Sometimes, when perusing the property pages for the perfect pied a terre, in which to place you, your partner, and pets, you’ll spot an absolute stonker at well below the market value.
Naturally, your first thought will be that it’s a mistake. You second thought will be that it’s a con – some evil ne’er do well seeking to exploit your opportunism to gain access to your cash. Your third thought may well be that it’s an opportunity too great to pass up.
Your first and second thoughts may well be correct, as mistakes do happen, and the world is full of wicked people – as we’ve documented before.
But there is also a fairly decent chance that the listing is genuine. In a neighbourhood with an average monthly rental of £600, there is a genuine property listed at £350 per month.
What’s going on here
What we’re looking at here, is the phenomenon of the distressed landlord.
Property owners have a lot of overheads on an empty property – especially one which is mortgaged to the hilt with a building mortgage. As soon as they receive the transfer from the mortgage company, the clock starts ticking. The interest is applied on a daily basis, and payments need to be made. Mortgage companies don’t have souls. They’re unforgiving. Remorseless. Inevitable.
Council tax still needs to be paid, albeit at a reduced rate. And if the landlord bought the property as a fixer upper, then he has to take workmen’s wages and material costs into consideration.
And all the time, the clock is ticking to the next mortgage payment. He needs your deposit and your first month’s rent in advance and he needs it now. Unfortunately, he can’t afford to wait a fortnight while rightmove struggles to distinguish his property in a crowded marketplace. He can’t even afford to finish off the kitchen.
What can you expect?
Literally anything. In examples we’ve seen, you’ll be looking at low-spec, hastily completed paint jobs. Nasty carpets. Fitted kitchens which are missing the worktops. No cooker. If it was a completed property, you wouldn’t be getting it for a £250 pcm discount.
Yes, you can move in right away. The sooner the better, in fact.
And yes, he promises to have the carpets replaced next month. He’ll finish of the kitchen as soon as possible, and in the meantime, here’s a portable camping stove to see you through.
Unless you’re extremely unlucky, the property will be structurally sound, with no leaks and a working heating system.
The Long Term
Everybody’s happy it seems. The landlord can make his mortgage payments and is no longer liable for council tax. He has a little more breathing room to finish the job.
You have managed to snag a great little house for next to nothing, and it’ll be finished to a super high spec in a coupe of months, surely.
What could possibly go wrong?
He could use your security deposit to finance the building and decorating work. It’s not illegal so long as he puts it into a government-backed tenancy deposit scheme within the next 30 days. But at this point there’s no guarantee that will actually happen.
He could fail to actually finish the property. You both know he has money troubles, and yet he’s promising to put new carpets down within a month, as well as making mortgage payments. Do you even know how much carpeting a house costs?
He could sell it from under you, or it could be repossessed. You’ll need to deal with a new landlord and a whole load of legal issues in trying to get work done.
But the most likely scenario is that he’ll use the first six months as breathing room. He will probably get the work done, and he’ll probably push himself into a financially stable situation.
And at the end of your six month AST, you’ll be gone. To make way for someone who’s willing and able to pay the full market rent.
Image credit: The Explorographer