Property118 Landlords Association – should we?

by Mark Alexander

15:44 PM, 3rd May 2016
About 2 years ago

Property118 Landlords Association – should we?

Make Text Bigger
Property118 Landlords Association – should we?

Property118 Landlords AssociationHaving 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:-

  1. Membership fees of £10 a month – list of potential benefits further into this article
  2. Incorporation and offering shares to members
  3. Regional Property118 committees and regular meetings

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 Jan 2001 to Dec 2015

Property118 Stats – 1st Jan 2016 to 10th April 2016

Property118 Stats - first 15 weeeks of 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 ….

Property118 Landlords Association Member Benefits

  1. Fee free direct access to a barrister to discuss legal problems and solutions. Maximum free telephone consultation is 30 minutes. Service to be provided via Cotswold Barristers Limited.
  2. A guarantee to beat any ‘like-for-like’ landlords insurance quotation. For many members, this alone will more than cover the cost of membership.
  3. Questions submitted to Property118 by members will always be answered within 48 hours. All responses will either be via email, telephone or the publication of an article on our discussion forums to elicit opinions and responses from other members.

Points of difference

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.

What could membership fees be used for?

  • To support the infrastructure
  • To promote awareness Property118 Landlords Association
  • To facilitate the sharing of best practice amongst UK landlords, letting agents and tenants
  • To fund research and PR campaigns to improve public perception of UK landlords
  • To promote fund-raising campaigns to fight for justice for UK landlords, e.g. the legal battle with the Government over finance cost relief for individual landlords
  • To provide ongoing research into tax efficient structures for landlords and the promotion thereof
  • To launch and promote regional events – never to be sponsored and never to include a sales pitch!
  • To provide investors with a return on capital – target 35% of income generated

How It Could Be Achieved

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

Expression of Interest - Property118 Landlords Association

I am interested in the following ....
  • If you are interested in purchasing shares please indicate the £ value of the investment you might consider based on the information provided to date. This is neither an offer nor a commitment on either side.
    Please enter a value between 10 and 50000.
  • For example; Devon



Comments

Mark Alexander

7:58 AM, 4th May 2016
About 2 years ago

Just spotted this Tweet which is very apt ....


.

Mark Parsons

12:30 PM, 4th May 2016
About 2 years ago

Reply to the comment left by "Mark Alexander" at "04/05/2016 - 07:58":

I have read through these details quickly and this is a great idea, it has my vote. Regarding the EIS part relating to shares, can an individual offset their tax against the purchase, and if so, would that help offset the clause 24 issue?

Mark Alexander

12:33 PM, 4th May 2016
About 2 years ago

Reply to the comment left by " " at "04/05/2016 - 12:30":

Based on my understanding, yes to both questions but please check with a professional adviser.
.

Ed Atkinson

14:05 PM, 4th May 2016
About 2 years ago

I like the idea. My preference would be to have a long term aim to join up with the existing lot like the NLA once they see the success of a more genuine group. So leave the NLA to lobby Parliament for landlords, but push forward on the legal challenges that they shied away from.

I wanted to contribute to a talk at my local NLA, but they said it was not possible however good my material because all the slots go to sponsors. They so need a shake up!

Mark Alexander

14:18 PM, 4th May 2016
About 2 years ago

Barry Fitzpatrick

14:48 PM, 4th May 2016
About 2 years ago

Great idea

Another core function I'd like to see is some PR effort directed to counter the demonising/vilification directed towards Landlords.

Bill Williams

14:52 PM, 4th May 2016
About 2 years ago

Reply to the comment left by "Ed Atkinson" at "04/05/2016 - 14:05":

No keep the existing organisations out of it, their inaction is why we need new blood.

NW Landlord

14:56 PM, 4th May 2016
About 2 years ago

I think that is a great idea as we need to unite and fight our corner especially with what this government are doing. The other organisations are not fighting our corner in my opinion

Michael Bond

16:01 PM, 4th May 2016
About 2 years ago

I like this idea. I am a member (actually chairman of the Dorset branch) of the NLA. NLA focuses on training and information, landlord accreditation, and lobbying by "HQ Staff " of Government ministers and senior civil servants. "118 Landlords Acition" should complement NLA , RLA, etc.rather than compete, having a higher profile more spiky approach.

Ed Atkinson

16:16 PM, 4th May 2016
About 2 years ago

Reply to the comment left by "Bill Williams" at "04/05/2016 - 14:52":

I am sympathetic, and also I am wary that we'll have the People's Front of Judea etc etc. Thus reducing Landlords overall clout with Government. My dream is a large and properly functioning UK-wide Landlords Association.

But yes as a start I agree ...... keep the existing organisations out of it

1 2 10

Help calculating rents?

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More