ASK540: How can I sell this property? PLUS: Is this rent increase allowed?

0:01Rob B:Hi, I'm Rob. And I'm Rob. And this is Ask Rob and Rob.

0:06Rob D:Welcome to Ask Rob and Rob. It is Tuesday, which means we have two more listener questions. And we've got some good ones today. Good ones every week, what am I saying? You always send in interesting stuff that allows us to cover some ground we never otherwise would have covered. So make sure you keep that happening. If you've got a question of your own and you haven't sent in yet, then Rob, about time to put that right.

0:25Rob B:It certainly is, but the good news is it's very easy to get it done. You just need to go to propertyhub.net forward slash ask. That's propertyhub.net forward slash ask. There you can record a message, you can call in, you can write your message if you want, and then maybe it'll appear in the Sunday Times. Whatever you prefer, we do not mind as long as you do it. And luckily, Rob, that's what's happened again this week, and we've got a question in from Stephanie.

0:50Rob D:Dear Rob and Rob, Stephanie here from West Sussex. Firstly, a big thank you for your advice over the last four years on your Property Hub podcast. Informative and I'd say light-hearted. So I have a question regarding a holiday let I have under a limited company. My husband and I had several holiday lets located in the North York moors. Over time, we have made them into APTs, assured periodic tenses. however we've got a holiday let remaining and owing to the raised mortgage rates we've all seen we're losing money each month keeping this property the property has been for sale for over a year now and with the great summer rental income drawing to a close in about a moment's time we're facing a winter paying a hefty mortgage with hardly or no rental income.

1:55Rob D:We've considered APT for this property but of course this will tie us in to tenants and with a contract. So my question is, is there any options we haven't considered before we put our own personal funds into the limited company to see through our mortgage for what the next eight months over this coming winter your advice is always appreciated looking forward to hearing from you

2:27Rob B:thank you okay stephanie thank you and i'm glad you find her light-hearted and i will try to soften this as much as i can because the reason you're asking this question right is because there's no obvious easy answer and unfortunately i don't have a secret killer strategy that's going to change all your fortunes but i can give you some things to think about maybe some of them you thought about yourself already hopefully there's something new in here as well and if anybody else is in a situation like this they can also use these ideas so one of the options you can look at is extending that holiday letting season into the off season it may not be as much in demand but possibly look at remarketing maybe dog walkers christmas new year breaks are always you know popular for people just to get away if it's a really nice property dropping the prices for the tougher periods like midweek for example where it becomes a bit of a no-brainer to stay as long as it's a profit on your costs it's still then income chipping away at that mortgage burden that you have even if it doesn't get the whole way if it can offset 50 75 of it perhaps with a bit of effort it's not something you'd want to do every year but this is not a long-term strategy for you now so maybe that extra effort a bit of repositioning from a marketing point of view and some repricing will get you far enough in terms of covering those costs that it becomes acceptable you could depending on the area target corporate let perhaps for a shorter period and go at it that way it's going to very much depend on your property and where it is but don't just immediately write it off do a bit of a search use your ai platform of choice find local employers in your area get the ai to compose an email find email addresses for you of those companies and email them saying this property is available for corporate lets that hours piece of work may pay off and you may be very happy with the result so you might think immediately that's not going to work but just do that quick check the check will only take you minutes and then if it shows some promise that the overall work would take no more than an hour so well worth doing that quick check of course another option is pushing harder on that sale itself readjusting the price i don't know if you want to do that the market is definitely a buyer's market right now an investor's market it's not a seller's market so i can understand why you wouldn't want to go down that route But if it's not moving, it's because the market says right now in this current environment, it's overpriced.

5:00Rob B:But if the market starts to pick up in spring next year, then maybe the strategies I've already outlined will get you to where you want to be. Of course, I can't promise it will pick up in spring. But going through the first couple of strategies that I've outlined gets you to that point. So then you can make an assessment again. So I'm sorry I don't have the killer. This is definitely going to do with strategy, Stephanie. but at least you've got a few ideas and if they match what you've been thinking at least that gives you comfort that's how we would approach this so whatever you end up doing i wish you

5:32Rob D:the very best of luck yeah good luck and let's see what we can do now for mark hi rob and rob

5:37Rob B:massive thank you again for all the free resources and all the information you give us it's been imperative for my first buy to let my question is i am going through the legal process of my first buy to let. So I'm getting a free bed terraced home, which already has a tenant inside. So I've just been off the phone to the managing agent who is looking after the property with the current landlord. And they've just said that the current landlord has placed section 13 coming into effect around the early September mark. So they're only increasing the rent by 5%. So I believe it's going up to 730. However, the current market rate is around 950 to 970.

6:15Rob B:So you know, if I can go through the legal process and they can revoke Section 13, would you recommend me going straight to market value or do you think I gradually increase the rent as well? I was just wondering if you had any experience with this, any information or any advice would be amazing. Thank you very much.

6:32Rob D:Mark, thank you for your question. And I'm afraid this is a tough news episode because there isn't a particularly happy answer to this one either. So if a rent increase notice under Section 13 has been served then it can be withdrawn before the date the increase was meant to come into effect and as long as it hasn't been challenged at tribunal already but from the timing of your question it sounds like that date has already passed which means that whoever the owner of the property is whether it's the current landlord or you the rent can still only go up once every year so if you buy when you buy you're going to be locked into this£730 rent and there's nothing you can do about it for the best part of a year but even if that hadn't happened even if you're coming in and you had the option of putting up the rent you've still got a big gap to make up and this is something you're going to have to think carefully about because the rent you believe is going to be 730 you think it's worth 950 to 970 so more than 200 pounds a month that is a big increase so if you're going to make that up gradually well that's going to take you some time because you're going to have to do it a little bit more every year which means it's probably going to take you four or five years to get up to where you believe the rent could be on the other hand if you do it as one big jump then a couple of things could happen one option is that the tenant could challenge it they could take it to tribunal because it's such a large increase they think oh this can't possibly be right even if actually it is so you get that increase through in the end but there'd be a delay while you got it through the tribunal and the other option is the tenant just leaves because they can't afford to or don't want to pay that rent and so they move on so it's one of those situations where you've inherited a problem that many landlords have created for themselves over time by not putting up the rent regularly, you've got this gap and it's a gap that's very hard to close.

8:10Rob D:It just so happens that you've stepped into that problem rather than having created it yourself. So the positive to take from this is that, well, you've got a year to build a relationship with that tenant and you've got a year to decide what you want to do and how to prepare them for it. So you can decide if you want to work with them and you can talk about that or you can decide actually this is what the rent it's going to be and you can see how they feel about that and if that's not something that they're able to pay then it gives the opportunity to start looking around early in the knowledge that this is coming so it's probably not the answer that you would want mark but hopefully your numbers still work on the basis of that lower amount of rent and hopefully it's an asset that you're planning to hold for the long term in which case the rent that you're making over the first couple of years won't make a huge difference in the end so hope that helps and good luck whatever you decide to do.

8:56Rob B:And what you should decide to do is join us on Sunday for the Sunday Times article that we have. Join us on Thursday for the Property Podcast and of course join us same time, same place, next week where we'll be answering more of your questions. Until then, take care. Bye-bye.

9:10Rob D:Bye-bye.