Should I sell or risk tenants buying at undervalue price?9:08 AM, 25th September 2019
About 4 weeks ago 48
Having raised over £500,000 to take West Bromwich Mortgage Company to the Court of Appeal it has been suggested by numerous Property118 members that we should become a Landlords Association.
Sentiment appears to be that a group with courage to take legal action against rogue mortgage lenders and poor decisions made by Government is seriously needed in the UK Private Rented Sector.
Subject to levels of interest this is something that we are willing to consider further.
Towards the bottom of this article you will find an expression of interest form. The ideas we are considering are:-
The growth of Property118 has been tremendous over the last five years as can be seen from the statistics below. This year we are projecting in excess of 5 million page views.
Property118 Growth – 1st Jan 2011 to 31st Dec 2015
Property118 Stats – 1st Jan 2016 to 10th April 2016
Whilst there is no guarantee that we will convert Property118 into a Landlords Association it is something we are seriously considering. A decision on whether to progress will be made based on the responses to this article. Here are some of our thoughts to date ….
The existing Landlord Associations have a track record of being shy of litigation.
Property118 has a track record of raising funds and seeking justice through the Judicial System. Ombudsmen and lobbying have their place but rarely achieve much more than publicity for a particular cause. If we progress this ideas and Property118 Landlords Association is launched we may not always be successful in litigation but we will pick our battles wisely and ensure that in every case the minimum outcome will be far greater awareness of any issues affecting UK landlords which to choose to tackle.
Transparency is key. We are capitalists at heart which means that we believe that success has to be rewarded; for our members, for ourselves and for those who back us financially. We have discussed the possibility of implementing a similar structure to that of Shelter and becoming a registered charity but we do not feel this would be right in terms of our core objective for transparency.
Property118 already owns 26% of the shares in LettingSupermarket.com as well as having revenue sharing agreements with many of our website sponsors. If we were to create a Landlords Association we would do so whole heartedly. In other words, all of the existing business arrangements that Property118 has (which for the avoidance of doubt doesn’t include our private property portfolios) would be incorporated into the Landlords Association.
The founders of Property118 value the goodwill of the current business at £5 million. If we were to incorporate our existing business and transform it into a Landlords Association then we would want our members to own part of it and to be as financially committed to it’s success as we are. To achieve this shares could be sold. This initial share capital would be the foundations upon which Property118 Landlords Association is built and would also provide us with confidence that we are doing the right thing.
If we decide to go ahead our first objective would be to recruit 50,000 paying members within 5 years. This would produce circa £6 million a year of revenue, i.e. £10 per month per member X 50,000 members =£500,000 per month.
To enable members to own a stake we could initially offer 1% of shares via a crowdfunding platform for £50,000. The minimum investment could be just £10. Over-funding could then be considered, e.g. if there is enough interest to raise £500,000 then 10% of the shares could be made available and so on. Whilst such a structure would decrease our personal shareholdings it would also provide funds to facilitate a more rapid growth in terms of membership recruitment.
To provide some assurance to both members and investors that we wouldn’t simply draw all profits from the business ourselves we would be prepared to commit to capping all directors emoluments to the projected 2016 earnings level of £225,000. That would be the maximum that all Directors collectively could take out of the business in terms of salary, bonuses etc. Any additional income for the Directors would then rank on par with that of the shareholders from dividends.
Property118 currently operates on a profit margin of circa 35%. Assuming this figure is maintained and assuming the membership target of 50,000 is achieved then shareholders earnings would be £2.1 million per annum. This equates to gross annual earnings per £10 share of £4.20.
Now some people may say that a 42% ROI based on an initial target of recruiting just 50,000 members from a pool of what is said to be around two million landlords just isn’t right and that the returns are too high. Well that’s capitalism folks. Once this target is achieved the value per share will not be £10 either!
Some will ask, what if Property118 doesn’t grow and what if Mark Alexander were to die, so I will address those points now. I post less than 2% of all comments and articles on Property118, the rest are posted by our members. On that basis, why should Property118 stop growing, are landlords likely to face no challenges in the future? Nobody is irreplaceable or has a monopoly on good ideas. Nothing that has been achieved by Property118 has been achieved by one person alone. It has been the vision and engagement of a growing community of landlords that has brought us to this point. The question for us all now is this; where should we take it from here?
Membership growth is projected to be achieved organically, as has been the case for page views to date. This is because existing members share their interactions with Property118 and their positive experiences with other landlords. Momentum is continuing to accelerate, as can be seen from the stats, and we have every reason to believe this will gain further pace once we have proper funding and infrastructure to campaign and appeal against other injustices against landlords and back our challenges with legal action as neccessary and commercially viable. Furthermore, a broad, growing and solid financial and membership base combined with increasing revenue streams will provide additional opportunities to fund increased PR and brand awareness campaigns. Given that there are believed to be around 2 million landlords in the UK we would like to think the initial objectives we are considering should be realistic. What do you think?
Existing monetisation projects will continue unchanged, save for the fact that all income and profits will accrue to the new company.
We would also apply for EIS relief on shares. This has significant tax benefits – details here >>> https://www.gov.uk/government/publications/the-enterprise-investment-scheme-introduction
— Mandy Thomson (@lodgersite) May 4, 2016
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