Podcast Transcript - Episode 46
Hello, and welcome to another episode of the Essential Property Podcast with your host, Amanda Woodward. Today's episode is titled "Not Just a Letting Agent." I came up with this title because, over the last few months, we have been inundated with requests from our landlords and from those who are yet to work with us, all seeking solutions to property-related problems.
The title, "Not Just a Letting Agent," reflects the fact that letting a property — especially a House in Multiple Occupation (HMO) or serviced accommodation — is actually only a small part of managing that asset. I don’t even refer to us as letting agents. That term brings to mind two people sitting in a high street office, conducting viewings and letting properties. That couldn’t be further from what we do here at Essential Property Management.
So, I guess "property managers" is a better description of what we do. We have had many requests for other services, and I thought that if we’re getting these requests from landlords, no doubt some of our listeners would benefit from hearing about these stories and experiences to see if they have similar issues or if we can help them with their property-related problems going forward.
We have grown very organically at Essential Property Management. For those who know us on the podcast, we have been investing for about 12 to 13 years and actively managing assets for around eight years. As I mentioned earlier, the letting element is just a small part of property management. I've got about four or five different headings here of things we do for landlords that you may want us to do for you.
Property Deals and Portfolio Building
Let's start with the first area: deals. At Essential, we have two types of landlords: those with just one property — an HMO or a serviced accommodation unit, either based in the UK or overseas — who want that one asset to perform at its best, and those who are building more of a business. The latter group is looking to acquire multiple properties or may already be portfolio landlords, always in the market for a good deal.
Finding good deals has been challenging over the past couple of years, mainly due to high mortgage interest rates affecting cash flow or properties being either unavailable or overpriced. Despite this, we continue to source properties that landlords can buy. These are often existing HMOs that we already manage, and the landlords are looking to exit. For me, this is the best process to follow: the property is already let, licensed, compliant, and cash-flowing from day one. All we’re doing is swapping ownership. We source properties like this all the time, and we also handle refurbishments if needed.
For turnkey properties that are already up and running, it might only require a light refurb. However, if we’re helping you purchase a property that is currently a home and not an HMO, a full refurbishment will be necessary. We assist landlords throughout the year with purchasing properties, refurbishments, and more.
Another way to grow your portfolio and wealth with us is through joint ventures (JVs). We are quite selective with whom we work regarding JVs, but we have done several over the last decade. About half of our JVs are with investors based overseas — in places like Australia, South Africa, across Europe, and, of course, the UK.
Our JV model involves setting up limited companies, creating Special Purpose Vehicles (SPVs), buying assets, refinancing them, and generating cash flow. We rarely sell properties, following Paul's mantra: “Be like the Queen — never sell, or rarely sell.” This model works well for investors who may not be able to raise finance themselves. For those based overseas who cannot secure attractive mortgage rates, partnering with us can be highly beneficial. Even though it is a JV, the cash flow and ROI are still strong due to our ability to secure better rates.
We also work with landlords new to property who want to build their portfolio but need support. We provide coaching and mentoring, and we are very selective with whom we work. We look for people who are ready to take action, not just looking for a learning experience but a "learning and doing" experience. Paul takes the lead on this, leveraging his extensive experience working with people across the country.
For example, we are currently working with a high-net-worth individual who owns multiple businesses and now wants to invest his profits into property. We are providing him with coaching and guidance to leverage our experience to help him make informed decisions. We’re also working with someone doing their first deal, an electrician with a growing business who wants to invest in property to secure his future. Paul is working with him one-on-one to get his first deal over the line.
Legal, Financial, and Council Liaison Services
Now, let’s move on to another area where we offer significant support — dealing with legal, financial, and council matters.
We had a client come to us a few years ago who had a five-bed HMO and was paying council tax by the room, which amounted to about £600 a month. This was significantly more than the £150 a month he should have been paying. Even though his property was full, it wasn’t cash flowing because of the high council tax.
We restructured the property and moved the management to us. By converting it to serviced accommodation, we switched it from council tax to business rates. Because this owner only had this one property, he qualified for small business rate relief, reducing his business rate to zero. That’s right, zero! This saved him £600 a month or £7,200 a year. All we did was change the strategy — without making any physical changes to the property.
However, dealing with the Valuation Office Agency (VOA) is no easy feat. We handled the entire process, following a structured approach to ensure the property became profitable. We've done this for several landlords, so if you’re facing issues with the VOA — whether related to incorrect banding, commercial property, or properties with mixed-use, we can help.
We also assist landlords with insurance claims. For example, in April this year, during a bad storm, a chimney collapsed on one of our managed properties. It took out several roof tiles, and the bricks went through a car on the street. The situation required immediate action from us, including evacuating five tenants, arranging temporary accommodation, and managing emergency services on site.
We took over the insurance claim process, communicating directly with the insurance company, coordinating repairs, and negotiating with the loss adjusters. The claim was eventually accepted, and the insurance company paid out about £6,500. The key takeaway is to ensure you have a good-quality insurance policy and that you are adequately covered. If you ever find yourself in a similar situation, we can handle the process for you.
We also assist with mortgage refinancing. With interest rates dropping, we’re seeing more landlords looking to refinance. Applying for a mortgage with a new lender, even on an existing property, isn’t straightforward. It's crucial to get the right valuation. We meet surveyors on-site, provide valuation packs, and help steer the valuation process to get the best possible outcome.
Compliance and Inspection Services
Another service we offer is assistance with lawful development certificates (LDCs). These certificates confirm that your HMO was operating correctly before Article 4 came into effect. If you’re selling or refinancing a property in an Article 4 area, lenders often require this certificate. We have experience securing these certificates and can help ensure your property is valued correctly and maintains its marketability.
We also manage HMO applications, which can be daunting with 30-page forms and stringent council inspections. We handle the entire process, from the initial application to organizing the inspection and ensuring compliance.
Our compliance and inspection services go even further. We provide comprehensive property inspection reports, which many self-managing landlords or those with less proactive agents might not receive. We inspect all properties monthly, conduct smoke and carbon monoxide detector tests, and carry out quarterly inspections. We also provide fire risk assessments and compliance inspections to ensure all properties meet HMO housing standards.
Utilities Management and Cost Optimisation
Managing utilities is another area where we offer support. For example, we recently helped a landlord whose electric bills were inexplicably high. After a deep dive, we discovered the energy supplier was charging an incorrect rate due to an economy seven setup. By changing the tariff, we reduced the bill by 50%. We like saving landlords money and keeping their properties profitable. If you need assistance managing utilities or reducing costs, we’re here to help.
Property Optimisation and Market Adaptation
Finally, we assist landlords in keeping up with market trends. The property market has evolved significantly over the past decade, with rising demand for quality accommodations and increasing rents. To remain competitive, landlords must consider second or third iterations of their properties. For example, upgrading a four-bedroom HMO with one bathroom to an all-ensuite or studio layout can significantly increase rental income.
We have observed that modernizing properties and adding amenities like TVs, tea stations, or small kitchenettes can increase rents by £150 or more per room per month. This extra income can translate into thousands of pounds per year. Investing in property improvements offers a far better return on investment than buying a new property, often yielding a 50% ROI within two years.
We encourage landlords to think about how they can improve their properties to stay aligned with market demands. Whether it’s a change of strategy or upgrading amenities, we’re here to guide you through the process.
So, that’s an overview of the various services we provide at Essential Property Management. If you find yourself facing a unique property challenge, whether you’re in Stoke, Crewe, Birmingham, Derby, or Burton, we’re here to help you solve it.
Enjoy the rest of your summer, and we look forward to catching up with you in the next episode.
To get in touch with Paul and Amanda directly, please visit our website at www.essentialpropertyoptions.co.uk.
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