Japanese Knotweed, Damp Proofing and Electric Nonsense
As well as giving one to one consulting advice on where to buy property we are often asked what type of property to buy. The question people most often ask is should I buy houses or flats and what size of property should I buy for best returns?
Plus, today, I will look at how both government and mortgage companies are being conned by trade bodies with the Japanese Knotweed, damp proofers and electricians very much to the fore.
What Type of Property Should I Buy?
Generally, we are in favour of smaller properties for a variety of reasons (though whether this is true in a specific area will depend on local factors, of which the characteristics of the area itself is very important). We can advise landlords on this – see the links below to our one to one consultancy advice.
Interestingly, a report out this week found that landlords were tending to buy smaller properties than they were two years ago – and I was quoted yesterday in the “Financial Times” on the reasons why this might be.
Whatever type of property you buy, getting finance for it will be near the top of your thoughts. So it was timely that in the press this week, there were quite a few interesting stories, three of which caught my eye and all of which involved finance issues.
In one article, it was reported that the lender, Paragon, had reported a good set of results in their latest set of reports to the City. In another, it was reported that a lot of mortgage lenders – especially the big banks and building societies – were still being rather silly about Japanese Knotweed. Many were making daft and over the top requests about treatment plans for this weed and were refusing to lend money for house purchases, even if the knotweed was many metres away or even on someone else’s land.
Update, Sep 2016: I self-treated a JK problem in summer 2015 using materials bought from B&Q over a 3 month period. I managed to stop the problem and the following Spring, there has been no re-growth of the weed. And a further 9 months on, still nothing. My advice: Ignore the rip off treatment companies and do it yourself. I did!
Damp Proofing Nonsense
This is all rather like the silliness that mortgage companies used to get up to when they became obsessed about damp and condensation: They would not lend unless a buyer had commissioned a damp report and then paid out lots of money for what was often unnecessary damp proofing. The Property Care Association were the cheerleaders for some of this nonsense. (To see a vicious critique, google “Property Care Association + Heritage House).
The new lenders, including Paragon, tend to not be too silly in their requirements of landlords and less bothered than most about knotweed and damp proof courses – and their lending is more pragmatic (though not cheap). This partly explains why they are cleaning up in buy to let lending.
Some five years ago I met some of their senior managers. I realised they “got” buy to lending and so I bought their shares – they are now worth four times what I paid for them.
We have the view that a lot of industry trade bodies makes a lot of money by scaremongering and somehow convincing mortgage lenders and the government that their latest set of standards are necessary. But often they aren’t – and yet no one in government seems prepared to question things. And so we are all too often being dragooned into doing work that is not needed or of little practical benefit.
A whole industry of Japanese Knotweed eradicators, damp proofers and the like have made hay, based on lenders stupidity and / or because government is not in control.
But one of the best trades by far at creating work for themselves has to the electricians.
Every year or so, their trade body will come up with another set of “necessary” regulations that home owners / landlords must comply with.
For example, if you have even a smaller house in multi occupation you are supposed to commission to get a certificate saying the electrics in the house are safe – and you must do this every five years under the HMO Management regulations.
And yes, you guessed it, each time you do it, it always leads to a load more work, because – surprise, surprise – your electrical consumer unit or some other aspect of the electrical installation, no longer meets the latest standard that the electricians trade bodies have suddenly decided in their wisdom is now vitally necessary for your tenants safety.
It is ludicrous and most of the time of little benefit in terms of safety.
The main beneficiaries of this are, of course, the electricians themselves.
It is high time that the government and mortgage companies got some proper independent scientists and engineers to advise them and actively question whether there is really a need for whatever new regulation has just been dreamt up.
Back to the finance stuff – and the third piece I saw in the press was that lots of crowdfunders have gone bust.
We highlighted the dangers, risks and the costs associated with Crowdfunding or Crowdsourcing in a previous blog. Well worth a read again, I think.
Services to Businesses and the Public Sector
We advise a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers. We help them develop and improve their services and products for private landlords. David Lawrenson, founder of LettingFocus, also writes for property portals, speaks at property events and is regularly quoted by the media.
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We help landlords and property investors by showing them how to make money in the private rented sector using ways which are fair to tenants and which involve minimal risk.
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