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  • FIRST POST
    • Pobby
    • By Pobby 13th Jul 17, 4:50 PM
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    Pobby
    Rent or invest
    • #1
    • 13th Jul 17, 4:50 PM
    Rent or invest 13th Jul 17 at 4:50 PM
    I am moving in with a relative with whom I own a house. This means my current home is not going to be required. I am very reluctant to privately rent it, however, the local council runs a scheme where they will lease the property from us. Giving that there will be no agents fee and the property is returned in the condition that it first became leased it looks like an OK deal.

    As an alternative I could sell and have about £150k to do something with. I have done long term investing in the past but at 68 I am looking for income. As I am older I am also very risk adverse. I would be looking at a return of around 4% per annum. Any thoughts please?
Page 1
    • Malthusian
    • By Malthusian 13th Jul 17, 5:05 PM
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    Malthusian
    • #2
    • 13th Jul 17, 5:05 PM
    • #2
    • 13th Jul 17, 5:05 PM
    How much are the council offering? Without being an uncaring Tory !!!!!!!, I'd want the agreement that they have to return the property in the condition they found it to be absolutely watertight if they were going to use it as temporary housing for the homeless.

    If you want a return of 4% per annum and you don't want both the capital and that 4% per annum to be eaten away by inflation, then you will have to take investment risk in some form. If you have held long term investments before then you will know that investment risk doesn't have to mean a material risk of actually losing money, unless you panic and cash in.
    • Pobby
    • By Pobby 13th Jul 17, 5:46 PM
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    Pobby
    • #3
    • 13th Jul 17, 5:46 PM
    • #3
    • 13th Jul 17, 5:46 PM
    The council have assured me verbally about this, however it certainly would have to be in writing. Property value is about £130 thousand and the rent would be a little under £600 a month.
    • Pobby
    • By Pobby 13th Jul 17, 5:49 PM
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    Pobby
    • #4
    • 13th Jul 17, 5:49 PM
    • #4
    • 13th Jul 17, 5:49 PM
    Benefits of the HouseLet scheme:

    We'll provide a full property and tenancy management service
    We'll pay you rent quarterly in advance starting 14 days from the date you sign the lease
    We'll take on the responsibility for the management of the occupants and your property, so if the occupants break their terms of contract we'll pay for any legal action
    We'll take on the responsibility for the gas, electricity, water, sewage and council tax once the property is in our management
    We'll guarantee to hand the property back to you in good condition and repair any damage caused
    We'll find a suitable family and will inspect it within seven days of occupation followed by four weekly inspections
    We'll pay for the gas appliances to be inspected by a qualified gas safe engineer and if necessary for the property to be professionally cleaned between occupancies
    If your property is suitable then we'll offer you a yearly lease agreement, which can be renewed at the end of the term (no renewal fees). The rent will be agreed at the beginning of the contract which you'll receive on the first day of each quarter throughout the lease period.

    We're currently looking for unfurnished two and three bedroom houses and flats, with gas central heating, double glazing and preferably a secure outside play area.
    • Newtown
    • By Newtown 13th Jul 17, 6:36 PM
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    Newtown
    • #5
    • 13th Jul 17, 6:36 PM
    • #5
    • 13th Jul 17, 6:36 PM
    The council have assured me verbally about this, however it certainly would have to be in writing. Property value is about £130 thousand and the rent would be a little under £600 a month.
    Originally posted by Pobby
    That gives you a yield of 5.5% gross. so not bad. Plus the Property price appreciation (Possible)
    • bigadaj
    • By bigadaj 13th Jul 17, 7:08 PM
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    bigadaj
    • #6
    • 13th Jul 17, 7:08 PM
    • #6
    • 13th Jul 17, 7:08 PM
    The council have assured me verbally about this, however it certainly would have to be in writing. Property value is about £130 thousand and the rent would be a little under £600 a month.
    Originally posted by Pobby
    Looks a bit low on the rental side. My missus is currently doing this with her house, having had a nightmare private tenant before. Her property is valued at around 10-15% less, and the rent she gets is around 10% higher, we are in the East Midlands.

    There's a single mother in there currently, she's working with two young kids. The council have done essential works but she's had to deal with some issues so it's not hassle free.

    It's probably a better option than private rental, many councils are desperate for accommodation and have hundreds if not thousands on housing lists, but still the risk of late night or weekend phone calls and costs of maintaining or repairing.
    • jimjames
    • By jimjames 13th Jul 17, 8:32 PM
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    jimjames
    • #7
    • 13th Jul 17, 8:32 PM
    • #7
    • 13th Jul 17, 8:32 PM
    We'll guarantee to hand the property back to you in good condition and repair any damage caused.
    Originally posted by Pobby
    That doesn't sound quite like the earlier description of "property is returned in the condition as leased". Good condition might not be how you'd describe it now, obviously if trashed it would be repaired but good condition might not get you the same standard of kitchen or bathroom for example
    Remember the saying: if it looks too good to be true it almost certainly is.
    • kidmugsy
    • By kidmugsy 13th Jul 17, 9:12 PM
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    kidmugsy
    • #8
    • 13th Jul 17, 9:12 PM
    • #8
    • 13th Jul 17, 9:12 PM
    How long does the deal run? How much notice do you have to give to pull out?
    • Pobby
    • By Pobby 14th Jul 17, 10:44 AM
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    Pobby
    • #9
    • 14th Jul 17, 10:44 AM
    • #9
    • 14th Jul 17, 10:44 AM
    Couple of things. The rent is equivalent to the rate of housing benefit. The lease is run yearly. If all goes well I would be in for the long term.
    • AnotherJoe
    • By AnotherJoe 14th Jul 17, 10:51 AM
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    AnotherJoe
    For your reqirements it sounds pretty good to me. Lets say in 15-20 years you want out, and its not in the original condition, "just" good condition. So what, sell it and buy something that suits you at that time, maybe a flat with no stairs for example.
    • Malthusian
    • By Malthusian 14th Jul 17, 11:42 AM
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    Malthusian
    What are the main reasons you are "very reluctant" to hang onto it and rent it? If the reasons are the hassle and investment risk, you still have some of that - the council eliminates the risk of void periods (I assume they pay you even if the house is unoccupied), and some of the expense and time cost of maintenance but not all.

    I am normally sceptical of having all or a large amount of your investment portfolio in a single residential property. But it sounds like a reasonable deal and it has the advantage that if you needed to move out of your shared house for any reason, you could move back into your old one (after the lease was up) - or sell it and buy another one. The same is largely true if you sold it now and invested in a diversified stockmarket portfolio, except that you might not be able to buy a new house if you needed one after a market crash. By hanging on to the old house you always have the option of moving back into it (as soon as you can terminate the arrangement with the council) even in the middle of a stockmarket crash.

    Depends on your priorities and how keen you are to be rid of the hassle and risk of owning a single residential property as an investment.
    • Pobby
    • By Pobby 14th Jul 17, 1:19 PM
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    Pobby
    Thanks for all the helpful comments. Keeping it does make sense. Pretty much what my friends have said. Having let in the past, a calamitous move, there is that feeling of being wary.
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