Letting property to housing association - Any experience?
Discussion
In the next few months I'm considering dipping my toe in the BTL world and following a bit of research I've been looking for a while into letting a property to the housing association. On paper it looks good with guaranteed rent for a set period (3 or 5 years) and they will put the property back to it's original condition. What I really want to know are the pit falls as anything that sounds too good to be true usually is.
My initial thoughts are that housing associations still have a shortage of properties and in the current climate they are going to need even more over the coming years. Also, I work full time so do not have the time or inclination to manage the property myself and having just sold a flat, I have no intention of dealing with another estate agent for the foreseeable future. Long term plan is for capital growth (this will be used in addition to my pension, so 25 years+) but I'll also be looking to set the mortgage (60% LTV max) up on a cap & int basis so property will be unencumbered by the time i want to take advantage of the income or sell.
I'll also be looking at properties under £100k which seems to be realistic now for 2 beds outside of London, so if anyone can recommend any areas to consider I'm listening.
My initial thoughts are that housing associations still have a shortage of properties and in the current climate they are going to need even more over the coming years. Also, I work full time so do not have the time or inclination to manage the property myself and having just sold a flat, I have no intention of dealing with another estate agent for the foreseeable future. Long term plan is for capital growth (this will be used in addition to my pension, so 25 years+) but I'll also be looking to set the mortgage (60% LTV max) up on a cap & int basis so property will be unencumbered by the time i want to take advantage of the income or sell.
I'll also be looking at properties under £100k which seems to be realistic now for 2 beds outside of London, so if anyone can recommend any areas to consider I'm listening.
Depends where you are looking, you really need to do the research on what housing association area you in, and what property they want.
If they are looking for 2 bed flats they won't take a 3 bed house for instance. (even at the same price as a 2 bed flat)
A fair number of investors in the Medway towns were given their keys back a couple of years ago after the HA decided they had more than enough property.
You also need to pick your mortgae lender carefully many will not allow HA or DSS rents. You might think of simply not telling the lender, but often, to prevent further problems the HA will insist on knowing which lender you are with, or having proff fromt he lender that HA lets are allowed.
If you want a steer on the mortgage side of things, let me know.
You do tend to get a lower rent through HA, but the lack of void periods tends to offset that.
One of the HA's we know allows owners to meet and "vet" prospective tenants. Check yours will allow this. We've also seen that properties that have been "done" albeit cheaply are kept in a better state then properties that are simply bought and let (HA's are not that fussy about decor) One of our clients was actually told to remove the cheap fridge and cooker he'd put in. The HA would provide something not as good themselves. That prevents arguments about value later.
If they are looking for 2 bed flats they won't take a 3 bed house for instance. (even at the same price as a 2 bed flat)
A fair number of investors in the Medway towns were given their keys back a couple of years ago after the HA decided they had more than enough property.
You also need to pick your mortgae lender carefully many will not allow HA or DSS rents. You might think of simply not telling the lender, but often, to prevent further problems the HA will insist on knowing which lender you are with, or having proff fromt he lender that HA lets are allowed.
If you want a steer on the mortgage side of things, let me know.
You do tend to get a lower rent through HA, but the lack of void periods tends to offset that.
One of the HA's we know allows owners to meet and "vet" prospective tenants. Check yours will allow this. We've also seen that properties that have been "done" albeit cheaply are kept in a better state then properties that are simply bought and let (HA's are not that fussy about decor) One of our clients was actually told to remove the cheap fridge and cooker he'd put in. The HA would provide something not as good themselves. That prevents arguments about value later.
I have two properties that I let out via a housing association and im getting £380PCM, if I went with a normal letting agency I could get £450 and over £500 if i dealt with it myself but with the housing association they are insured so all maintenence is sorted, im gauranteed and income for 5 years.
You will have to set up a meeting with a housing association first to see if its worth your while, see which properties they have their eye on but dont have the funds to buy themselves.
Speak to your mortgage provider because some of them dont like benefits paying there mortgages but ive never understood why thats a problem, money is money at the end of the day.
The one thing I was told when I was looking into it was that people will wreck your house, wont give a monkeys about how its treated and its true but the housing association insure against it, they have a team of their own builders, decorators etc and any damage is covered by them.
It does seem too good to be true, but the downfall is that you get nowhere near market value for your rental. For most its a long term investment and as long as your mortgage is covered it doesnt matter. Your main return will be in equity and not your monthly rental.
You will have to set up a meeting with a housing association first to see if its worth your while, see which properties they have their eye on but dont have the funds to buy themselves.
Speak to your mortgage provider because some of them dont like benefits paying there mortgages but ive never understood why thats a problem, money is money at the end of the day.
The one thing I was told when I was looking into it was that people will wreck your house, wont give a monkeys about how its treated and its true but the housing association insure against it, they have a team of their own builders, decorators etc and any damage is covered by them.
It does seem too good to be true, but the downfall is that you get nowhere near market value for your rental. For most its a long term investment and as long as your mortgage is covered it doesnt matter. Your main return will be in equity and not your monthly rental.
Not as big a shortage of properties for HA;s as you would think, the crunch has caused an abundance of new developments to be sold off to HAs simply because the mortgage market didnt allow for spec sales. Essentially there is a shed load of choice out there for HA's at the moment.
Ultimately will depend on your locality, and the HA's that work within your area.
Cheers
Ultimately will depend on your locality, and the HA's that work within your area.
Cheers
Ungarsee said:
In the next few months I'm considering dipping my toe in the BTL world and following a bit of research I've been looking for a while into letting a property to the housing association. On paper it looks good with guaranteed rent for a set period (3 or 5 years) and they will put the property back to it's original condition. What I really want to know are the pit falls as anything that sounds too good to be true usually is.
My initial thoughts are that housing associations still have a shortage of properties and in the current climate they are going to need even more over the coming years. Also, I work full time so do not have the time or inclination to manage the property myself and having just sold a flat, I have no intention of dealing with another estate agent for the foreseeable future. Long term plan is for capital growth (this will be used in addition to my pension, so 25 years+) but I'll also be looking to set the mortgage (60% LTV max) up on a cap & int basis so property will be unencumbered by the time i want to take advantage of the income or sell.
I'll also be looking at properties under £100k which seems to be realistic now for 2 beds outside of London, so if anyone can recommend any areas to consider I'm listening.
Think about your yield - if you buy a £100k property & can only let it for £400 per month as it's via a HA, then 1. the overall yield is poor (ok 4.8% is better than current savings rates, but long term is crap) and 2. if you have had to take a mortgage, your rent would only just be on par with the mortgage payments (and probably wouldn't cover it unless you put down a large deposit and got a great rate). On top of that, there is no capital growth for the nest few years (in fact a very real risk that you will lose money on paper).My initial thoughts are that housing associations still have a shortage of properties and in the current climate they are going to need even more over the coming years. Also, I work full time so do not have the time or inclination to manage the property myself and having just sold a flat, I have no intention of dealing with another estate agent for the foreseeable future. Long term plan is for capital growth (this will be used in addition to my pension, so 25 years+) but I'll also be looking to set the mortgage (60% LTV max) up on a cap & int basis so property will be unencumbered by the time i want to take advantage of the income or sell.
I'll also be looking at properties under £100k which seems to be realistic now for 2 beds outside of London, so if anyone can recommend any areas to consider I'm listening.
Sounds like I'm being negative - I'm not as I'm also currently looking at BTL, I'm just highlighting some of the research I've uncovered so far.
It seems to me a lot of BTL'ers have not run their portfolio as a business, just a get rich quick scheme, which was great when property was increasing by 10% per year but not so great now.
There are a lot of other ways to invest £100k at the moment and gain over 10% returns, so just think long and hard about property as it is a very long term investment in the current market (IMHO)
LeeThePeople said:
The one thing I was told when I was looking into it was that people will wreck your house, wont give a monkeys about how its treated and its true but the housing association insure against it, they have a team of their own builders, decorators etc and any damage is covered by them.
Thats what they say, but in the houses I have seen that have been given back by the HA, they are still a real mess. Try getting the HA to put the house back in its original condition for the few houses Ive seen has been impossible. Clearly not all but of the 3 Ive seen.I used to let a flat to my local council. I got a cheque every 4 weeks and my tenants (young mum and daughter) were perfect. When I moved into that flat and tried (and failed, don't get me started on the incompetent EA's I used) to sell the home that I was in, I approached my council again to let it to them.
They had decided to use a company to deal with housing council tenants. I showed a lady from this company around my place expecting her to give me a rough monthly rental figure, but she said she'd get back to me. She also had a snagging list. All the feature fire places had to be covered and the window in one of the bedrooms opened too far, so needed something to restrict how far it opened (never mind that it's a fire escape route). There were a few others that made a victorian property unsuitable for children. How did the victorian kids cope
Anyway, she got back to me saying they'd pay £635/month. I was getting £725/month for the other flat, on the same street, on one level (not split level) and with no loft space.
I said thanks but no thanks and ended up letting through my incompetent EA's/LA's....to a family with 2 rather annoying children that like picking wallpaper off the walls and drawing on pretty much everything.
Long story short (a bit late I know). Housing association tenants can be as good or better than private tenants. LA's will do a check to see whether the tenant can afford the rent, but they won't always know much more than that.
Get onto your local council to find out the going rate and what type of property they need. Then work out what the yeild is. I pesonally wouldn't consider anything less than 8% atm, just in case interest rates start creeping up month on month.
They had decided to use a company to deal with housing council tenants. I showed a lady from this company around my place expecting her to give me a rough monthly rental figure, but she said she'd get back to me. She also had a snagging list. All the feature fire places had to be covered and the window in one of the bedrooms opened too far, so needed something to restrict how far it opened (never mind that it's a fire escape route). There were a few others that made a victorian property unsuitable for children. How did the victorian kids cope
Anyway, she got back to me saying they'd pay £635/month. I was getting £725/month for the other flat, on the same street, on one level (not split level) and with no loft space.
I said thanks but no thanks and ended up letting through my incompetent EA's/LA's....to a family with 2 rather annoying children that like picking wallpaper off the walls and drawing on pretty much everything.
Long story short (a bit late I know). Housing association tenants can be as good or better than private tenants. LA's will do a check to see whether the tenant can afford the rent, but they won't always know much more than that.
Get onto your local council to find out the going rate and what type of property they need. Then work out what the yeild is. I pesonally wouldn't consider anything less than 8% atm, just in case interest rates start creeping up month on month.
A frend let his house when he was deplyed with the RAF. After 3 months his wife left him and he got a comassionate posting back. had to wat until the 12 month contract was up to get back in. They had smashed it to ****. Every door, every light fitting and some windows had been broken. The carpets were trashed, the central heating knackered.
But, the HA put it back in the condition it was when he let it to them, as agreed in the contract but he couldn't bring himself to move back in and sold it.
But, the HA put it back in the condition it was when he let it to them, as agreed in the contract but he couldn't bring himself to move back in and sold it.
flyingjase said:
Ungarsee said:
There are a lot of other ways to invest £100k at the moment and gain over 10% returns, so just think long and hard about property as it is a very long term investment in the current market (IMHO)
2 5HAN said:
flyingjase said:
Ungarsee said:
There are a lot of other ways to invest £100k at the moment and gain over 10% returns, so just think long and hard about property as it is a very long term investment in the current market (IMHO)
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