General (main property discussion here) - Public Sector Leasing

A big hello to all you guys n gals that provide such valuable information on this forum.

I am a new entrant to the property investing game with one investment property just going under my belt as we speak. This is where the first of my questions comes from.

Until I build up a critical mass of property giving up my day job isn't an option just yet. So messing around with tennants and their issues is not someting I want to divert my time to.

So, I am considering a Public Sector Leasing Deal with the Borough the property is situated in. Is this a good idea?

The idea in principle is great, hand over your property tothe council for a fixed period at an agreed rental income and sit back while the council deals with tennant issues and pays into your bank account every month.

But is it as simple as that, are there any negatives and has anyone got experience of this?

I would really appreciate your comments.

Regards

Ara

A good question, I'd be interested in the answer too.

Ara,

If the council accepts the deal go for it. Your property, assuming its in a sound state of repair from the start, should be in good hands with any city council. I have tried to do this, but my local counsil refused, saying that it had an abundance of council properties already... My loss.

Regards, Malik

The mortgage contract has now been signed so that much closer to my first property!!

Having read the t's & c's of the mortgage there is a section under the acceptable tenants exclusions that reads

" tenants in following categories are not acceptable: students, DSS tenants, asylum seekers, persons with diplomatic immunity, SOCIAL LANDLORDS (such as housing associations).....etc"

In your opinion does “SOCIAL LANDLORDS (such as housing associations)” count as the same thing as Public Sector Leasing schemes?

Why is the mortgage company bothered, as long as I can pay the monthly mortgage who I decide to rent my property should be up to me.

Also, once the paperwork is done will the mortgage company ever check who I am renting to? What right do they have to request this info from me? What are the consequences?

Ara

Leasing to Public sector scheme will be excluded by your lender, as far as they are concerned if you default on your payments they will have problems re-possessing the property if you have leased the property to the local authority. Some lenders are extremely onerous with conditions as to who you can rent the property to. I have never known a lender check to ensure that you are not renting to excluded tenants, ie dss. Speak to your mortgage broker regarding lenders who are less picky with their conditions.

Ara,

Andy is right. Sound advice to speak to the brokers. I would also add that in a situation where one might be approaching repossession: why not sell BMV, but above buying price. That is cut the losses and get out out of the market...Ara,

Andy is right. Sound advice to speak to the brokers. I would also add that in a situation where one might be approaching repossession: why not sell BMV, but above buying price, thus generating profit and selling faster. That is cut the losses and get out of the market.

Best wishes on the property, Malik