Should I let to Council or Local Housing Association

by Readers Question

7:42 AM, 4th January 2015
About 4 years ago

Should I let to Council or Local Housing Association

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Should I let to Council or Local Housing Association

I am new to the forum and Buy to Let Property. I would like to invest in Buy to Let Property and have been looking at the option of letting it to the Council or Local Housing Association on a 1 or 3 years lease.

I am planning to buy 2 or 3 bedroom house in Luton. My reason to let it to Council/LHA is guaranteed rent, low voids and not required to find tenant. Though this is offset by lower rent.

I would like to understand more on the following:
1) Problems letting it to Council/LHA.
2) Benefits (other than mentioned above) to let it to Council/LHA.
3) Are Council/LHA responsible for all repairs. if not what is landlord responsibility?
4) Does it make a difference if I choose different area than Luton?

Thank you for all your assistance in this matter.

Newcomer BTLFRI



Comments

Neil Patterson

7:49 AM, 4th January 2015
About 4 years ago

Hi Newcomer,

Are you talking about a Full Repairing and Insuring Lease (FRI) ?

These are often 3 year leases and the Council or LHA contract to return the property to you at the end of the lease in the same condition it was in when they took it over.

The main problem if you are borrowing money is that many lenders (not all) do not allow these types of leases. This sounds counter intuitive as you would think the income and condition are safer, but they are concerned about gaining possession should you default.

Newcomer BTL

12:37 PM, 4th January 2015
About 4 years ago

Thank you for your quick response.

Yes, I am thinking about FRI, which will be ideal for me. though I am hearing that Council/HA are no longer providing this scheme.

I am thinking about day to day repairs such as plumbing (toilet, bathroom, kitchen), and/or heating, boiler, etc.

I spoke to one lender and mentioned that I will be letting it to Council and there was no objection for it.

Thank you.

Mandy Thomson

13:48 PM, 5th January 2015
About 4 years ago

I would only consider this if you're having trouble attracting tenants on the open market. I have also heard some horror stories of housing providers having a very different idea of acceptable condition at the end of the lease, after letting to problem tenants.

At least if you find your own LHA tenants, if you carefully screen them (thorough interview, credit referencing and delinquent tenant checks) and get a guarantor, you can minimise any issues.

ray selley

17:23 PM, 5th January 2015
About 4 years ago

I have a portfolio of 40 properties with 18 to let Brighton and Hove City Council via a scheme run by Orchard and Shipman .The properties range from 4 bed houses to 2 bed flats.The first 5 properties were let to BHCC over 3 years ago on 3 year leases which on expiry i have now renewed for a further 5 years.I have since purchased properties with the scheme in mind and leased them for 5 years.A few of the properties were brand new however a majority while safe and sound and meet all safety rules you could describe as a bit tired " eg dated bathrooms kitchen and decorations " and might be difficult to let to professionals without a refurb.
POSITIVES; No management charges.No voids.Good net yields
NEGATIVES; Buildings insurance more expensive.Repair call outs more frequent.Limited mortgage availability
Am i happy with so called Private Sector Leasing ?welli guess i must be

Newcomer BTL

11:23 AM, 6th January 2015
About 4 years ago

Ray - Thank you for the adivce.

"When you state that more frequent repairs call outs". Does it mean that Landlord are responsible for all repairs such as plumbling, heating, bolier, etc, similarly if you let it to private tenant? I thought there will be some joint repsonsibility.

I take it council no longer offer Full Repairing and Insuring Lease (FRI).

Do you arrange repair yourself or has contracted to an agency?

Thank you once again.

ray selley

17:41 PM, 6th January 2015
About 4 years ago

There are two types of tenant the council will place in a property.Those who have been made homeless by misfortune and those who chose benefits as a life style.With the later most will not lift a finger to make minor repairs so the call out rate is higher.My local council does not offer FRI leases so i use a local contractor to carry out all repairs and cover the gas central heating systems with maintenance contracts provided by the same contractor.I have managed gross yields of 6-9% and bearing in mind there are no management or other charges connected with setting up the leases my net yields are generally greater than letting to so called professional tenants many who have had a good xmas at my expense leaving me with several thousand pounds in rent arrears but that's another story


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