How To Be A Successful Landlord: Interview With Richard Blanco
19th September 2016
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Portico estate agents interview London landlord and NLA representative, Richard Blanco, on how to be a successful landlord

 How many properties do you currently let? 

It's taken some time, but I now let 12 properties - seven houses, three flats and two shops. I specialise in letting property in east London, a fantastic area for both rental yields and capital growth.

Do you use an agent?

Yes. I'd recommend using a good agent to find tenants, as they can undertake full tenant referencing checks including right to rent. You don't want to get slapped with a big fine for failing to notice fraudulent passports or bank statements!

Though I let the agent find great tenants, I will always meet them before agreeing to a tenancy, and again at check-in. A good relationship with your tenant is really vital for success.

When do you put your properties on the market?

Knowing when to put your properties on the market is crucial. I engineer all of my tenancy agreements so that they end between February and June or September to October - basically when the lettings market is at its most competitive.

This does mean that I can have tenant changeovers at the same time, but my rationale is that November to January is a bad time to let and I don’t want to be dealing with a changeover during the holiday period in July and August. Spring and early autumn are often the best times to let out a property - so you're likely to achieve a higher rental price and lower void periods.

I actually recently re-let a property for 12 months in August, and when I renew I will offer a 13-month contract so that the next tenancy ends in September. I had a contract end on 30th September and the tenant wanted to extend by a few weeks, so I offered him the option of extending to 31st October or 31st January.  In other words, if tenants want short extensions I do allow them, as long as the quieter periods are avoided.

To furnish or not to furnish?

That's a very good question! My original business model was to always furnish as I thought that’s what prospective tenants would want. But after being in the business for this long, I’ve learnt that after refurbishing it’s best to wait to see what type of tenants the agent finds for me. I’ve had a few experiences of having to remove furniture for tenants who wanted an unfurnished property, which is a huge management headache, especially if you don’t have storage!

Always refurbish your property to a good specification before you let it, so you get the best tenants who will stay longer. After all, securing good tenants is at the heart of being a successful landlord.

How do you select an investment?

I do have criteria for investment, such as a minimum rental yield, and I also prefer freehold houses that fit the needs of my target market. Most importantly though, a property must always have the potential to add value and it must be located in an area that is improving.

What do you think about Crossrail’s impact and Crossrail 2?

I’m a huge fan of new rail schemes as they can really lift an area and bring in professional tenants who are my target market. I think substantial chunks of the Crossrail corridor have matured in terms of potential – especially in central London and inner east and west London, but having said that, if you buy in these areas you are likely to be protected from any price falls.

I’m certain there is still money to be made in outer London sections both east and west - but this is definitely a long-term goal. I mean, look at how long it took Brixton to regenerate even though the Victoria line arrived in the 1970s!

At the end of the day, we still don’t know the final route of Crossrail 2 so it's hard to fully comment on its potential impact. I think the north east end of it will be most interesting as there could be greater gains than in already bloated Chelsea, Battersea and Balham.


Have you sold any of your portfolio recently?

I sold a one bedroom flat in the East Midlands just before the stamp duty change in March 2016 as I’d decided it had fallen outside of my criteria. I was losing profit on service charges, I had seen no capital or rental growth in 10 years, and this spring was a window of opportunity to sell. 

One of the problems with a one-bedroom property is that refurbishing the bathroom and kitchen can still cost the same as it would for a larger property, and if it’s in an area where you won’t see uplift in value, it’s just pointless.

I plan to hang on to the rest of my portfolio for another ten years or so though!

How have you reacted to the legal (HMO licensing) and impending tax changes and how has this influenced your decisions this year?

I have generally taken licensing in my stride. My properties are in good condition and, as an NLA accredited landlord, I aim to follow good practice, so usually licensing has been a pain free paper exercise and I have benefitted from early bird discounts. Three of my properties are subject to local authority licensing schemes and two more may be in future.

It's really important that you're aware of new legislations; for example, my latest purchase in Newham is affected by Article 4 directions, so has to be let to a family.

Do you recommend buying through a limited company?

Interesting question. I manage my properties as a business through a limited company - and recent research shows that 40% of landlords are thinking of buying property through a limited company.  It’s important you do your sums before making a decision. Although you can set all finance costs against rental income in a limited company, you will pay tax on any money over £5,000 per annum that you withdraw from the company as dividends, with the highest rate being 38.1% - on top of the 20% corporation tax already paid.  And imagine setting up a company structure only to find in 5 years’ time that the government changes the tax regime again.

Do you recommend a mortgage provider for buy-to-let?

Yes - there are some fantastic deals out there are the moment! Virgin Money, BM Solutions, Godiva and The Mortgage works are still the quickest and all have good rates.  I never pay percentage fees but flat fees, because a percentage of a London property is a lot of money.  I like working with building societies, as if you can manage to develop a good relationship with one it can be really beneficial. Always make sure you have a commercial lender that you can work with, like Lloyds or Bank of Cyprus UK.

Top tips for anyone thinking of building a property portfolio?

Landlords: make sure you buy at the right price! Capital growth and yield are all relative to the price you pay for the property, so do a thorough spreadsheet before you buy, act in a business like way, and you should be able to justify your decisions to an imaginary board scrutinising you. 

You need to think smarter in today's market and develop your portfolio taking full regard of all of the tax and regulatory changes.

Another tip would be to not divide up your property into separate rooms - it's a maintenance and management headache.  I’d rather have properties that create nice homes that I’m proud of.

What do you think of the future of buy to let now Theresa May is in government?

Like many landlords, I am heartened that George Osborne was sacked. Theresa May and the new Chancellor Phillip Hammond say that they will be looking at measures to help support business and stimulate the economy. The construction sector is keen for the 3% stamp duty surcharge to be abolished, but I fear we will be stuck with the changes Osborne brought in. Instant Property Valuation

Lenders are keen to continue buy to let as it is profitable for them and Bank of England proposed regulation has already been factored into how most of them operate.  George Osborne shifted policy to homeowners away from landlords and it is hard to predict whether this will continue to be the stance of Theresa May’s government. We’ll have to wait and see…

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