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15:44 PM, 3rd May 2016, About 8 years ago
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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
I am interested in the following ....
At last – a #landlords‘ union!! EXACTLY what we need! https://t.co/qr7Uvqpyft @IamALandlord @jamesalexandere
— Mandy Thomson (@lodgersite) May 4, 2016
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Simon Griffith
16:41 PM, 4th May 2016, About 8 years ago
A very good idea indeed. In the olden days I was a member of The Southern Private Landlords Association run by a very well informed group of landlords much more of a union and lobbying outfit than the shops that NLA/RLA have become. I think that the NLA swallowed up this outfit and yes they did professionalise it but at a cost which is plain to see now. I would favour and recommend an independent property118.com association with the stated aim to become the proper literally national landlords association offering yes the revenue streams, training etc and all that but not in the process losing the spine and attitude to take on the fight that property118.com already does so well. Never has there been a better time to create a truly national association which is desperately needed before the next government attack. The crowd funding exercise showing less than 1000 supporters (and the petition that didn't make it to 100,000) when there are apparently 2m landlords shows just how easy it is for the government to bully us as such a fractured and disparate bunch.
Mark Alexander - Founder of Property118
17:28 PM, 4th May 2016, About 8 years ago
Here's a very good article in Mortgage Strategy regarding our Court of Appeal case against West Bromwich Mortgage Company >>> http://www.mortgagestrategy.co.uk/landlords-take-on-west-brom-over-tracker-rate-future/
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Rachel Hodge
19:43 PM, 4th May 2016, About 8 years ago
Why not a "Union" rather than an "Association"? I mean what's different about another "Association"? Especially if it's just offering the same ingredients, different mix as the others, for a fee. It just weakens all side by dividing into smaller groups.
I'm thinking out loud with this post, but what's missing from the sector is a Union type of organisation for our profession. To lobby on our behalf, campaign against unfair treatment and promote positive PR. No-one does this but us. I mean the people's front of Landlordism (not the Landlord people's front!). Nobody impartially fights our corner, except us.
It has to be a member contributory, non-profit making organisation; non-commercial and impartial. Staff get paid of course, as in all other not for profit organisations, but if it's commercial it's just another competitor in the market.
Mark Alexander - Founder of Property118
20:14 PM, 4th May 2016, About 8 years ago
Reply to the comment left by "Rachel Hodge" at "04/05/2016 - 19:43":
I like the word Union and your perception of what we stand for. What I don't like though is the lack of transparency of "not-for profit" for the reasons mentioned in my article.
If I do this I want to be rewarded on performance and for the financial backers of it to be equally rewarded so that it gets sufficiently well funded from day one.
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Rachel Hodge
20:36 PM, 4th May 2016, About 8 years ago
Reply to the comment left by "Mark Alexander" at "04/05/2016 - 20:14":
Yes, Union is good, but this isn't what your proposal sounds like to me. It's largely, almost entirely, commercial and comes across that way.
I'm sorry if you misunderstood my last post as perceiving what you stand for. When I said "us", I meant the LL community, across all forums.
I have no problem with you launching a Property118 "association", as long as members are clear it's a commercial product, not a Union. Apart from the litigation part, you're not proposing anything different other than opening it up to shareholders. the rest of it sounds a bit like a pyramid scheme to me, with the directors at the top, but I'm no Maverick, so that could just be me misunderstanding!
The other difference (apart from shareholders) is your mention of litigation. A Union would, and does, fund litigation from its own assets. I don't think you would be offering that. How could you? Unless you decide what action to take based on commercial aspects. I imagine litigation, outside the 30 min legal consultation included in membership (how often?), would need to to be financed by additional funding from members.
Let's be clear. You want this branded Property118 as a commercial venture, not a not-for-profit Union for LLs. Again - I've no problem with that, just stating the obvious for discussion here, else it's one sided, and that's no good for evolution and is not transparent.
Robert M
21:32 PM, 4th May 2016, About 8 years ago
I like the idea of having a union or association that is prepared to take legal action to challenge injustice against landlords, but there are lots of injustices so how would the Property118 association decide which injustices to fight? How would the legal fights be funded? How would Property118 association be rewarded by tackling those injustices (win or lose)?
I have often found that landlord associations are ineffective, as are many trade unions, as they are unwilling to legally challenge the authorities (or the status quo), so if Property118 association is willing and able to challenge authorities and unjust legislation, then I would definitely support this.
Mark Alexander - Founder of Property118
21:45 PM, 4th May 2016, About 8 years ago
Reply to the comment left by "Rachel Hodge" at "04/05/2016 - 20:36":
It was never my intention to be making a proposal at this stage Rachel, merely floating past the community a set of initial ideas for discussion and a lot of further consideration.
The questions you have raised are all good ones and reflect many of the questions also buzzing around in my mind. I don't have the answers just yet, just a vision through a haze at this stage, heavily influenced by members suggestions on other threads. For example, on one thread there was a discussion about litigating against BoI for messing with their tracker rate products and if successful the financial backer of the legal fees (win or lose) retaining any refunds gained on the back successful litigation. As you say, such arrangements would have to be judged commercially and any risks offset by insurance if possible/necessary. The commerciality would be the decider on some of the cases that are fully funded by the company whilst in other cases the company would fund only the investigations of viability and raising awareness for example.
I'm typing as I think now but perhaps a percentage of all membership fees could be set aside to fund certain litigation and that a committee could be formed to decide upon which cases represent the wider interests of landlords. All just thoughts at this stage.
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Rachel Hodge
22:01 PM, 4th May 2016, About 8 years ago
Reply to the comment left by "Mark Alexander" at "04/05/2016 - 21:45":
Appreciate all you say Mark. I think everyone wants something else other than the lameness of what's on offer with NLA and RLA, which I guess are the perceived representative bodies currently.
I don't know much about either of them, but that in itself shows how ineffective and useless they are as if they were fighting on behalf of LLs, for our cause, I'd be shouting about them and backing them.
I will follow this thread with interest, and hope you come up with the answer. Appreciate it's going to take some effort from someone, somewhere to form an alliance / union / guild.
Robert M
22:09 PM, 4th May 2016, About 8 years ago
Reply to the comment left by "Mark Alexander" at "04/05/2016 - 21:45":
How about the Notice requirements of the Protection from Eviction Act 1977, and the time cases take to get to court and eventual eviction by bailiffs, in the case of anti-social tenants (particularly where violence or damage is occurring), being an unlawful deprivation of the landlord's income and possessions, and an unlawful infliction of (allowed continuation of) torture or inhuman treatment to the victims of the anti-social tenant.
How about bringing a case to ensure that landlords can recover debts owed by former tenants via ongoing deduction from the debtor's benefits, if no other enforcement option would be effective?
How about suing local authorities when they make errors in Housing Benefit calculations and then seek to recover the money from landlords?
How about suing local authorities who advise tenants to stay in the property until the bailiffs arrive?
How about fighting to get the Housing Element of Universal Credit paid to landlords, and/or suing the DWP (or Council) in cases where they pay it to the tenant who spends it instead of paying the rent with it (when the DWP/Council have been warned by the landlord that this is likely to happen)?
Just a few examples of unjust legislation (or where legislation is lacking and is causing detriment to landlords), there are plenty of other possible challenges!
Are these the sort of things that the association would fight to get changed?
Mark Shine
22:18 PM, 4th May 2016, About 8 years ago
A focused not for profit organisation or 'union' that was able to represent ALL residential landlords and challenge some of the myths peddled by Shelter, Generation Rent, HMG, HMT and parts of the LL bashing media would be a great idea. If that was achievable, then the electorate may have a fairer chance of understanding the intricacies of the PRS.
However, is that an unrealistic concept?
The problem as far as Clause/Section 24 is concerned a % of LLs will be directly adversely affected, but the reality is that a greater % of LLs are ironically likely to financially benefit from its implementation.
In terms of offering an olive branch and perhaps potential 'union' of the existing associations (RLA, NLA, Guild etc) and representative websites (P118, Property Tribes, Landlord Zone etc), does anyone know if they have they all been invited to speak at the summit on 9th June?