In the Savills auction (see last post) there are a few “cheap” properties with “Regulated Tenancies”. E.g.
http://62.105.94.133/lond_Current_auction_lot.asp?pos=57
Harpenden, Herts, £85k, Rent £4,394 per annum
So what’s the catch?
Well I looked up what a regulated tennacy is (http://www.communities.gov.uk/publications/housing/regulatedtenancies) and basically it seems here are the major problems for the landlord:
- the landlord cannot evict the tenant unless he or she gets a possession order from the courts, and the courts can grant an order only in certain circumstances
- if the tenant dies his or her spouse will normally take over the regulated tenancy (a family member who has been living in the home can take over an assured tenancy)
- either the landlord or the tenant can apply to the rent officer for a fair rent to be registered
- once a rent is registered it is the maximum the landlord can charge until it is reviewed or cancelled
- even if a rent is not registered, the landlord can only increase the rent in certain circumstances
- the tenant may get housing benefit
- the landlord is usually responsible for major repairs
- the landlord, or in some cases the tenant, can ask the local authority for a grant towards certain repairs and improvements.
So all in all you are lumbered with a liability rather than an investment! It’s a house you have little chance of ever moving into or achieving a fair rent, and with the expected yield of 5% in todays uncertain market, I would give this one a miss. I may consider it at £40k though, as the rent minus repairs may pay off the mortgage eventually.
