For my yield calculations, I add an amount for unknown maintenance and known maintenance like gas cert, boiler insurance, etc. I also add in for 1 month of voids per year. Does the property need freshening up before renting it out? Is your £500 rent top end, or is it an easy rent you could achieve? James
  6. Hi Liam, Just wanted to give my advice re your help to buy. As Adam mention previously, and is also my understanding, you won't be able to use help to buy (Equity loan) and then change that over to another mortgage product (including BTL) without giving the government back their portion of the help to buy money. The Help to buy Equity loan is only available to new builds, but you mentioned you would start renovating the house? If it was me starting out again, as the help to buy equity loan is interest free money for 5 years, I would be looking to buy somewhere with 2 bedrooms and rent one of them out to a lodger. Even better would be somewhere with 2 bedrooms and a separate living room, then you could rent 2 bedrooms out to lodgers and have the living room as your bedroom. Lodger's rent money is tax free upto £7,500 so it makes perfect sense to use this to your advantage in the beginning of your property journey. From that base, you can then start saving again for a deposit for a BTL property. James
  7. @Private Finance Hi Private Finance, I don't currently require any kind of bridging but thanks for your input.
  8. @Adam Hosker Hi Adam, thanks for posting the article - very interesting info. I will continue researching my options and report back to the community if I come up with anything useful.
  9. @snookjas Hi Jase, thank you very much for your response. Do you know how the solicitor's promise works? Did the seller essentially pay off the £8k for the grant to be removed from the property?
  10. Does anyone have any experience with grants from the council, and subsequently, getting a mortgage on a property? I own a long term empty property which is eligible for a £25k grant from the council to bring the property back into rentable condition. The main condition surrounding the grant is that you must rent the property to LHA tenants for 5 years or 'lease' the property to the council for 5 years once the council gives you the grant and you finish the work. If you wish to dispose of the property within those 5 years, you are simply required to repay the grant in full, otherwise the grant is just free money. My concern in how mortgage companies will view the situation and whether it would reduce my chance of getting a, good rate, mortgage. Does anyone have any thoughts or experience with this? Thanks
  11. Hi Rajesh, do you want to attach a copy of the fully special conditions on here? It would help to see them
  12. Great link Dennis, not come across that before. Very useful - Thanks!
  13. As others have mentioned in this thread, it all depends on where you are in life and what you require. Based only on rentals, i.e. you are not going to use any other strategies to get extra cash through property , e.g. flips/refurbs etc: If you are younger with a well paid job (and are already able to save money each month) or older with a good pension, you probably wont need the income to fund your lifestyle, so it may make sense to be more weighted towards capital appreciation (The caveat is that the numbers should still stack up so that you wont be losing money). If you are younger with a low paid job (and have won the lottery/got inheritance /saved your ass off) you would probably want to be weighted much more heavily towards yield so that you can either use the money to fund your lifestyle or help you to save faster for your next property purchase. Also be aware of your tax situation regarding mortgage relief. If not using a Ltd company and you have a low-ish paid job, receiving yield now will probably not affect your mortgage relief situation (more money in your pocket). However, if you have a more highly paid job, you may creep into or be in the higher rate tax bracket for mortgage relief, meaning, after tax (and only being able to claim 20% mortgage relief) you'll receive a substantially lower yield. In that scenario, it might make more sense to delay/forgo that yield, for capital appreciation which; you can extract later on down the line; is taxed lower than income; you get to decide when to realise the gain. My personal strategy is try to have a balance and achieve a bit of both (be it slightly more weighted towards more yield) by purchasing some lower yielding properties in areas that I expect to appreciate more, and others in areas with better yields. You also need to keep in mind that while the market is very likely to continue rising (save for the usual wobbles and dips etc), capital growth is not guaranteed. IMHO I think that at some point in the not too distant future, there could be changes to the CGT system which might make capital appreciation a worse option, and I doubt they'll make the current taxes on rental income much worse. So as Dino mentioned, yield is tangible and can be in your pocket now. Capital appreciation, however unlikely, may never happen.
  14. Hi Dennis, Indeed, they should obviously pay for the repair anyway, but the guilt factor is important in actually getting the money from them easily. Also, it cements that they need to be more careful and not damage the property, from the outset. I am going to find someone to repair it and charge the tenant. Not easy finding someone who'll do a good job of the repair though. I'll add some before and after pictures once it's repaired
  15. Well, here's something I've not come across previously. Tenant has caused damage on Day one of the tenancy. Friday I had professional photos taken of a staged flat, to use in future adverts. Friday evening and Saturday morning staging removed and flat cleaned. 12pm Saturday the inventory was done and at 2pm I check the tenant in. 5pm tenants tells me they've damaged the floor. I have a look and it's half a 5 pence piece gouge out of the brand new (good quality) laminate floor in the middle of the room. Credit where credit is due she did own up right away and tell me. She told me she thinks it happened while they were moving their furniture/fridge in. I'm not really sure what to do in this situation. If they'd dented the wall or door I would just want to leave it until checkout, however, because it's in a kitchen/living room and the gouge is deep and has taken off the top protective layers of wood and left the more soft looking underlayer, my main concern is when they inevitably mop or get water in the floor it could damage it further. How would you move forward?
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