ASK535: Will tokenisation change UK property? PLUS: Can you use a buy-to-let mortgage for short lets?

0:01Rob B:Hi, I'm Rob. And I'm Rob. And this is Ask Rob and Rob. Hey everyone, it's Ask Rob and Rob, the show where you get your questions in, predominantly property related. Sometimes you go a little off piece, but we don't mind that. And we do our very, very best to give you a good answer in return. We've done this over 500 times now, so we're well versed. But luckily, you always have a lot of questions. And we'll guide you now to the place you can go to ask some more.

0:29Rob D:Yep, it's just one destination, propertyhub.net slash ask. If you go there, you can leave us a question in written form for our Sunday Times column, or you can get yourself on the show and be the envy of all your friends by leaving us a voice note.

0:42Rob B:Okay, let's listen to our first question in from Robert. Hello, Rob and Rob. I've been listening to your podcast for around seven years now, and it's been very informative. Thanks for all the great content. My question is about the property market in general going forward. There's a big story in the world of crypto anyway regarding the tokenization of assets, basically real estate in the near future being tokenized and put on the blockchain. I don't know if you have familiarized yourselves with this, or even if you consider it worthwhile informing yourselves about it. In my opinion, I think it's inevitable and it won't be long before it becomes a reality.

1:22Rob B:Simply because the technology is there to do it now. The wheels are in motion to tokenize other assets, for example, stocks and bonds. Also, tokenization simplifies the process of buying, selling, holding proof of ownership, and it reduces the transaction costs significantly. I'd be interested to hear your thoughts on the subject, its effect on the market, but more importantly, if you think there are any opportunities there. Thanks and keep up the great work, Robert. Robert, I really like your belief in the UK system, let's call it, as a whole, that you think they're going to be forward-thinking enough that this becomes, as you put it, a reality.

2:08Rob B:Because, as you pointed out, the technology exists. But you're dealing with a very, very old beast and machine, and that being the UK conveyancing system, process, UK LAN registry. I think while there could be a version of this in the future it will take an incredibly long time to do. In Dubai their land registry is far more advanced than the UK industry for example so there are countries out there that are being more forward thinking with how it can be done but I think if this does happen which it may I'm not saying it won't you are looking at it being a very very long way out and I would expect the UK to be one of the last movers when it comes to something like this.

2:54Rob B:I agree with all the positives you've outlined and tokenization and the blockchain being really interesting and the benefits it could bring but you are dealing with a system that is hundreds of years old that is massively inefficient and just some simple measures would improve things and yet even just making simple process change to the complex conveyancing process that we have seems hard to do the government has talked about it for years now and that's the point right they've talked about it and there may be something that eventually happens but with the way our laws are created the uk government's changing every five minutes nobody's here to see it through the fact that this is quite bold when there's some simple low-hanging fruit things to be done means that while this could absolutely happen i think it's going to be a long

3:47Rob D:long time before it does let's have a listen to this question now from sarah hi robin rob my name is sarah i'm leaving this message from london west london exactly first of all thank you so much for all the free content you're sharing it's been very helpful on my journey especially because i'm not British person so I live here since a decade now but obviously this is not my first home so very very helpful thank you so much my question for you today is I'm basically purchasing a property under a limited company and this property is a one-bedroom flat in a new build in Leeds unsolored to be exact.

4:34Rob D:I'm trying to make my mind around whether to go for a normal buy-to-let mortgage or a short-let mortgage, which I believe would allow me to do service accommodation renting. The reason for this question is that basically the brokers I contacted, they all suggest to take the route of normal buy-to-let mortgage and then basically doing the short let which I don't think is totally right and obviously with all that's going on with the interest rate that are increasing I was thinking maybe it's worth just taking the route of short let mortgage yeah I'm very curious to hear your opinion on that one I know you're not financial advisors but I know you will provide the clear answers to that and looking forward to it.

5:33Rob D:Thank you so much and all the best. Sarah, thank you for your question. This is a bit of a mysterious one because if I'm interpreting it rightly and you're interpreting rightly what you've been told, then you're being given some very duff advice from brokers. So if you're going to do short-term lets, you've got to have a mortgage that permits it. It's possible that for some period of time, you can get away with using a regular mortgage that requires a long-term tenancy and using it for short-term accommodation but i would very much not recommend it because if they find out then you are in breach of your mortgage terms and that means that they are within their rights to say you have to pay us back right now and that puts you in a position where you then have to scramble to refinance with someone else to repay that first loan in a rush and lenders do share information around between them about people who are, I won't call it blacklisted, but people who have been known to be abusing mortgage products.

6:28Rob D:So you really don't want to be doing that. So that's not to say that people don't do this. People do do this and people do it for long periods of time and they do get away with it. But for me, it would be outside my risk tolerance and it's something that I'd be very surprised to have a broker saying that you should do. So you really do need to be deciding, are you going to be doing short lets or not? If you are, then you need a dedicated mortgage and you need to check that you're able to do it under the terms of your lease because you mentioned that it's a flat. That means that the lease needs to allow for that kind of usage.

7:01Rob D:When you start digging into serviced accommodation, you find that in the vast majority of cases, it's not permitted by either the lender or the freeholder. And again, a lot of people are doing it outside the rules and have been for a very long time and most of them get away with it. but it's not how I would set up a business model. So I'm not saying, Sarah, that you're doing anything deliberately wrong by any stretch of the imagination, but I think it is worth going back to the people who gave you this advice and really check it with them. And are they really saying what they perceive that you're saying?

7:32Rob D:And even if they are saying it's fine, I wouldn't personally consider it fine. The ideal, of course, would be that you would be able to have a property that you can put to different uses at different times, depending on what makes the most sense. But unfortunately, because of the way things are, you pretty much do have to choose. If you're going to be going down the short let route, that's something you need to be making a conscious decision about and making sure that you have the ability. So I hope that helps and good luck with getting the clarity you need.

7:57Rob B:So that's just done for another week. Thank you for listening. We'll be back with the main event, the Property Podcast on Thursday. Until then, take care, have fun. Bye-bye.

8:05Rob D:Bye-bye. hi listeners it's sam here from property hub invest we love sharing our take on the market with you each week but we're just as curious to hear about yours what are you seeing out there what's working for you right now and what's got you worried we've put together a quick survey to find out it'll only take a couple of minutes but it will generally help shape what we talk about on future episodes. Head to propertyhub.net forward slash survey to have your say.