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Various LHAs/councils offer to rent property direct from landlords. The property is then let by the LHA/council to social tenants.
Is there a comprehensive list of which LHAs/councils offer what deals, such as management fees, rent guarantees, average rents, etc?
Some might say """The property is then let by the LHA/council to anti-social tenants.""".
Been to a pitch from one council offering significant bonus for signing up & completing such deals. They must be desperate (... errr.. probably suffering problems of RTB whilst statutory requirements on councils still continue/get worse...).
Anti social or not, the council I talked to (Norwich) guaranteed the premises would be returned without damage (other than fair wear or tear). They deal with any anti social behaviour, and pretty much everything else if you want them to. They also guarantee the rent whether the premises are occupied or not, and they cover any council tax liability for the whole duration - even if there are no tenants. They can also arrange for repairs that are the landlords responsibility if you want hands off, and deduct the amount from your rent payment.
No sign up bonus though and they charge 10 per cent management fees.
That might not be appropriate for many people, but it might suit others. I think the key is having the information so everyone can make an informed choice between what diffetent councils are offering.
Councils have been doing this for years and does suit some people. The only problem is you lose control of the property for the 3/5yr period. For example your circumstances might change and you want to sell up. I think most councils go for the longer term rather than shorter periods of say 1 yr. Every council has its own deals depending upon their current rental requirements. The bottom line is where ever you are going to rent check your local council and don't be ruled by best council deal so I will buy in that area.
Mine run a scheme and pay 10% above the LHA rate + no management fee
Ties you in for 3 years which many lenders wont like
They do minor running repairs and pick up the tab
You get paid come rain wind or shine so yes it has its advantages
These are the bullet points
Guaranteed rent each month, even during void periods Inspections carried out monthly on commencement of tenancy and subsequently quarterly 10% higher payments than Local Housing Allowance (LHA) rate Day-to-day repairs undertaken at no additional cost No administration or service fees Payment of utility and council tax bills for duration of lease. Property returned in good condition taking into account fair wear and tear. No obligation to provide white goods as we prefer unfurnished properties
I haven't been tempted yet but never say never
I dont know if there is a comprehensive list is though on all schemes, I doubt it somehow
Jonathan Clarke. http://www.buytoletmk.com
Do you think this makes sense for an investor who 1. Fortunately does not need a mortgage and 2. Cannot be hands on?
Is there a certain type of property in your area that would suit this scheme and which would also be sellable in the future when it came time to exit?
Yes they can be popular and make sense yes if hands on is not your thing
And they do pick up the tab for many of the extras so your net profit rises
They will check it out beforehand and ensure it is safe and complies with HHSRS
Councils can be a bugger to work with . Slow and cumbersome creatures.
But at least you know they in essence mean well and they wont go under
And they have a proper complaints process if stuff does goes wrong.
In my area to get the best return I would go for maybe something like this
So a cheap 4 bed house @ 165K . You would get £1130 pcm so 8.2% yield
By going for a 4 bed rather than a 3 the 4th bed box room itself is worth an extra £247 pcm
If a 3 bed is say 150K to buy then the yield on that 4th bed alone is nudging 20%
So pound per square foot that 4th bed really pulls its wait
LAs who PRIVATE LEASE typically grant a 12 month Lease and pay 90% of applicable LHA rate - retaining 10% as management fee.
In SE LHA may be 20/30% below market rent - so LL may then be getting say 90% of 70% of MR - around 2/3rds of MR.
You would need to pay for Gas/Elec certs at outset as well as freshly decorate and maybe provide carpets/laminate flooring as well as a cooker.