LUCY MORTON, LETTINGS, WA ELLIS | OLYMPICS LETS ARE A BAD IDEA
“We are now receiving enquiries in their droves about lettings over the Olympic period. Interestingly, 90 per cent of these enquiries are coming from landlords, which tells a story in itself. At the moment, there is very limited demand from tenants.
“I offer a word of caution to investor landlords who are considering losing their long term, blue-chip tenants for this short term gain. While landlords can earn above market value rents, the major drawback is the void period running up to the let and more importantly, following the let. If long-term investors jump on the Olympic bandwagon and launch their properties back on to the market in September, there is a strong risk that there will be a sudden surge in supply of properties available without the demand. We are already noticing a reduction in demand levels – I believe that the lettings market plateaued in October 2011 and in some areas, is now marginally dropping. The reason for this change in market conditions is that the City is not employing its normal influx of expats and it is these tenants who underpin the lettings market. With the economic outlook looking bleak, this situation is not going to improve and therefore, the market will not be able to cope with this extra supply, which could drive rents down.
“In addition, anyone wanting to let during the Olympics will also need to check what their council requires in terms of planning permission to let their property for less than 90 days. If they proceed without it, they could be breaking the law, and the future sale of the property could also be affected as any enforcement notice will be registered as a legal charge and this may deter future buyers.
A short let may also invalidate some insurance policies. If the rent is under £1,923 per week, it will become an AST (Assured Shorthold Tenancy) and therefore, a Section 21 Notice must be served. If the tenant refuses to leave, they may be able to stay for six months until court proceedings can be initiated.
“My advice to long term investors is to ignore the hype and temptation, unless the current tenancy is actually coming to an end in July, or unless you are a homeowner who wants to avoid the Olympic gridlock in London and flee to calmer and possibly warmer climates.”