I was called out to a Market Appraisal in Leeds last week. The property was a maisonette that a Landlord had just bought at auction. This was originally a 2 bed flat above a shop that was now a 4 bed flat above a takeaway. The takeaway business was unaffected by the sale and the flat had 2 tenants renting a room each (the other 2 rooms being vacant). The Landlord wanted to know how to maximise his rent from the flat upstairs.
To access the flat we had to go round the back of the row of shops, past the bins (the contents of these was mostly on the ground) and up a metal staircase to access the flat through the kitchen on the first floor. An unpleasant and impractical entrance. Upon entering it was immediately obvious that the flat hadn’t had any work carried out for a long time and was in a bad way. I could see that it hadn’t been updated for something like 40 years. Solid pine units which would have been decent quality back in there day looked most dated now. Possibly even worse than the 1960’s tiles was the wooden panelling that was everywhere! Floor to ceiling on the walls, and covering the entire ceiling! This was clearly a fire hazard and I was struck by the fact that no one had given this serious consideration in all the years they had been present.
When I asked the Landlord what work he had planned, he told me it would just need “a lick of paint”! I was shocked and told him he needed to think about that some more, pointing out the obvious fire hazards.
Continuing on I was guided to 2 bedrooms also on the first floor whilst the Landlord excused our visit to the Eastern European tenants that occupied a room each. These rooms were originally the lounge but a previous owner had erected a stud wall to create more bedroom space in order to increase his rental income. These rooms were double size bedrooms but only just, and the effort to squeeze a stud wall in was apparent not only by the way the furniture had been shoe-horned in, but also the awkward way this wall negotiated the windows to the front. Patterned green carpets were just visible through the detritus on the floors.
Feeling increasing despondent I was lead to the 2nd floor. The double bedroom to the front was displaying more than it’s vanity wished for as it’s wallpaper had been steamed off in sheets where it had flirted with the radiators. A broken mirror remained on the far wall, presumably the remnants of a previous tenant’s bad luck. Dilapidated furniture and the worn out mattress completed a scene back dropped in tired magnolia.
Onward to a bathroom that had more in common with an outside toilet. No, the plan was not to put a new suite in… Oh dear.
A double bedroom to the rear of the 2nd floor in a marginally better state than the one to the front had rounded off the tour. The fitted wardrobe door swung open on an uneven floor to meet me as we continued a strained conversation. After closing the door twice, it was clear it wanted to remain open and I shuffled out if it’s way.
It was obvious that the intention was to get as much rent out for as little spend possible. This would mean renting the rooms out to 4 individuals. Again I asked the Landlord what the plan was and amazingly again I was told a decorator would be the start and finish of it. What about the carpets and the furniture I asked? A vague shrug was returned. I offered an insight on how competitive this market is and how high the standard needs to be to attract tenants and to keep voids down. In current state, this property wouldn’t come close to competing, no matter how much paint you put on the walls. I was quite amazed that 2 tenants were already living there.
The Landlord said that there was a shortage of housing and there must be demand. There is a shortage a small affordable accommodation to rent but this is mostly for well maintained 1-3 bedroom homes, not dilapidated flat shares above takeways I assured him! There were nearly 1000 rooms available to rent within a mile radius of here at this time. Nearly all of them will have been a great deal better than these.
What about fire doors, I asked? This went as follows:
Landlord: “Will that get me more rent?”
Landlord: “Why would I do that then?”
Me: “Fire safety?!”
I was offered a blank stare by way of reply. The flat had no smoke or fire detection systems. These bedrooms had beneath them 2 kitchens, one of which being a food cooking business! There were no fire escape routes. Wooden panels covered every flat surface in the flat kitchen. The electrics hadn’t been looked at it decades. The list goes on…
I did my best to explain this and then took this as my cue to leave. I wished him all the best and let myself out.
This was probably the worst one I’ve seen this year, and although it’s quite an extreme example, it does highlight a number of very concerning things.
Number 1. You must do your research!!! I can’t emphasise this point enough. The quickest way to lose a load of money and give your yourself a load of stress in the process is by buying property without knowing what you are doing. What is the size of your market? What is your competition? How much do you need to spend?
Number 2. You must understand your responsibilities as a Landlord, the legislation, and the dangers to your tenants . In particular, you need to understand fire safety, gas, and electrical regulations just to begin with. There has been over 150 changes to legislation affecting tenants and landlord just in the last 2 years! How many of these are you aware of?
Number 3. If you are buying at auction, you should ask yourself ‘why is this property being sold at auction’? This is often because it can’t be sold on the open market. The current use of the property may lack planning consent. It may have had work carried out without building regulations approval. This increases risk to you if you become the owner. Do not put your hand up until you have read the legal pack, viewed the property, and ideally had your builder view it too. You need to know what you’re getting into. Aside from the property potentially not being safe, it may not be mortgage able either.
If you want to buy a property in Leeds for investment purposes, feel free to give me a call to talk it through first.