CJ Carpenter Properties Ltd
higher rents and a fully managed service
for 2 and 3 Greenland quay
Oct 2022 - Aug 2023
Proposed Service
Property Management
Ensuring the properties are maintained in tip top condition to maximise their rental income and capital value
Including management of suppliers, utilities, regulation and compliance - licences and other registrations, routine maintenance, arranging for repairs and emergency response as required; physical inspections each month; ideas for property improvement
Goal is preservation and enhancement of capital value
Tenant and Lettings Management
Ensuring the properties are fully let at best possible rents, minimising voids
Including advertising for tenants, conducting viewings, organising move ins and outs; liaison and communication, rent collection, registration and return of deposits
Goal is maximisation of income
Cost
10% of rent with no charge for VAT (equivalent to 8% plus VAT)
Re-rental at higher rents
Our immediate priority will be to re-sign tenancies for the next year til 31st August 2023 at new higher rents, ideally by retaining as many of the existing tenants. If existing tenants don’t like proposed increases, we will advertise for new replacements at higher rents.
We think we can improve the current rent for 2GQ from £54,588 to £58,740 (increase of 8%) and for 3GQ from £54,600 to £58,740 (also 8% increase). These increases should cover any increases you face in mortgage interest and energy bills. See our budget on the GQ handover page. If any of the existing tenants leave naturally, we will push for higher rents from new tenants at then your gross rent from each property should get to +£60,000pa.
We understand you would ideally achieve larger increases and this might be possible by finding new tenants. However this will come with cost and risk that could outweigh the headline increases:
Voids - The existing tenants might leave and there could be a void between them leaving and new tenants joining. A void of one week would mean a gap in cash flow of c£275, equal to a rise of £25 per month for 11 months. A void of two weeks would be equal to £50 pcm
Cost - it will cost a lot of time and money to exit the existing tenants, ready their rooms, advertise for new ones, agree tenancies, move in the new tenants etc. Even £1,000 per house to re-tenant them (which would be cheap) is equivalent to £20 per tenant per month (NB We will make no charge for finding new tenants and doing check outs and ins, but most other agents will)
Redecoration - some rooms might need redecoration in between the existing tenant leaving and the new one joining. The cost to redecorate a room would be c£500, equivalent to £40 per month, whereas the existing tenants are happy with their decor and so it is not required
We feel the best time to get larger increases is when the existing tenants leave. We can then ‘auction’ each room to the best and highest bidding prospective tenant but with no void or unnecessary additional cost.
In summary, we would go for smaller headline rent increases that keep the existing tenants, minimise voids and costs. Your cash flow will actually be higher. We feel the risk of losing the existing tenants and trying for bigger increases could mean a loss of up to £100pcm equal to the increase you’re trying to achieve.
A few other points:
Timing - we feel the best time to find new tenants is in August each year, just before September when new people arrive in London to study or start jobs. We would avoid rooms falling vacant over the summer when people are on holiday and not starting jobs or courses
Tenancy contracts - therefore, we would re-sign the existing tenants if possible until 31st Aug 2023. If any leave in the meantime, we will charge them an early exit fee and try to re-let the room at a higher rent to a new tenant; we will synchronise any new tenancy contracts to finish at the same time, ie 31/8/2023
Management Agreement - therefore we would ideally synchronise our management agreement to end contemporaneously with the tenancies, ie on 31/8/23
FEES
Total 10% of gross rent due notionally split as follows:
8% Tenant and Property Management - includes agreeing new contracts with existing tenants with budgeted rent increases or finding new replacement tenants for equal or higher rents, then on-going liaison with tenants, rent collection etc, plus physical management of the building
2% Monthly Inspections and routine maintenance - includes a comprehensive ‘MOT’ each month to maintain everything in good working order
The above with no VAT - most agencies will add 20% for VAT, so 10% will become 12%. We will not charge VAT
Additional Work Rates and Costs (Outside the Scope of the Management Agreement and where Tom Takes the Place of an Outside Sub Contractor) - for example, network installation and rewiring, project management etc
£60 per hour, £150 per half day (three continuous hours), £250 per day (six continuous hours), Project Work - quoted based on the project
On-Costs (recharged at cost)
Outside contractors - eg cleaner - our existing cleaner is happy to work for £15 per hour, three hours per property, every fortnight
Materials for repairs
Logistics - cleaning materials etc
why Use Us?
We know the properties and the tenants - we will care for them as if we still owned them ourselves - we can change a lot less to fix maintenance issues because we know how the houses were built and have encountered most issues before. We can fix things quicker and cheaper than others
We will not charge for lots of hidden extras like most estate agents do
No VAT