Stuck with a student pod and no management company?

Stuck with a student pod and no management company?

14:57 PM, 8th April 2021, About 4 months ago 9

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I purchased our student pod in 2017, and it came with the on-site management company that offered a rental agreement stipulating that they would cover all the maintenance costs, would be in charge of letting the property out and would provide a regular fixed rental income on a quarterly basis.

In October 2020, not only have I found myself with no rental income from April (due to pandemic) but I also found out that the service charge and ground rent had not been paid for 2 years after the leaseholder presented me with some hefty invoices of over £5000 arrears.

I panicked as the management company claimed that due to the pandemic, they were unable to pay any money, so I decided to appoint another company to manage my flat, but that did not go well as they did not cover any maintenance, so I had to retract my application for their services.

The existing management company just took my initial request into consideration and terminated our contract as soon as I asked them to cooperate with the handover, even though literally the following day I communicated the change of my mind regarding the switch and my husband (whose name is also on the rental agreement) had never consented to it anyway.

I had been left with no management company and nobody to rent the studio to. Because it is not rented, I cannot sell it. We had also secured a mortgage against that flat so now, not only are we not receiving any income from the flat, but we also have to pay the maintenance and the mortgage from our salaries, which is not sustainable in the long run.

I would appreciate any thoughts, suggestions, especially if anybody had/has experienced a similar situation.

Aliona



Comments

by Katy Ann

20:13 PM, 8th April 2021, About 4 months ago

It’s difficult to answer this without understanding more about your specific property, the terms of the leasehold interest you hold, and the terms of your contractual arrangement with the management company. Generally speaking, as landlord you are entitled to the rental income but you're also legally liable for maintaining the property in a habitable state (ie paying for maintenance costs). You can of course engage someone else to look after the tenancies and to undertake maintenance on your behalf, but those things are still your responsibility. It sounds as though you engaged the maintenance company to find tenants for you and to collect rents on your behalf, but that as part of that arrangement they were supposed to use the rental receipts to pay for maintenance costs and then pass over to you only the net rents. It’s not clear whether they were also expected to pay the service charges and ground rent out of the rental income - it sounds as though the arrears go back pre Covid? Possibly worth taking legal advice about whether they've breached the terms of their contract with you?
As to getting it let again, that should be possible as students are starting to go back to uni. My own student house has been occupied throughout as my tenants chose to stay there, and my student son (at a different uni, not in my student house) has also been back and forth between home and his student flat. So you've been quite unlucky if yours has been empty since last April. Worth speaking to a different letting agent. Good luck.

by Aliona Tariq

21:52 PM, 8th April 2021, About 4 months ago

Reply to the comment left by Katy Ann at 08/04/2021 - 20:13
Thank you, Katy, for taking the time to provide such a rich reply. Our rental contract with the management company stipulated their legal commitment to cover all of the maintenance costs, including service charges and ground rent, besides the guaranteed rental income. I am not sure what type of student accommodation is yours but ours is more of a hotel-style - with only a microwave and a mini fridge, meaning that long-term letting may not be a convenience since the lodgers do not have cooking facilities or a washing machine on-site.
I guess this is a negative factor that minimises our options with private lettings as well as alternative management companies/agents. So now my dilemma is where do we break the cycle? The on-site management does not want to renew our contract, nobody else has shown interest so far, the leaseholder is very unhelpful and we cannot sell it as it does not generate profit at the moment...

by Bill O'Dell

12:04 PM, 9th April 2021, About 4 months ago

Have you considered making contact with other pod owners? You may not be the only one in this position and together you have more leverage. There may also be one who is enjoying the fruits of this arrangement and wants to buy another so a possible exit strategy too.
The university will have an accommodation office and they may be able to help with providing students - this time of year there are often overseas students on short term placements.
There is usually a Facebook group for the uni students too, so it may also be worth contacting one of the student residents and seeing if they want to earn a bit of pocket money by finding you a tenant using the facebook group. This has worked for us in the past.
If there is no restriction on students only for this accommodation you might be able to turn it to Serviced Accommodation. There are often companies who will manage that for you inc all the changeovers etc depends on your location.
Just a few ideas to mull over anyway!

by Aliona Tariq

12:08 PM, 9th April 2021, About 4 months ago

Reply to the comment left by Bill O'Dell at 09/04/2021 - 12:04
Thank you, Bill, very much! Yes, I am desperately looking for any ideas and links that I could use.
I am not sure how to find out who else is in the same position as me on those premises...without being intrusive, but will definitely bear in mind your suggestions and will give them a go!👍

by DGM

12:22 PM, 9th April 2021, About 4 months ago

Reply to the comment left by Aliona Tariq at 09/04/2021 - 12:08
You said these are leasehold, so the Land Registry will have details of the lease owner. Go to land registry website and do a search, it costs £3 per individual search and is instant.
Or, ask the occupiers of the other pods if they know who there landlord is and contact them that way.

by Aliona Tariq

12:39 PM, 9th April 2021, About 4 months ago

Reply to the comment left by DGM at 09/04/2021 - 12:22
Oh, yes, that is true! Thank you!

by Richard P

1:23 AM, 10th April 2021, About 4 months ago

The management were obviously keen to get out of the contract hence why they terminated so quickly, now I am not a solicitor so I would be asking my solicitor if what they did was legal especially as you never signed anything.

As for the property, never say never as everything sells, but at what price, short lets is a good idea, but you need contact short let companies see if they would take on. Otherwise I would manage myself , advertise, find a student and then arrange any repairs through a local handyman

I think the suggestion of getting in touch with other pod owners is a good idea, either to sell to or for you all to form a group as I expect others are suffering to. You could all apply for the right to manage or if there was enough of you apply to buy the freehold , but this takes time and I would make it a long term plan. Myself I would get others together and see how you can all get shot of the current management company and replace with another

If the management company can no longer manage, it does make it a difficult building to manage and as a buyer that would be a concern

Fortunately we are slowly coming out of the pandemic and things will get back to normal , I have 16 BTL and rented to overseas students, I saw them all disappear in 8 days when the pandemic lock down was called. So my income just stopped , but within 2 months I had filled with other types of tenants

As someone else said students are returning, I did a 2 year let to a group recently and I am getting enquiry from Hong Kong Korea and the USA which is encouraging.

I think you will need think outside the box a little and get that pod rented out and that might be just advertising on say spareroom and doing it yourself

I am sure you will come out the other side be good to hear how you get on

by a.murray18@ntlworld.com

11:35 AM, 10th April 2021, About 4 months ago

Its a bit like the lease holders of blocks of flats that have the wrong cladding on them. They love to take your money and give you all types of promises, but when something goes badly wrong they do not deliver and want the government to make repairs before taking their money again.

by

10:34 AM, 13th April 2021, About 4 months ago

Hi Aliona, unfortunately you appear to be one of thousands of investors who have purchased into an unlawful, Unregulated Collective Investment Scheme (UCIS). These schemes are widespread and investors are now being offered correct ways to recover their losses. You may find the article I wrote for the Mail on Sunday last year helpful: https://www.thisismoney.co.uk/money/studentfinance/article-7981393/Student-property-plan-taught-100-000-lesson-RIP-OFFS.html You could contact http://www.ucisadvicepoint.org.uk or me directly if you need further help. Neil@neilbromage.com - http://www.neilbromage.com


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