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looking for advice on renting out my property

Discussion in 'General Chat' started by rampant, Feb 23, 2012.

  1. rampant

    rampant Member

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    Hi all,

    i have been approached by a company who would like to rent out my house on a long term commercial basis (5 year term wit 1 year termination either side)

    I am very interested, as i am working away so much that i could effectively have my mortgage paid for the next 5 years :thumbsup:

    Anyhow i was looking for advice on what i should be aware of or where to go for that sort of lease.

    cheers
  2. KeithO

    KeithO Member

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    I rent out a couple of properties on a long term basis, but I would never sign for a 5 year term. Usually for mine it's 2 years max, but a 1 month termination clause either side after the first 6 months.

    The reason being I have no idea what my situation will be 5 years from now, and I might need to sell the property, live in it myself or whatever. If I don't, I can always extend the agreement, but it gets me flexibility.

    You might also want to put in some clause about reviewing the rent annually or something similar.

    When you say they want to rent it commerically, what does that mean? Will they just sublet it to their employees who move into the area, or do they intend to conduct business from the property?

    Also who are the company going to let live in the house? Is it their employees? Do you have any restrictions (smokers, for example)? Do you want to vet who they put in, or don't you care?

    Who's going to maintain the house? For example if there's a burst pipe, who will fix it? Will they call you in the middle of the night, or will the company take care of it? Who's going to pay for it?

    Where will you live when you're not working away? If you have to rent something yourself you might not be making much money on it.

    Any property management company can draw up a lease agreement for you, or maybe even the company themselves if they have a legal dept. It's not complex, you can even find lease agreements on the net.

    I rent mine out through a management company. It costs me 10% of the rent but the benefit is I have absolutely nothing to do, which is good because i'm out of the country and not easily in a position to get pipes fixed, vet new tenants, check on the property etc etc.
  3. Mac Man

    Mac Man Member

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    +1 for using a good rental company. As above, me and my Mrs have a couple of properties that we let out. we used to do it ourselves but had some real hassle over the years with some tenants. Ever since using an agent it's been pain free....and well worth the 10% they charge.

    This will be especially true if you are living/working away.
  4. Begonia

    Begonia Active Member

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    I've just had an email today from LandlordZONE.co.uk.

    The link in the email takes you to http://www.lettingaproperty.com/private-landlords/rent-collection-service

    They say:

    We know that landlords want to avoid 'empty property' headaches. Simply take out our Platinum Tenant Find service and not only will we find you a tenant, we will guarantee your rent too - all for just £79 inc vat*

    (I note on the link that the price has gone up to £99 inc. VAT. Perhaps my prior Registration entitled me to a discount?)

    They have another deal, whereby you can advertise your property on:

    Right Move
    Zoopla
    PrimeLocation.com
    FindaProperty.com
    Globrix.com

    for £59 in. VAT until it is let.
    Last edited: Feb 23, 2012
  5. Mac Man

    Mac Man Member

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    The £99 is basically an insurance policy against non payment of rent. They also charge £35 a month on top to collect the rent and chase it if it doesn't appear. But there's no management other than rent chasing. Our letting agent will arrange repairs and deal with any issues raised by the tenant and check the property on a 6 month basis to make sure the house is ok.

    So we pay more than £35 a month but it's a fully managed service. Depends on how much you want to do yourself I guess. But after having done all the management myself in the past I now know what I prefer :)
  6. KeithO

    KeithO Member

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    I agree 100% with Mac Man on this point. If you're going to be away a lot, get yourself a decent reputable and preferably local agency. I've rented out both properties for 12+ years and I've never had to deal with tenants once. It's worth every penny of that 10% fee :)
  7. Begonia

    Begonia Active Member

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    I always thought my missus used to dress like Mary Poppins when she used to show people round our flats.

    Since she had such an 'aura' of respectability and professionalism, it wasn't too problematical when she whipped out her 'Questionnaire' and asked:

    Who do you work for?
    How long have you been there?
    How much do you earn?
    etc.
    etc.

    When we ran the job for ourselves, we were very selective with tenants. We had absolutely no bad debts - and there were 12 flats!

    When we had agents acting for us, and we tried three, they used to take on anyone. They billed us for finding a new tenant, for doing inventory controls, for cleaning at the end of tenancies (and the standards were crap!). in fact a change of tenant was extremely profitable for an agent. And our dissatisfaction was at a maximum.

    When we cleaned ovens, hobs, fridges, freezers, cooker hoods, tiles, bathrooms and showers, then we always used steam cleaners. The flats when we cleaned them were utterly pristine. We had full inventories and perfect statements of condition with absolutely no problems. This meant that there were absolutely no arguments with tenants at the end of a tenancy.

    Simples.......!!
  8. Steven

    Steven Senior Moderator

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    Subject to correction, rampant is asking in the context of a commercial tenant. His post indicates it will be for commercial business use. An entirely different context to residential renting folks. Well meaning advice given, but not really applicable. Different regulations and laws apply. As it is commercial there is freedom to contract as you wish. Proper legal advice should be sought as a commercial landlord will want to define precisely what rights in the property they are granting.
  9. KeithO

    KeithO Member

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    You make some good points...but it is not always so "simples".

    I'm living and working in Southern Germany, my properties are in Swindon. The hours it would take me to vet tenants, do inventory controls and cleaning, even assuming I could do all those from here, would be very expensive. My time is more precious to me than that of a local dedicated agency, so I'd rather get them to do it, and save me both money and time.

    From what the OP said, he's in a similar position in that he'll be away a lot. In that case (for me at least) it's a no-brainer - get someone else to do it.

    Your second point about agents is also valid, and I said to the OP you need to find a good reliable one. Clearly you didn't. I have never had any issues with tenants.
    Last edited: Feb 24, 2012
  10. KeithO

    KeithO Member

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    That's exactly why I asked him this question:
    The OP doesn't make it clear, but it could simply be that the company intends to rent it and use it for "transient" employees, which is fairly common, and could be construed as "commercial" in a conversational if not legal sense. If it really is "commercial business use" then are we really talking about a house? What commercial businesses operate from a normal house?

    One last comment to the OP. If you do rent out, let your mortgage company know. They are quite likely to insist upon a change in mortgage rate, because then you are effectively doing a buy-to-let.
  11. imightbewrong

    imightbewrong Active Member

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    I doubt it's for someone to run a business from - it would either be someone to let out themselves, or for staff from their company to stay at on an as-and-when basis.

    By brother-in-law was going to rent out his house - someone offered him one of these very-long-term deals - it was for a fixed three years - don't even think there was a notice-option. This was basically an agent who going to let it on and take a profit, as the rent being offered was quite low. It might even have been intended for use for some sort of social-housing. Anyway, he went with a regular agent in the end - don't know the specifics.
  12. Begonia

    Begonia Active Member

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    We did have a tenancy with a Limited Company, who used the particular flat for their staff.

    As far as I can remember, the tenancy agreement was the same for them as it was for the other tenants. Namely, a 6-month period with a shorthold assured tenancy and which rolled on month by month afterwards.

    Absolutely no problems.

    This was about 16 years ago. We sold the flats about 13 years ago and moved away from the area.

    I agree with all you say. However, my main message was a story about my own personal experiences with the conclusion and suggestion to all readers, "If this is also applicable to you, if you can - then definitely do it yourself."

    People have different standards. You can have an agent who is fantastic at marketing and letting, whose cleaners are rubbish, who is brilliant at debtor control and who is useless at managing maintenance.

    The only way to determine on this is to try one and see how you get on with them.

    Some property rental agents 'just don't give a monkeys' and are utterly and totally insincere and only in it for the short term and for the money.

    That's why WE did it ourselves.

    I have another story about one particular tenant, which was a real eye opener. I'll come back to it later possibly.
  13. Begonia

    Begonia Active Member

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    Here's one for the professionals:

  14. rampant

    rampant Member

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    its for a company that run care homes for 'care in the community' people. The company want to rent my house as i have 5-6 bedrooms, 4 bathrooms, 3 large reception rooms, nice big kitchen, conservatory and big garden - so they see it as being able to get 5 care people in, and then a room for office / live in staff.

    Im fed up of the house to be honest - i got divorced about 5 years ago, and its just far too big for how much i see the kids now with work.

    so im looking to tie up on a commercial basis - that i can just hand over the keys, and in 4 years go back and do an audit and renegotiation. The company will be doing all of the maintenance on the property.
  15. Begonia

    Begonia Active Member

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    I think you will need to grant a commercial tenancy here. In other words, to rent to this company as you describe, you will need a professional Lease drawing up.

    First you need to discuss your requirements with a firm of Chartered Surveyors and Estate Agents. They will survey the property and, if you agree terms with them , they will then act as your agent all according to the laid down practices of the Royal Institution of Chartered Surveyors (RICS) and advise you what to do next.

    They will have their own firm's lawyers to act for them but I would not advise you that they be allowed to act for you. There would be a conflict of interest, you see, if anything went amiss in your relationship with the agent.

    So, you will also need a good lawyer to act for you. This firm needs to be experienced in property matters, not just your average conveyancer or will drafter. So you need to find a good firm of property solicitors to act for you. They could receive instructions from your Chartered Surveyor, providing he 'copies you in on everything' and 'discusses things with you' before he instructs the solicitor on your behalf on matters such as 'drafting the Lease'.

    This might be a need to change some of the internals/externals so as to fit in with legal requirements. The CS will advise you. That's what you'll be paying him for.

    Your solicitor can also check out the company (ie, the tenant) and ascertain their financial strength. In other words, he would ask the proposed tenant for a couple of years' worth of their accounts and cast his eye over them and make written comment to you on it.

    Now all of this is going to cost you.

    My estimate, before they even sign on the dotted line, would be circa £2,000 + VAT.

    If you then appoint the CS's firm to act as your renting agent, then they will draw up an Agreement for you and are likely to want say 10% of the rent (but budget it at 15% with other extras) of the passing rent. They will want other 'one-off' fees too. If they need to spend further monies on your behalf on the property whilst you are away, then there will be a limit placed on it, say £500 + VAT, before contacting you for further permission. They might want £150, £125, or £80 per hour for odd things depending on the qualifications of the staff required for the specific job. They might also want an annual review of their rates written into their agreement with you too.
    Last edited: Feb 24, 2012

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