A New Wall Appeared from Santa

[Ferdinand]

Funny tenant story.

 

Having interred mum in the graveyard before Christmas, and having risen from what felt like my own deathbed with the 6 week Christmas lurgy, I went to visit long term tenants to check for storm damage and maintenance needs. The front window installed by the person who restored it before I bought is leaking so my 2G man needs to seal it properly.

 

They have installed a stud wall across the former archway in their double lounge because the 3 sproglets have reached the age of 2-4 where they make enough racket that mother wants peace and a closed door sometimes. Bit of a surprise. Tried to contact me but I have been a little incommunicado.

 

For these particular Ts it is fine as they found the house (1910-ish 3 real double bedrooms under 100k 3 years ago - very unusual even here) and there is a side deal where they get to buy the house from me when they can afford it, and in the meantime it means that I get a cared for house, and they are able to make modest adaptations by agreement, or I do and it will be covered in the sale price. He is a trained builder, and I have trained him a bit on detail-obsession.

 

I was not expecting a new wall to come from Santa, mind. I think this qualifies as self-build .

 

Ferdinand

 

Edited February 18, 2020 by Ferdinand

[Big Jimbo]

1 hour ago, Ferdinand said:

Funny tenant story.

 

Having interred mum in the graveyard before Christmas, and having risen from what felt like my own deathbed with the 6 week Christmas lurgy, I went to visit long term tenants to check for storm damage and maintenance needs. The front window installed by the person who restored it before I bought is leaking so my 2G man needs to seal it properly.

 

They have installed a stud wall across the former archway in their double lounge because the 3 sproglets have reached the age of 2-4 where they make enough racket that mother wants peace and a closed door sometimes. Bit of a surprise. Tried to contact me but I have been a little incommunicado.

 

For these particular Ts it is fine as they found the house (1910-ish 3 real double bedrooms under 100k 3 years ago - very unusual even here) and there is a side deal where they get to buy the house from me when they can afford it, and in the meantime it means that I get a cared for house, and they are able to make modest adaptations by agreement, or I do and it will be covered in the sale price. He is a trained builder, and I have trained him a bit on detail-obsession.

 

I was not expecting a new wall to come from Santa, mind. I think this qualifies as self-build .

 

Ferdinand

 

Great to have good tennants, and to look after them. I like the idea that they can buy the place off you when then can afford it.

[Moonshine]

2 hours ago, Ferdinand said:

there is a side deal where they get to buy the house from me when they can afford it,

 

That's an interesting side deal, being nosy can you give details how that works?

[Ferdinand]

1 hour ago, Moonshine said:

 

That's an interesting side deal, being nosy can you give details how that works?

 

Sure.

 

At root it is "my word is my bond" between people who trust each other. I have known the family for a number of years, and their parents were former tenants (with a number of labrador retrievers) who rented a slightly difficult property from me for 2-3 years (which was quite doggable since the plan was to turn it into a road and they rented knowing that it would be time limited). Parents were trying to set up for retirement, so I suggested such a deal to them as Ts/friends - subsequently a grown up offspring was getting married (one partner had previous children), and they asked me to think about the same for them, as their credit was seriously shot (6-7 years recovery shot).

 

I did that whilst the couple were renting elsewhere. They found one house, which I warned them off as it would be a stretch and needed 20k spending. Then they found this one, which fitted the bill - after 2 years or so. A early 20C semi in an unusual situation renovated (not that well but to Regs standard) by somebody else.

 

The deal itself was for:

 

1 - Initial 3 year fixed rent at a little below market (ie take bottom of the suggested range from EA) for a slightly easier on-ramp.

2 - Ignore credit checks ?. To be fair the parents would have stepped in - that sort of people.

3 - Letter of intention giving the not-quite-binding right to purchase at half way between purchase price and market price at purchase  point, adjusted for any long term expenditure - eg my extra 3% Osborne Stamp Duty, I have fitted a ventilation system and a loft storage area (loft legs), and they have built a small conservatory economically (which I made them insulate properly) and fenced the garden. In practise it will be 20 minutes horse trading.

4 - 3 years are nearly up so I get to put it back to a market rent plus a bit from this year (had conversation about it last summer), now that maternity leave is over and they will have 2 incomes again.

5 - When their credit is back they get to buy it as above.

 

The "not quite" in 3 is  just in case my business melts down entirely (unlikely). So I get (hopefully) a low risk and OK rental investment (7% yield ish), and they get to have a family home, do stuff, be secure and have an easier way onto the housing ladder. Estd. 75% chance of a one way bet for both sides imo. At the end of the day my arse is covered as I still have the house should things go entirely wrong, or they not follow through, and it is slack I can afford to cut for people whom it helps make significantly happier / more secure.

 

A more usual thing is for LLs to leave rents fixed for years and years in cash terms for really long term Ts on fixed incomes; a lot do that. Also quite commn to offer first refusal of a sale to a sitting T.

 

At the end I will get a reasonable increase, which hopefully will be small enough to not engage CGT, and they get a house at maybe  10-15% below true value (hopefully within the negotiating margin so avoiding Below Value issues) and may end up with a lower mortgage percentage at the end of the day. In 2.5 years property is up by about 16%, so we are both safe if it doesn't spontaneously fall down.

 

It's a little intricate and very bespoke, but that's the deal. I would do another one in the right circs, though it takes care and I would not have more than a small number of them at once, as it is all tighter now.

 

F 

 

 

 

Edited February 18, 2020 by Ferdinand