Agents in London are coming under pressure from landlords and house owners who are going for gold, asking huge rental prices during next summer’s Olympics.
In some cases, asking rents are already rocketing six times normal value, while some agents are being put on the spot because of legalities.
Owner occupiers who are keen to cash in are often unaware that their lease may prohibit renting out their property, but that in any case they will have to seek permission from their lender and insurers, and quite possibly planning consent for change of use.
In some areas of London, even properties that are already rented out may breach local council requirements if they become short-term lets of less than 90 days. A breach could lead to a fine of up to £20,000.
High-profile agent Foxtons is one that is advertising Olympic lets at record-breaking prices – for instance, a penthouse in Knightsbridge is being advertised at £100,000 a week as an Olympics let.
The most expensive rental property in the UK, it puts into the shade the previous record-holder – a four-bed penthouse let out (by Harrods Estates) in August to a Middle Eastern billionaire at a mere £55,000 a week.
But even a one-bed apartment in South Kensington is currently being advertised by Foxtons as a £7,000 a week Olympics let.
Zoopla currently quotes the most expensive one-bed apartment in the South Kensington area as £2,100 a week.
Foxtons is also marketing a two-bed flat in Wapping at a whopping £7,000 a week as an Olympics let. By contrast, it is also marketing a non-Olympics three-bed flat in Wapping at £1,350 a week.
Foxtons is by no means the only agent listing Olympics rentals. Link Up Properties also has a two-bed flat in Wapping available at £7,000 a week for the Olympics. Knight Frank has a one-bed flat in nearby St Katharine’s Dock as a short let for July and August at £3,900 a week and is marketing a number of rental properties specifically for next July and August.
Such is the concern about sky-high Olympic rent prices that the issue has been raised in Parliament.
Labour MP Chris Williamson, who represents Derby North, asked whether an assessment had been made “of the extent to which landlords have evicted tenants in London in order to let their properties at higher prices during the London 2012 Olympics”.
Williamson also asked whether the CLG minister planned to take steps to discourage this practice.
Replying, CLG minister Andrew Stunell said: “We have received no evidence that landlords are seeking to evict tenants in order to let at higher rents during the London 2012 Olympics. Any landlord seeking to evict a tenant would need to operate within the existing legal framework which entitles most tenants to an initial fixed term of six months, and two months’ notice of eviction.
“That framework would also apply to any new tenancy. Landlords seeking to let properties on a short-term basis only may need to seek planning permission for a change of use of their property from a residential to commercial let.”
Meanwhile, not all agents are keen to cash in on the action, scenting problems such as getting tenants to quit when the Games are over, and whether the taxman might also see gold before his eyes. See the inimitable Bushells blog.
http://www.foxtons.co.uk/search?search_type=EL&submit_type=search
http://www.bushells.com/newsarticles.php?id=24430
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Comments
For the record........ Kensington and Chelsea and Tower Hamlets have both taken the view that if this is a one off short let for the Olympics that NO permission is required from the planning department.
@arla member
hahaha - that's a good idea!
Useful info which we will shamelessly plagiarise as an info sheet for any landlords with green eyes.
This is exactly the sort of thing ARLA should be doing.
Thanx
Bloody hell - just read this on the way home and also Bushells blog - It really made me think. Very useful as we have a lettings department meeting next week and this is on the agenda. Cheers all - much appreciated.
Dear all - please don't encourage our MD - you have no idea how many articles we have to read - plus his Friday email and mandatory friday 'joke'
Sorry EW ;)
Bushells blog is indeed excellent and well informed - but to call it negative or indeed any comments on Ros's blog is disingenuous.
If you wrote an article about why you shouldn't let children play on a motorway, the consequences could be described as negative but also sensible.
I do agree that the phrase 'its an old story' suggests the writer being dismissive - though he went on to add some useful points so perhaps meant 'this is not a new issue'
For what its worth - I think this is just the start of this story and we will see much more.
AAjax
Sorry I think it's me that needs to ask what your agenda is!! I have no interest in knowing who you are, as I said earlier I don't care. I just express honest opinions based I hope on may years experience (and not just one year many times!) and where necessary facts.
I don't know if Ros, for whom I have the greatest respect, writes all these articles to which you refer or not. I dare say she does but they could be written by The Devil or the Good Lord himself and I'd still have the same responses in terms of their relevance to EAT and LAT.
I only picked out a few comments from a lengthy article because they were the same points made when the item first appeared. Yes there may be money to be made, yes maybe various LAs will get in the way they seem to be good at that, but there are an awful lot of other difficulties including I would suggest above all HMRC who are already well documented as saying they will take an unhealthy interest in the lettings.
The Bushell's blog I think is excellent and makes all the right points which unfortunately in the main are negative, or if anyone prefers, health warnings and I certainly agree with the post immediately before your last one advising of the need to take heed of the downsides in terms of Duty of Care i.e. preventing a Landlord from falling over himself to make a mint only to then see it taken away from him.
End of my posts on the subject.
Industry Observer:
I have posted previously and always under the name Ajax.
I work in the media.
I will reveal my identity if you can spare a moment to do this:
Calculate how many stories Ros writes each week in:
Three issues of Estate Agent Today
Two issues of Letting Agent Today
Two issues of Landlord Today
One issue of New Homes Today
Five issues of Introducer Today
Then add it all up for the year.
The stories, rather like in a daily newspaper, are a mix of press releases, talking points and many exclusives, although they are rarely if ever labelled as such.
These are well written to a standard unusual in today's world of instant blogging, with top marks for spelling and grammar (although this may not always be appreciated by all agents). There is often a nice leavening of good humour.
How much does it cost you?
OK, I sometimes get irritated by the flashing ads too.
I do not believe Ros has a large staff, she does not appear to take holidays, and she does not go on strike.
I trust she is amply rewarded, but I doubt it is much, compared say to the hacks who used to work on the News of the World.
Respond positively to all this, after doing the calculations above, and I will happily tell you who I am.
All numbers have 2 square roots - one positive and one negative. Both are correct.
Opinions are the same - if well thought our and well written as with Bushells blog - its not negative. In fact, you could argue its very positive advice as failing to head it may well have a negative affect of the landlords plus problems will multiply even if opinion are divided.
@Ajax
I've just read the Bushell's blog as I didn't have time earlier. It agrees with every point I made, or rather if you like I agreed with every point the blog made.
Can I take it that you will therefore be making an equally offensive, unnecessary and pitiful posting comment about the negativity of the blog - or sending an email to Bushell's accusing them of being negative as well?
Apart from an initial coment that there may be money to be made all the comments the blog then makes - correctly in my 'know it all' view - are in effect negative (by your definition).
@ Ajax - a tad harsh and totally unnecessary - Industry Observer is realistic and mostly correct.
That said - this is NOT an old story. Its an ongoing story with much to come on the subject.
Headlines today: Global recession - Jeremy Clarkson upsetting people - both could be described as old news.....
A very good offering from Bushells as well and a sensible article from Ros which is really helpful and objective. Thanks
@Lettings Guru
What I was trying to get across was that Old Agent seemed to be implying that somehow tenants were going to appreciate it if they were given more advance notice so they could kindly vacate their home sooner to enable the landlord to let to the new tenants without any problems.
All I'm trying to point out is that you can serve the ntoice and give as much notice as you like. But the date in it has to be the last fixed term.
The reference to a break clause is simply that is the only way a Landlord can ever use an earlier date than the intended original last fixed date (and even then only if the tenant has had their 6 months occupancy 'right' satisfied).
I am of course well aware that a 21(1)(b) can expire when the tenancy is periodic
@Ajax
No idea who you are and care even less. I assume you must post under another name(S) as I have never seen your Ajax handle before.
November 29 Hansard fine - that's just the latest development. This story was run about 2 months ago from memory, maybe in EAT instead.
Negative? Pesilential? Know it all? At least I have manners, and by the way never confuse realism and objectivity for a negative attitude.
Industry Observer:
What is your agenda?
Day after day you pontificate, often prefacing your remarks with the comment: "This is an old story" or "This is a non story."
When you are one of the first to post, your comments do nothing to encourage debate, just to rubbish the site and the writer.
Today, when others have posted that this is an interesting and helpful story, you still maintain your negative stance.
Williamson's remarks are in Hansard for November 29. An old story?
You are a pestilential know it all.
If I were Ros, I would automatically delete your derogatory posts.
I can't tell you to bugger off (picking up on your word).
I do ask you, politely, please try to be positive. If you have it in you.
Industry Observer - "Landlord can give as much notice as he likes on a s21(1)(b) notice but the earliest date on it for the tenant to leave by is still the last fixed date"
Not sure what you mean there
Provided a S21(1)(b) is served within the fixed term it can expire after the end date of that term even if the tenancy is at the time of expiry a periodic one.
@Old Agent
I'm assuming nothing just saying that if it is an AST on the existing tenancy then it has to be two months notice. We are talking of the existing tenants problem here I assume so the Landlord can get shot of them to carpet bag?
Care to speculate what you think these perfectly good tenants who are minding their own business are going to do when they get a notice seeking possession for no good reason other than greed - I know what I'd advise them if I was in the Stratfor CAB office or the LA Waifs and Strays (Housing) Department.
Either way it is at least 1 month's notice and the Landlord can give as much notice as he likes on a s21(1)(b) notice but the earliest date on it for the tenant to leave by is still the last fixed date (unless there is a break clause).
These erudite landlords - happy to get rid of perfectly good tenants are they just to get one in for a month at most and then have to find another at a time when presumably a lot of like minded landlords are going to be in the same boat - and in the same area?
And we wonder why agents and Landlords have poor reputations!!
Load of nonsense if you ask me and a waste of time. Too much risk admittedly possibly for a large one off reward
Industry Observer
You are assuming that a minimum 2 months notice is given - erudite landlords would give tenants as much time as possible to reduce risk of them not finding
A key issue is also is the LA's view on such rentals.
I doubt any landlord would set up such a let as an AST nor would any tenant agree to one.
This is an old story that ran a couple of months ago and what a bugger’s muddle it all is, as follows:-
“In some cases, asking rents are already rocketing six times normal value, while some agents are being put on the spot because of legalities.”
Let’s hope they are not ASTs then as otherwise the tenant can move in, challenge the rent and get it reduced as not being the market norm!!
“...their lease may prohibit renting out their property, but that in any case they will have to seek permission from their lender and insurers, and quite possibly planning consent for change of use.“
Planning maybe but that is dealt with by “.......Landlords seeking to let properties on a short-term basis only may need to seek planning permission for a change of use of their property from a residential to commercial let”
It is the leaseholder consent plus the other two that are the real issues especially lender as that applies to all properties with a loan on them not just flats.
“Meanwhile, not all agents are keen to cash in on the action, scenting problems such as getting tenants to quit when the Games are over”
Can someone explain to me why any tenant who is only at the property for the Games and probably a month at the most would want to stay longer at such exhorbitant rent levels?
I can only assume that no-one has seen the item on the Beeb last week saying how hotels are panicking because they cannot get takers at double normal room rack rates?
As I say quite a bugger’s muddle!!
Now to:-
@Legal Eagle
You are right in one sense but of course there is nothing to stop these tenancies being set up as ASTs to provide mandatory rights for the Landlord. Trouble is if the tenant sits tight then the 6 months occupancy rule kicks in - but then as above will the tenant want to stay 6 months at an extortionate rent?
@ Old Agent
And any other agent thinking serving a s21 notice in April will free up the property in time for is it early August the Games start? The tenant fun and games will have started long before that as if the tenant sits tight then the Landlord has to go legal and that even with the so called Accelerated Possession procedure will take at least 3 months.
Then if the tenant fi;;s in the Court papers and returns thhem there will be a hearing etc etc .....how can any agent set up a prospective tenancy AT AN ENHANCED RENTAL in those circumstances
Andrew Stunell said: “We have received no evidence that landlords are seeking to evict tenants in order to let at higher rents during the London 2012 Olympics.
Ask him again in April when the S21's start getting mailed out - fact is, tenants wont know their landlords plans yet and landlords aren't going to tell anyone.
Oddly, our Lettings Director suggested we advised tenants to go for a straight 12 month contract without a break clause to protect themselves. I wonder whether they realise what good advice that was.
It is something we have been thinking about and this article and the link to the blog is very useful - thanks. I think we may even promote the fact that we aren't renting for the Olympics and want tenants to stay in their homes.
@Ray Evans "It is Free Enterprise. Supply & Demand. "
So is drug dealing ;)
It is Free Enterprise. Supply & Demand.
It will happen whatever the 'suits' say. Some landlords may regret taking the chances but it is their choice.
If some people are prepared to pay stupid rents let the idiots pay, probably in more ways than one!.
Really, what are the chances of actually getting caught?
We have let several properties for the Olympics and landlords seem to think there is no risk whatsoever.
I am pleased this issue has been raised. I have been telling the Board we shouldnt get involved - but they see pound signs.
I agree - it seems a big risk for a one off event. Well done Ros - a very useful piece.
@paul - short lets are not ASTs and therefore deposit protection does not apply.
Nevertheless, some really interesting points and indeed, it will be interesting to see how Tower Hamlets et al deal with agents actively promoting Olympic lets - I assume they will have a caveat placing responsibility for getting planning permission placed firmly on the landlord - but surely, the agent will need to check.....
Good article - really helpful. Bushells blog is really informative and well thought out. I have circulated to the lettings staff as we have all had enquiries from landlords and have had concerns - but so many are doing it we were thinking we were missing out.
The message is - if something seems too good to be true, it usually is.
Get the consent of the lender who then wants credit checks without which landlord's are sunk again.
If a deposit is taken where will it be lodged? Not where the law says it should.
I see this as a too much of a risk all round.
Not for me.
Very very interesting indeed.
I wonder what the consequences will be for agents advertising properties in areas where the Council has made it clear that they wont allow such letting without PP.
We have also been thinking about jumping on the bandwagon - maybe time to think again.
I agree with Dave, this issue is one which will snowball and I can see more LA's adding to the problem as more and more tenants find they have nowhere to live.
Bushells point about tenants subletting is one we hadn't considered. Interesting.
I also think some landlords who have entered into contracts already may be in for a shock as this issue becomes more of a focal point as the S21's start landing on doormats
A useful piece and something which has been discussed widely in our lettings team.
Excellent article by Bushells which really helped and which may get forwarded to a few landlords!