Hi guys,

so far so good with my first investment property. I paid below market rate because it was a repossession. It has now been redecorated and is ready for letting.

The agent introduced me to somebody from The Home Group (http://www.homegroup.org.uk/landlords)

They are looking for properties to provide assisted accommodation for vulnerable and socially excluded people
("young people leaving care or who are homeless, men and women who have been in the criminal justice system, older people, vulnerable women and their children – many of them fleeing domestic violence, people with mental health problems, learning difficulties or physical difficulties, refugees and asylum seekers")

The tenant will be the Home Group but the occupiers will stay for about 6 - 8 weeks with a visit from a care worker ever 2 - 3 days.

They are offering to pay above market rates, to return the property to my in exactly the same condition and will pay for fire doors and alarms to be fitted. Any problem tenants will be removed quickly.

I calculated my ROI on £650 pcm, the agents valued the property at £725pcm and Home Group are offering me £850 pcm.

On one hand this is the worst kind of tenant, on the other they will be closely monitored and I have assurances from an established organisation that the property will be well cared for. I will get above market rates and potentially a tenant I can target my next purchase for as they need more properties.

However this is still a big risk and I want to be absolutely sure that it's worth it and that I've got everything covered.

My questions:

1) Has any one had any experiences with The Home Group or similar organisations
2) What more can I do to make sure that the property is returned to me in the same condition that it is now.
3) I'm not sure if I should use a standard AST or an alternative/ additional agreement, any thoughts?
4) Would you do it?

Thanks,

Luke

(01-10-2012 09:13 PM)luke_vincent Wrote:  Hi guys,

so far so good with my first investment property. I paid below market rate because it was a repossession. It has now been redecorated and is ready for letting.

The agent introduced me to somebody from The Home Group (http://www.homegroup.org.uk/landlords)

They are looking for properties to provide assisted accommodation for vulnerable and socially excluded people
("young people leaving care or who are homeless, men and women who have been in the criminal justice system, older people, vulnerable women and their children – many of them fleeing domestic violence, people with mental health problems, learning difficulties or physical difficulties, refugees and asylum seekers")

The tenant will be the Home Group but the occupiers will stay for about 6 - 8 weeks with a visit from a care worker ever 2 - 3 days.

They are offering to pay above market rates, to return the property to my in exactly the same condition and will pay for fire doors and alarms to be fitted. Any problem tenants will be removed quickly.

I calculated my ROI on £650 pcm, the agents valued the property at £725pcm and Home Group are offering me £850 pcm.

On one hand this is the worst kind of tenant, on the other they will be closely monitored and I have assurances from an established organisation that the property will be well cared for. I will get above market rates and potentially a tenant I can target my next purchase for as they need more properties.

However this is still a big risk and I want to be absolutely sure that it's worth it and that I've got everything covered.

My questions:

1) Has any one had any experiences with The Home Group or similar organisations
2) What more can I do to make sure that the property is returned to me in the same condition that it is now.
3) I'm not sure if I should use a standard AST or an alternative/ additional agreement, any thoughts?
4) Would you do it?

Thanks,

Luke

hneighbours would love you bringing in these undesirables next to them.
Would YOU want to live next to one of them.
Very few of these companies refuse to restore the property as it was.
Even RSL's have refused to restore properties. once 3 year lease period has ended.
The damages can be more than any rent that was ever made on the property.
Only dirt cheap properties in crummy areas up North should be used as you should have less capital exposure.

I agree with Paul.

The agreement you have with the 'Home Group' will not be an AST - it can't be - it will be just a regular tenancy, often known as a bare tenancy or a contractual tenancy.

What thet means is that (other than contract law) your rights really depend on what the contract says. I bet THG provide the tenancy agreement, an agreement they had written for them, rest assured, it will not have been written with the intention of protecting the landlord, it will have been written with the intention of protecting THG. If you had a 'regular' tenant approach you and say "I'll have the house, but you use my contract", you'd tell them where to get off!

There have been many stories of landlords suffering in deals like this - but often that is due to ignorance. People sign contracts without realising what they are agreeing to. So, invest some of that potential extra rent in an appointment with a solicitor, let him read the contract and advise you exactly what you are letting yourself in for.

Hi guys,

thanks for the quick feedback. Love this forum!

@ Paul,

I'm still learning about the details of the different types of tenancy, so didn't realise it wouldn't be an AST. I guess I will have to check with the lender and insurance company that any other agreement is acceptable to them. Yes they did provide their own contract. I got my solicitor to take a look at it and as you expected its very weighted towards them and full of holes. OK so if I still think it's worth it then I can get a stronger agreement drawn up. But alarm bells are ringing that the agreement wasn't very fair in the first place.

@ David

I know they are undesirable occupants. And I am concerned that they don't have any negative impact on the neighbourhood. One of the reassurances that I've been given (and will have to make sure is reflected in a contract) is that any issues with the occupants are quickly dealt with.

Maybe I'm being naive but everyone needs a place to live - including the undesirables. If I can provide that accommodation at a premium at the same time as 1) ensuring that they don't have a negative impact on the neighbourhood ( the Police are kept informed of the arrangement) and 2) ensuring that the property is returned undamaged then it is potentially a good business move?


The question is can I ensure 1 & 2 ? Sometimes big organisations can be even more difficult to deal with than the public (more used to playing legal game etc). Seems to me that there is generally a bad opinion of HAs. A google of "letting to housing authorities" brings up a lot of vitriol, but then some people specialise in LHA tenants?

I would suggest you carry on with your success of your first property.
Do the same again.
There are plenty of good tenants out there.
Don't bother with these types of leases.
You seem to be managing things yourself.
Eviction is an enormous problem.
You don't have to accept BMV rents.
These type of tenants will cause you problems as believe me this group will hand a property back to you if it isn't performing.
They will not take the hit.
It will be in one of their conditions which is one of the many holes you have had identified.
I would avoid like the plague!!!

Whilst not quite so vehemently against this as Paul, I would stress that it is only viable if you truly know what you are letting yourself in for. It's all (well, almost all) in the contract.

We manage properties for the Home Group on these tenancies (Stonham Housing)

They are a very large housing association managing over 50,000 houses.

They offer long term lets, no voids.

You do have to bring houses up to scratch with heat/smoke alarms and doors etc, so there is a capital outlay at the start.

We've had these properties for 4 years, starting with their predecessor (BASS).

I've only had a pleasant experience with them and I'd be happy to provide more homes to them.

If you want any advice or further information, please feel free to contact me.

glenn.ackroyd@nationalpropertygroup.co.uk

Do they just require properties up north? or do they let some down south.

I have 12 let to a provider who in turn let to the local authority and these are my least hassle properties.

(03-10-2012 10:01 PM)Glenn Ackroyd Wrote:  I've only had a pleasant experience with them and I'd be happy to provide more homes to them.

I'm sure that is very reassuring, one only gets to hear about the 'rotten apples' with schemes like this and (as I said above) there is no logical reason for nasty suprises so long as you make sure you know what you are letting yourself in for. Standard business practice really

(03-10-2012 10:16 PM)cashflow_king Wrote:  Do they just require properties up north? or do they let some down south.

I have 12 let to a provider who in turn let to the local authority and these are my least hassle properties.

They require them all over the UK. The ones we manage are in West & South Yorkshire.

I'm getting a new list of properties required tomorrow. Usually they need around 50-100 all over the UK.