Property118 Landlords Association – should we?

Property118 Landlords Association – should we?

15:44 PM, 3rd May 2016, About 7 years ago

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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 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 >>>

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 number from 10 to 50000.
  • For example; Devon

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Mark Shine

19:28 PM, 6th May 2016, About 7 years ago

Hi Mark
Just a thought: I don't normally do joint ventures, but given the need for action is not tomorrow, but NOW and more supporters are urgently needed to expose the truth behind Section 24 and its effects and fund the judicial review... instead of trying to create another association, is there any mileage in considering some sort of formal JV with one of the existing landlord associations?

James Fraser

21:03 PM, 6th May 2016, About 7 years ago

Unfortunately, I doubt they'd be interested. The point of a 118 ass - I know, we've got a few of them already 🙂 - is that we would be willing to challenge and fight the government wherever necessary. The major 'asses' don't do that so that there would be a major and probably incompatible difference in philosophy.

Mark Shine

22:05 PM, 6th May 2016, About 7 years ago

Reply to the comment left by "James Fraser" at "06/05/2016 - 21:03":

Whilst it's theoretically possible that more than 50% of the existing associations members (or rather their membership fees) may actually welcome some of the ahem 'unintended consequences' of Section 24 for financial gain, I would be very surprised if they could provide much evidence as to why HMT's logic is sound?

In the interests of encouraging Whitehall to try to understand the PRS a little better, do you think it's not even worth asking the established associations whether they would consider some form of alliance?

James Fraser

23:01 PM, 6th May 2016, About 7 years ago

Reply to the comment left by "Mark Shine" at "06/05/2016 - 22:05":

We could ask, sure. But I have insider knowledge, and they absolutely wouldn't do it.

Mark Shine

23:29 PM, 6th May 2016, About 7 years ago

Reply to the comment left by "James Fraser" at "06/05/2016 - 23:01":

Many LLs will not be too happy if their golden ticket (aka Section 24) Is abandoned or defeated via a JR.

I think an alliance with the established LL associations would be very useful for the whole PRS, but clearly the wording of any alliance 'invitation' needs to be be worded very carefully.

Robert M

0:01 AM, 7th May 2016, About 7 years ago

Reply to the comment left by "Mark Shine" at "06/05/2016 - 23:29":

How does clause 24 benefit landlords? I can see that it does not affect all landlords, but you refer to it as a "golden ticket" for landlords, so I'm just trying to understand why you think this would be the case?

James Fraser

0:12 AM, 7th May 2016, About 7 years ago

Reply to the comment left by "Robert Mellors" at "07/05/2016 - 00:01":

Yep, Im struggling with that one an' all! Do you mean large corporates who'll possibly benefit if the small operators pull out?

Mark Shine

0:25 AM, 7th May 2016, About 7 years ago

Reply to the comment left by "Robert Mellors" at "07/05/2016 - 00:01":

1. Increased demand for THEIR rental properties if supply decreases because encumbered LLs forced to exit the market.
2. 'Distressed' sales / buying opportunities for them as some of the encumbered or non incorporated LLs sell up. In the current climate, FTBs are perhaps unlikely to buy all the HMOs that may come to market?

Mark Alexander - Founder of Property118

11:13 AM, 7th May 2016, About 7 years ago

Reply to the comment left by "Mark Shine" at "07/05/2016 - 00:25":

Very interesting points, one mans loss is another mans gain.


11:48 AM, 7th May 2016, About 7 years ago

Reply to the comment left by "Mark Shine" at "07/05/2016 - 00:25":

I should be praising Osborne from on high as he has put me in a position to take advantage of other's misfortunes, to exploit your "Golden Ticket". I am nevertheless totally opposed to Clause 24 for it is an immoral tax to impose on entrepreneurs, especially those who have done what the government encouraged them to do only a year ago.

To take such a self centred attitude, exploiting the financial demise of others, without considering the whole picture and its impact on society is selfish. We should all be working together, not trying to exploit one another.

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