Buy To Let Blog
Not our comments but Buy To Let Blog Comments
Blog: Does anyone know if Councils sell properties that are in a state of disrepair and consequently un-inhabited to individuals or do they just offload them to housing associations?
Blog Reply: I am sure that Council's may have done this and do it in certain circumstances. In Westminster it seems that anything goes!!
However, generally I believe Councils would not be allowed to do this. One thing that is happening is that Council housing stock is being transferred to Housing Associations. This is because most of it now needs major investment and Councils don't have the money to do it. More importantly they cannot take on debt.
Housing Associations, who by definition are Registered Social Landlords (RSL's), then buy the stock from them for nominally calculated valuations on the basis that they will invest in maintenance and refurbishment.
They continue to run the properties as Social Housing.
For anyone who thinks it may be possible to become a Housing Association, one word of warning. Although they are run as commercial companies, they are tightly regulated by the Housing Corporation. They are run more like charities, do not have shareholders and any profits are reinvested.
However it is possible to set up a deal between a private landlord and a HA, which would guarantee a rent and maintenance. This may be worth looking into depending on the area.
Regards
Blog Reply: One of my tenants told me that he recently offered Walsall council a fair price for a council house that had been unnocupied for a very long time. Walsall refused to negociate with him despite the fact that he felt he may be able to raise as much as £40000. Subsequently, he tells me, Walsall sold this and the remainder of its housing stock to an association for £1000 each!
Blog Reply: I know it sounds crazy, particularly when the property was vacant.
But I suppose they figure that if they sold it to him then they deprive the area of one more unit of social housing.
The costs that HA's pay is not based on market value, rather on the income stream that the (social) tenant will pay over the next 25 years, say, less what needs to be spent on the property (based on a stock survey),discounted back to reach a Present Value at around 6%.
I've just been involved in one such deal on behalf of a HA where thousands of units were transferred from the Council at around £8,000 each.
And this is in an area where the average market value of each unit is more like £100,000.
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