ASK503: Should this put me off Derby? PLUS: Should I buy despite planning uncertainty?

0:02Hi, I'm Rob. And I'm Rob. And this is Ask Rob and Rob. Hey everyone, welcome to Ask Rob and Rob. This show where you get your wonderful questions in, we give you some heartfelt answers, some answers with effort and care returned to you for this wonderful format. And this wonderful format has been going for a long time now. So let's keep this show on the road. Let's get your questions in. Rob, can we get a quick reminder how our dear listeners can get their lovely questions onto the show we sure can all you've got to do is go to propertyhub.net slash ask that's propertyhub.net slash ask you can send us a written question for our signing times column or our favorite option send us a voicemail because then we can answer you right here on the show all right let's have our first question now this one is from russell you've recently said that derby city is one of your recommended places to invest However, there have been recent articles in the last few months and the last year saying it's ranked very badly.

0:57I think the fifth worst place to live in one survey. Also, the worst place for a city break was mentioned just a few months ago. And it does have quite high levels of crime and NHS and poverty. I just wondered, because I've been looking to invest there, is it still somewhere that you would say is a recommended place to invest? Thank you. Russell thank you really appreciate your question it's great that you've been going off doing your own research and it's even better that you've asked the question because if you've found this and it's made you think twice then other people will definitely be in the same position I went off and found the article that you were referring to and it's a bit of a funny one because it references a survey but I can't find anywhere what the source of the survey is or really get too deep into understanding how they've come to this the thing about all these surveys is they are very sensitive to the exact inputs used to get completely contradictory things coming out so just a couple of years ago there was a survey saying that derby is one of the best places to live and now apparently it's one of the worst and it probably hasn't changed that much in the last couple of years in fact it's better in the last couple of years so it really depends on what you're measuring also the survey say it's the worst place for a city break i wouldn't worry about too much i love derby as an investment location it wouldn't be my first choice for a city break either but i'm not investing on holiday lets there i'm investing in long-term rentals there.

2:13When it comes to long-term rentals, what still attracts me to Derby is firstly the strength of local employment. Secondly, the lack of quality rental accommodation. There's been more built recently, but there's still not enough. And thirdly, the sheer relative affordability. So both property prices and rents are relatively, compared to the rest of the country, very affordable compared to local incomes. And that is the key for me because that provides the headroom for prices and rents to go up. It's the opposite of the situation that you have in the southeast, where basically it's all so expensive that it's topped out.

2:49It can't go up any higher without wages going up. Whereas in Derby, that's not the case. There's also been a lot of investment in Derby's town centre with more to come, which I think is real positive as well. So for me, I'm still super pro Derby, but you might do your research and come to a completely different conclusion. So it's great that you're doing that research and it's great that you're asking the question so Russell really appreciate it thank you Russell next in we have a question in from James hi Rob and Rob really love the podcast been listening to yourselves the last two or three years and it's really helped me sort of start my property journey so thank you so much for that the advice I'd like to get from you today is that I have recently had an offer accepted about four months we are actually on a property in Manchester as soon as I had the offer accepted I applied for planning permission to turn the property in from a residential to a HMO.

3:37The property hasn't yet completed and I've received the result of the HMO application, which was rejection. I have since appealed that and I've spoken to a few solicitors and they've advised me that they think the outcome or likelihood of the HMO license being granted is quite high. However, I wanted to hear your advice on whether you think it would be worth sort of taking the risk to actually complete on the property. Obviously, if the appeal is successful, then there is no problem but if it's rejected then obviously i'm left in a situation where the numbers simply don't stack up in terms of sort of a standard buy to let rather than hmo and i may be forced to sell the property and probably only just get my money back when taking into account stamp duty so you know the risk here is the sellers will put the house on the market because i'm not in a position yet to complete someone else may get the offer and sort of beat me to what I think is a very good investment.

4:31So I just want to tell you your thoughts on what you think that's kind of worth the risk if you've been in a similar situation in the past. And yeah, we look forward to hearing from you. Thanks. James, do I think it would be a risk to completing this property? Yes, absolutely. Yes. That wouldn't be an investment. That would be more of a gamble. I appreciate it may be an informed gamble because you have advisors telling you that you'll be fine. But the fact of the matter is it's been rejected and you may win that appeal, but I assume those advisors were surprised at the rejection because they're telling you it's fine.

5:03They're not putting their money on the line because you've said you're worried about walking away from a great investment, but you've also said it doesn't stack up as a normal buy to let. So without this HMO license in place, you do not have a great investment. And that's what everyone else will see as well. if you're looking at this investment and you can't get HMO on it and the only way you deem this to be a great investment is with the HMO license then it's the same for everyone else no one else is going to look at this as a great investment and if they do they're not a great investor you may be worried about losing your deal but as you probably heard on the podcast over the last weeks and months the market is very much in the favor of the buyers right now even in places like Manchester.

5:49So while I understand the emotion and the work that you've put into this deal makes you want to go forward, that's not a good enough reason to do it. And I think you know this. I think deep down you know this is not the right thing to do and hence why you're asking the question. But this is great because I know this happens over and over again and it happens in different ways but people get invested into a deal and it's something we call deal bias. We've seen it within our own business where we've spent weeks, months sometimes, times working on a deal and we can't quite get it to a place we're super happy with but because we've invested so much time and therefore emotion we want to make the deal work and we challenge each other within the business and go is this deal bias and then as soon as we say that it's like it clicks it's like yeah we're putting so much bias into this deal because of the effort that's gone into it and i know you've put a lot of effort into this deal but effort doesn't make it a great investment the license will and you don't have that so my advice as you've asked for it is do not proceed you realize you're in a position of strength and if this deal doesn't come off there are other deals to be done just take action don't hang about now is the time to be doing great deals i'm sure you can do very good deals next year but the market is particularly favorable at the moment so make sure you take advantage of that good luck so there you go two more questions answered and like we said at the beginning, we'd love to have yours too.

7:13So do get over to propertyhub.net slash ask if you've got a question to send our way. But that's it for today. We will see you back here on Thursday for the Property Podcast. Until then, have a great week. Bye-bye. Bye-bye.