No tenant? What about the homeless?
TV's Phil Spencer says charity scheme can fill the void for hard-up landlords. Julian Knight reports
Sunday 17 October 2010
'I want to be part of society, not left out," said Ottavio, 41, a former drink and drug addict, who until recently was living on the streets of London.
Until, that is, charity Broadway accepted him on to its Real Lettings scheme and got him into long-term rental accommodation. "Having a regular roof over my head means the world to me. I can go to college and train and strike out in the world again." Now Ottavio has started a course in complementary therapy and has even acquired a cat, Priscilla.
Ottavio is one of about 150 tenants being helped through Broadway's Real Lettings scheme which promises to help to reintegrate the homeless into society as well as provide a good deal to landlords.
"The beauty of the scheme is that not only does it help the homeless find a place to live but it can also make sense for landlords from a commercial point of view," said Phil Spencer, (right) one half of TV's Location, Location, Location double act and property consultant. He has been involved with Broadway for six years.
"A standard landlord has to take lots of risks. They have to source a tenant or get a letting agent to do it, paying a hefty commission in the process. They then have to arrange the ongoing servicing of the property, and when the old tenant vacates they may have to redecorate.
"With Real Lettings, Broadway guarantees finding a tenant for the long term – say, five years – so no chopping and changing. They pay a decent rent for the property – not full market but not that much below – and, best of all, they maintain the property and guarantee to return it in as good a condition as it was let. That's a pretty good deal for landlords."
Broadway currently rents 150 properties – mostly in London – but now plans a massive expansion to 500 or more rental properties. Broadway's chief executive Howard Sinclair claims that despite the fact that property is being let to people who may have had drink and drug dependency issues and potential ongoing mental health problems, the tenants have shown themselves to be very house proud.
"Compared to normal leasing we think we offer really consistent returns for landlords who want to know that there is a regular income and that the property is being maintained," Mr Sinclair said. A staggering 95 per cent of Broadway tenants renew their tenancy after one year compared with 59 per cent in the wider rental market. What's more, "void" periods when the property doesn't have a tenant in place are reduced under Broadway's scheme. It's not uncommon for some landlords to suffer a void period of two or three months in every 12, cutting their potential rental yield as a result. "Void periods barely exist; landlords are looking at one day in every 100. That is part of the reason that 88 per cent of our landlords plan to renew with us when their agreement comes to an end and a similar percentage say they are satisfied with how the rental is turning out."
But what about the potential stigma of letting property to the homeless? "We understand that some may have concerns. Remember, there are a large number of landlords that won't rent to people on benefits. However, we vet our tenants very carefully to ensure that they are in the right place in their life in order to take on responsibility of managing their home," Mr Sinclair said.
Ottavio, for instance, had been attending what's called a "dry hostel" for two years, before being accepted on to the Real Lettings scheme. "It can be quite a lonely experience moving into a place on your own after staying in hostels. But I did have visits from local people who Broadway asked to look in on me and see I was doing all right," he said.
United House, the property management company, helps to maintain the homes on behalf of Broadway. "We have an ongoing commitment to this and dedicate a week's work time to each of the properties in the scheme," said Mark Allum, United House's director. "But we can tell by the condition of the properties that people are looking after them – the former homeless become very house proud. Sometimes it's the first time they have had this level of investment in them as individuals."
And according to Spencer the investment can pay dividends for both for the tenants and the landlord.
"When a few things go wrong in these people's lives – like divorce, job loss or mental health problems – they find themselves on the street and that's often when the drink and drugs take hold. And to be honest, if it was 10 below in February on the streets, I think I'd want to be off my head," Mr Spencer said.
"But apart from the social good done by this scheme the key message is for landlords that this is a viable option, particularly if you have had your fingers burnt in the past by a tenant who refuses to pay or causes damage. OK, you get less rent, but the hassle is taken away. It's like renting out to a big private corporate client with all the guarantees in place. It can make real sense if you want a hassle-free rental. The only thing to bear in mind is that you won't want to sell the property during the duration of the agreement."
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