ASK516: Help - My portfolio is costing me sleep! PLUS: Will this stop me selling my flat?

0:02Rob D:Hi, I'm Rob. And I'm Rob. And this is Ask Rob and Rob. Welcome to Ask Rob and Rob. It is that mainstay of your Tuesday where we have two questions and we give two answers. We have some great questions coming up today. But first, a quick reminder of how you send in a question of your own. Yes, this is super, super simple. Whether you want to appear in the Sunday Times or be featured on this very podcast, the same destination as where you need to go. And that's propertyhub.net forward slash ask. You can leave your questions there in a variety of ways. And once you have, you may get your question answered.

0:38Rob D:And I'm pleased to say the first lucky so-and-so who's getting their question answered this week is Chris. Hello, Rob and Rob. Chris from Lancashire. I felt obliged to get in contact with you. Firstly, to thank you for all your content over the years. They've been instrumental in my property journey. Let me give you a very quick overview. I started listening to you guys in 2018. 2019 got made redundant from work, remortgaged our property, which we've been renovating since 2016. So we had some capital in it, bought a property to flip, flipped that property, made a bit of money, flipped the next property, so on and so forth.

1:18And we ended up with a reasonable pot of money. So the idea was to then get into rentals. So we started buying rentals in 2022. We're now just about to complete on our eighth. A mix of houses, flats, so it makes it so much easier sometimes when you buy a block of three. It just elevates your portfolio. We only rent to government-backed contracts at the minute. I have sleepless nights over the renter's rights bill, I think the oppression of landlords is going to get worse and worse as we move through the years. We just can't afford to have tenants not pay and go through the legal expense of evicting somebody that basically wants to live for free.

2:08It's something that I'm not willing to take on. I've looked at Airbnbs. I've kind of shirted around the idea of serviced accommodation. again it's not that I'm devoid of putting any kind of effort in it's the risk seems to outweigh a lot of the rewards at the minute with taking tenants on and it's probably worth noting that my housing stock is around the lower end of the market so anywhere between 150 ,000 pounds some of the flats are 85 ,000 pounds and then I think our most expensive property is 180 ,000 pounds. So capital appreciation is going to be quite limited over that time. It's all about the monthly rent.

2:50So what I'd like to know is, given we have some one-bed flats, some five-bed HMOs, they are all going to social care providers, what other opportunities are there in the market that I could explore for a hands-off landlord portfolio? Going to a estate agent to cover A lot of the services that they provide is not something that I'd like to do. And it's not because of the cost. It's more because if the tenant just decides to not pay, they just don't pay. I know I can get landlord insurance cover that only lasts for a certain period of time. I suppose when you start looking at the problems that landlords are facing, the more you look at something, the more information you find and you got bombarded with negative experience experiences so that's probably where I am at the minute I'm on the negative side of dealing with tenants the renters rights bill and ASTs can you give me a glimmer of hope of a different direction that we can take tack onto again thank you so much for your content and I really hope I've managed to get my point across thanks Rob and Rob you're doing a fantastic job Chris thank you for your question

4:05Rob D:now we don't want you to be losing sleep if I'm honest I don't think you should I don't think really anybody should over this bill. We've talked about it in depth, about what it is, what it means, and how to work with it. And with anything in life, you probably should let it play out and see what the reality is, rather than dreaming up how bad it may potentially be. But I think most people will let's after this very quickly and it'll be fine. But it applies even less so to you, because you are renting exclusively to government-backed social care providers. For those listening who don't know what that is, it basically means that your rent is guaranteed by those providers.

4:44So you hand your property over to those organizations and they

4:48Rob D:return it to you many years later after paying you rent month in, month out. So it's their challenge to navigate, not yours. So I wouldn't be that worried anyway. I'd let it play out. I'm not nervous. I appreciate I'm a positive chap, but having looked into it and talked about it extensively on the podcast. Yes, okay, would I introduce this bill? No, not in its current form, but I think there's aspects of it which are fair and useful. But am I now terrified and thinking that property investment is going to be over? Far from it. But with your strategy in particular, I wouldn't let it occupy any of my thoughts because that's a problem for someone else to deal with.

5:25Rob D:We have to remember that the thing that people are fearful of is not being able to get a tenant out quickly when they are not paying. But if tenants play the system now, That very environment exists. It absolutely exists. I've had it personally. You can play the game under the current framework and it takes a very long time to move that person out. It's just a different framework. But most tenants don't operate that way. There will be some and it will happen occasionally to you. But believe it or not, the vast majority of tenants are not renting properties with the ambition of screwing over landlords.

5:59Rob D:And just like the vast majority of landlords are trying to screw tenants over. But the ones that get the headlines are the evil landlords and the nightmare tenants, but they are the absolute minority. And when you operate in property investment, the vast majority of your time, you'll be okay. And occasionally you won't, but that's why getting insurance in place is absolutely critical. If you do have any sleepless nights over this, this goes to you, Chris, and everyone else. So the way to protect yourself against that downside to get insurance in place. So yes, it's coming. Yes, you may need some insurance, but do you need to lose sleep over it?

6:38Rob D:I don't think so. All right. Reassuring words there. Let's see what we can do now for Michelle. Hi, Rob and Rob. My name is Michelle. I have been following your show for seven, eight years now. Thank you so much for all the great content. I have a question regarding qualifying lease. I'm not sure that's something you have covered before, but I definitely missed out on this one i only found out today a potential buyer of our flat ask the question and i'm gonna look into the details i don't think it would qualify for the qualifying these because we owned smaller than three properties back on the 14th of february 2022 i just want to see whether you know any other ways to go around it because it sounds like it's gonna affect how well we can sell the flat thank you so much and i look forward to hearing back from you michelle thank you for your question what you are talking about here is something very particular around building safety so when the government was drawing up plans about how to deal with this whole mess there was this concept of qualifying leases which basically means that if you are a homeowner as of a particular date in 2022 then you are protected against the costs of having to do replacement of dangerous cladding and that sort of thing if you were not if you were an investor as of that date you were not protected and that date in 2022 is the date and that status lasts forever so if you were not qualifying which it sounds like you weren't and then someone else buys it off you they would not be protected either even if they were a homeowner it's a pretty weird thing and it's understandable why the question comes up in the course of selling a flat but how big a deal is it well really it's only an issue if there is any remediation work that needs to be done to the building so if it's already had its tests, it's had what's known as its EWS1 form or some kind of equivalent inspection, whatever is relevant for that type of building, and it's come back with a clean bill of health, then there is no issue because there'll be no remediation work.

8:30Rob D:So if you can provide that to a buyer, then it really makes no difference. But what if work is needed or that hasn't been done yet? Then it's a little bit more tricky. What you can do is see if the developer who built the building in the first place has signed up to a particular pledge that lots of the big house builders have which says that they will foot the bill for anything that comes up and then there are also some government funding schemes one of them's called the cladding safety scheme which certain buildings are eligible for which means that the owners won't need to pay so in the end michelle i'd say that this is probably unlikely to be an issue it's possible that if you do have a situation that hasn't been resolved yet you could get buyers chipping you on the price you could get them asking you for a retention so to hold some of the purchase price back until things are a bit clearer but the main thing is for you and your solicitor to figure out what the position is because then when it comes up during conveyancing which it inevitably will your solicitor will be able to confidently ask those questions and reassure the other side so thank you for your question hope that helps and good luck well that is us done for this week and we'll be back to do it all again next tuesday but before then you can join us for the property podcast on thursday so we'll see you then.

9:40Rob D:Bye-bye. Bye-bye.