When NOT to improve your property's energy efficiency!

There's a rule for everything, but as most entrepreneurs, I skirt around these (legally of course) to get the most out of things. An intended consequence of the governments energy efficiency drive (in particular to outlaw letting of properties that are rated F and below) was to get landlords to sell up. 

A number of landlords will have thrown in the towel upon hearing that their property can't be brought up to an E rating, and joined those who are sick of the red tape, regulation and taxation surrounding buy-to-let. Fear not, for those die-hard buy to letters like myself there is a way around having to improve your property.

The government has left the door open a crack, for those who are savvy enough to know about these things. Of course these exemptions are buried in the small print. Let's discuss when and how... There's 7 ways to get around having to improve your property you know! 

1. High cost exemption - The regulations deem it to be unreasonable to have to spend more than £3500 to bring your property up to an E rating. If the cheapest improvement will cost in excess of this you can apply for a "high cost exemption." If one or more bits can be improved for £3,500 or less, and these still fail to improve the property to EPC E, then the ‘All Improvements Made’ exemption should be registered (see number 2). This is for residential properties only.
   
   
2. 7 year payback exemption - irrelevant to residential buy to let but perhaps of interest if you do have commercial property - in a nutshell, if the cost of the energy saving measure will not pay itself back in 7 years.
   
   
3. All improvements made exemption - quite simply, there is nothing more that you can do to improve a property's energy efficiency; applies to both residential and commercial properties.
   
   
4. Wall insulation exemption - where the recommended course of action is to apply wall insulation but the measure is not appropriate for the property, as deemed by expert advice. The advice (by a suitable expert such as a chartered engineer or building surveyor) indicating that due to its potential negative impact on the fabric or structure of the property (or the building of which the property forms a part) would secure this exemption; applies to both residential and commercial units.
   
   
5. Consent exemption - the landlord may in fact be reliant on permissions to install things such as solar panels, insulation and so forth. Where the necessary consents cannot be obtained, for example planning permission is required, the property is in a conservation area, or perhaps freeholder consent is required a landlord may apply for an exemption.
   
   
6. Devaluation exemption - this is of importance for historic buildings and the such - you would be eligible for such an exemption if the value of the property were to decrease by a minimum of 5% after installing energy improvements. Applies to both.
   
   
7. New landlord exemption - whereby the property is newly acquired and there simply has not been ample time to implement any energy saving measures. This is typically in the first 6 months of becoming the landlord, after which the exemption expires. Applies to both residential and commercial properties.

So there you have it, 7 completely legal ways to avoid having to upgrade your rental property. So cancel the sale if you were planning on bailing, there are plenty of ways to keep carrying on (profitably) with buy-to-let! As always I'm happy to help you so do reach out via email. I love to help other investors old and new find their way in the myriad of strategies that are available. Are you looking for coaching, mentoring or simply after a sourced deal? Do check out my personal website to choose a package for you! Don't forget to check out my YouTube channel for more useful information on all things buy-to-let and don't forget to subscribe!

Oh no, we can't discriminate any more, what now?

 DSS discrimination is no longer allowed! What does that mean for you as a landlord?

Check out my video here: https://youtu.be/zlbRb6SwPYk

As always I'm happy to help you so do reach out via email. I love to help other investors old and new find their way in the myriad of strategies that are available. Are you looking for coaching, mentoring or simply after a sourced deal? Do check out my personal website to choose a package for you!

Down To South London - Omer Mehmet's 8bed HMO

Omer Mehmet practices what he preaches, that's for sure! Not content on being an expert at mortgages he set up for himself and now runs a 16 man strong brokerage. Being the master of creative finance allows him to truly understand property investment and development. We dive further into his progress and talk about his 8bed HMO he's building.

Click here to see the interview!

As always I'm happy to help you so do reach out via email. I love to help other investors old and new find their way in the myriad of strategies that are available. Are you looking for coaching, mentoring or simply after a sourced deal? Do check out my personal website to choose a package for you!

Are you still banking on HMO yields with Vanilla Let investments?

 I've recently been asked about my portfolio - when I started, why I continued, but most importantly what sort of yields I achieve.

Firstly let me start by saying I hate gross yield as a yardstick for how good an investment performs. If you know me, you'll know that I always look at the return on capital employed, or how much money is left in the deal after refinance. You may however be getting an infinite return - if you've refinanced after several years of ownership and price rises you may have been able to borrow more than your initial outlay - this makes it even more tricky. A good friend of mine always compares the "net equity" - the amount of money you would have in your pocket when liquidating the asset, after all fees and taxes. He then looks at other things he could do with the money. Will it get a better return? He pushes the 'sell' button. Interesting, but I digress. Let's just stick to gross yield for now, the topic du jour.

I have been in property for nearly 20 years, being a landlord for over 15 of those. My first purchase was indeed a single (vanilla) let, moreover because it's a studio flat. Difficult to turn that into an HMO with multiple people in there! After that I diversified in to bigger units with more bedrooms, because I realised that the "price per bedroom" was simply lower the bigger the number of rooms became. This increased yields. Coming from an estate agency background I was easily sold on the idea of letting in August and September, because after all, that's the busiest time of year - new students flood the London rental market, pushing demand and rents 15% above average for the year. What's not to love?

The concept of running an HMO, or multi-let, was fairly alien to me. I didn't really want the hassle of tenant 1 moving out a different date to tenant 2, and then tenant 3 kicking off because the other tenants are too messy or whatever. When you let to one group it's very nice, they all move in and out at the same time, they're all friends so you don't have to play mummy or daddy to them when the washing up isn't done and so on.

So why are people still multi-letting? What is it that we don't know? Well, people pay a high price for certainty. People pay a higher price for having flexibility. That is key with today's renter. There is a growing number of renters who prefer to try out different areas, don't want to commit to a houseshare where they don't know anyone (and are worried they won't like them). 

Now I don't believe that renting by the room is worth the hassle - in some areas that is. If you are letting in zones 1 and 2, and even 3, you're going to be just as well off renting to a group of friends as you are renting to 3 or 4 separate people. Demand is strong there. Zones 4 and outward you may struggle to get a big group. Generally the further out you go, the higher the percentage of owner occupier/families will be, so prices don't stretch as high as the inner zones because you just won't get as many larger groups wanting to live together.

Moral of the story? If you're going to aim for sharers, be prepared to multi-let if you are further out in order to get the good returns. In zones 1 and 2 (from personal experience and anecdotal evidence). You can't expect the same returns from bigger property the further out you go. Now interestingly enough I've been reading some articles that seems to dispute this - commuter towns that are beating London's average 4.1% yield. Now let me start by saying you must be doing something seriously below par if you are achieving a 4% yield, so it's not difficult to do better than that! My lowest yielding property is achieving 5.8% and the highest a whopping 8%. It will come as no surprise to hear that the 8% yielding property is a 5bed. It's an HMO. Do I multi-let? No. It's let to a single group of friends. Lovely!

Moral of the story - if you are looking for great returns and invest in Clapham and surrounds you need to be looking for more bedrooms in order to increase your yields, not necessarily let by the room.

Do stay tuned for property investment tips/tricks and updates and by all means do check out the DownToSouthLondon YouTube Channel for entertaining and informative videos to help you invest with confidence! I also offer coaching on a one-to-one basis so if you are looking to get into property investing and require personal guidance then head on over to www.jeroenhoppe.com.

Jeroen Hoppe interviews Ben Wilson about his 7 figure South London Development

 I can't stop networking with fellow investors and developers! This time I reached out to Ben Wilson, a fellow investor who has made a name for himself with some INCREDIBLE specification flats. I discuss a project in SW7 with him and his views on the current market.

A very interesting chat indeed, seen as he specialises in the higher end of the market, a segment that particularly scares me due to the vast numbers involved! check out the video below:

Do stay tuned for property investment tips/tricks and updates and by all means do check out the DownToSouthLondon YouTube Channel for entertaining and informative videos to help you invest with confidence! I also offer coaching on a one-to-one basis so if you are looking to get into property investing and require personal guidance then head on over to www.jeroenhoppe.com.