On 20 March 2012, the bailiff evicted one of our tenants after the usual court orders etc. (On the day before the bailiff she asked for a further 42 days extension so nothing new there!) Anyway, that’s not what this article is about. It took us about a week to get the flat cleared up but as we were (and still are) busy on a roof, we decided to just do the bear minimum with this flat and that I would ask the same or a little less rent as before. The main reason for this decision was because we plan to literrally gut this flat at the next letting because although it looks OK, it’s badly designed and needs walls knocking out, new kitchen and bathroom etc. There was therefore not much point in doing too much work to the flat to then destroy it in say 6 months to a year however long this next tenant might stay.
So, we ended up doing real basics. We cleared out the flat, cleaned it thoroughly and painted where necessary. Anyone interested, the flat I’m talking about is here. (The link might not work after a few days of this article).
It’s a two bedroom flat and before advertising with UPAD, I had a quick look at the market and noticed there was literally nothing for less than £525 pcm. As I wanted a quick let I decided to keep the rent low and was perfectly happy with £475 pcm. The phone was non-stop and had loads of viewings for the next few days.
However, to my surprise, there were no takers which is unusual for our lettings (as a rule if I have a flat to let longer than a week something is wrong!) I had noticed how everyone was commenting as to how cheap the flat was but I couldn’t understand why no takers. Yes, the kitchen is a little old and so too is the bathroom but it was OK and clean. After about 4 days, I reduced the flat to £450 pcm thinking that will do it.
Normally people will ask “how much are the bills”, “how much is the council tax”, “what are the neighbours like” etc. but this time, with about 30 people viewing, I was constantly being asked “why is it so cheap?” I explained we were working outside on roofs and the cost of the scaffolding per month was almost as much as the rent and so it was cheaper to let the flat go cheap as I didn’t have to pull the workmen off the roof job. Still they couldn’t understand why it was so cheap.
During this time, we did call back to the property and blitz it with some new window glass, re-plastered a scruffy wall and other cosmetic improvements but again nothing more than minor cosmetics that took about three days.
Finally, after just over 2 weeks, a lady recently split from boyfriend decided to take the flat and paid the administration fee to hold the property. I have to say my instincts were in top form with this one and I knew she wasn’t happy. I double and triple made sure everything was OK before agreeing to take money from her (I would rather have an empty property than somebody unhappy as unhappy just creates extra work). Everything checked out and an appointment made to start the tenancy from 1 May 2012.
During the two week gap before signing, a couple of emails went between us. I knew there was a problem when one email from her randomly asked “Are the neighbours rough and horrific?” The answer to this is a categoric no! But, why even ask? And, why ask randomly after agreeing to take the tenancy? The reason is simple, still in her mind was why was that property so cheap? Nothing could make the prospective tenant understand that I was genuinely happy with that rent and in fact I operate on a basis of always being cheaper than others on the market for quick lets.
10 minutes before the agreed time to sign up on the 1st, the prospective tenant rang and said she didn’t want the flat as she couldn’t afford it and I should re-advertise. Obviously I was really happy about this (NOT!) If I’m honest I wasn’t surprised though. Quite why wait until 10 minutes before signing I have no idea though.
So, yesterday, back to UPAD and another letting fee and off we go again. However, this time I put the rent at £495.00pcm out of curiosity and we hadn’t done any more work to the flat so it’s exactly the same as when it was at £450. I couldn’t believe the response! Alright, not as many telephone calls but the questions at the viewings last night were more normal again (although everyone still asked why it was cheap!) This time it wasn’t silly cheap, it was just cheap (if that makes sense?) Immediately on the first night of viewing, two people wanted the property, one of which had home owning guarantor with them so good to go.
I met these people earlier today to take the administration fee to hold the property and as it happens due to the bank holiday, we are probably going to sign up later tonight. They do have a bit of a credit issue so arguably, had the property had new kitchen etc. I would have had better choice but frankly I don’t care about the credit history and these people would have got any property of ours regardless. The guarantor has throughly checked out (i.e. home ownership confirmed on land registry and credit good).
The lesson therefore is that a property can be too cheap. I’ve always understood the concept that people will pay extra for quality but I never really thought something could be too cheap before this experience! I suppose if I’m honest the rising rents that people talk about has caught me out a little and I don’t think I’ve been increasing our rents as quickly as perhaps we could have been (but equally we let our flats very quickly and have barely any void period ever).
A big lesson learnt these last few weeks though and all properties that come up over the next few months and years will have a new kitchen and bathroom etc fitted (once the roof is finished) and the rents will again be only slightly below what others are charging and hopefully again i won’t be toooooo cheap.