The Spareroom & Padshare Interview 1st October 2010
The following narrative is a Question & Answer session between the founder and MD of Spareroom and the founder of www.padshare.co.uk
The questions and answers are both very informative to both the tenant and Landlord.
There are two sides to the Group, Padshare and Pad Residential. The founder of Padshare has been arranging professional flatshares in Manchester City Centre since 2003. He first had the idea after successfully arranging houseshares for his own portfolio of terraced houses. “I can read people instantly”. “I get about 80% over the phone but you need to meet for at least a few minutes to fully understand who’s in front of you. When the flatshare works, it works like a dream. Prospect tenants call me things like Godsend, Lifesaver and they cant believe how simple the process was.” In actual fact the simplicity is all down to nearly six years experience matching up flatshare tenants. “I just ask very simple questions, like what did you study at Uni? But it’s the speed of reply and the type of questions they ask me. How they dress and how they talk are they ambitious and polite, all these points extremely important to me”. “I have to always be very careful when I put the first tenant in the first room as they have the final say who goes in the second room. With all bills included and separate tenancies everyone is happy. Before they meet me they have literally been round the houses. The service I provide gets more popular each year.”
1) M1 is the 13th most in demand postcode in the country, just behind Leeds and closely followed by M3 and M4. The top 11 are all london postcodes and due to their very low yields, lose out to Leeds and Manchester City Centres as our top property hot spots. Despite the demand, supply of rooms remains very low. Why do you think this is?
“The supply of available apartment stock is always seasonal. August and September are the busy months due to graduate recruitment and the return of students however this year has been different. By the 5th of September there was literally no stock. The phone was ringing but we had nothing to offer. This was the same for all agents in the city. The reason for the lack of stock is , you guessed it, the Credit Crunch”. “Due to the lack of development funding there has been no new stock built and released in to the City for around two years. More people are arriving for work and more students are staying rather than go to London but there is no where for them to move in to. Also as tenants cant get a mortgage they stay in rented apartments for much longer preventing the new blood from moving in”.
2) Why do you think there is such strong demand for Rooms in the city centre by young professionals?
People simply enjoy the convenience. After a night out it costs a fortune to take a cab home plus when you’re a little worse for wear you just want to walk home fast. Then the next day if you have work you don’t want to cram on a metro or bus with a hangover you just want a five minute stroll to clear your head. There is a real buzz about living in a major city centre but probably one of the most overlooked reasons is it’s a very good place to meet the opposite sex. Say no more.
3) What kind of people do you get coming to your agency for flatshares?
Are they purely looking for a cheaper alternative to a one bed or are there other motives?
There are more two beds in a building that one beds this is due to there being more profit for the developer in a two bed. So its not easy to find a decent one bed. I meet all sorts but I only take on the smartest and polite tenants that are respectful of others. Some are looking to reduce costs and some are new to the city and will enjoy the company of a like minded flatmate. They also enjoy the concept of the all bills inclusive. Less hassle and no arguing with your flatmate.
4) Why should a landlord consider renting out a city centre apartment by the room instead of as a whole? Obviously the average yield is greater, but does that compensate for the extra admin?
Obviously the average yield is greater. Other good points are that if a tenant does move out at least you are still receiving half the rent until the new tenant moves in. On balance it is better to flatshare for a higher yield but you really have to know what you are doing. You need to have the correct paperwork. For example our tenancy agreement is bespoke for this type of tenant. In my opinion it is more important that a tenant can maintain payments than pay the deposit and first months rent. When you put together a flatshare you have the chance to really get to know the tenant before you give away about £3000.00 on a piece of paper known as the tenancy agreement. On standard lets if the tenants have three eyes but pass the credit you will put them in. Your typical estate agent treats all tenants just as a number. If they pass the credit check, take the money and the commission, on to the next. With a flatshare agency such as Padshare we are extremely careful who moves in first otherwise it will make our job harder for the second tenant. A flatshare will keep th continuity of the tental. It is very disruptive when one tenant wants to stay and one needs to leave. The standard tenancy agreement just does not cater for this scenario. More often than not you end up with an illegal sublet in one of the rooms.
5) What would say are the advantages and disadvantages to renting a 2 bed city apartment by the room compared to say a 4 bed house outside the centre?
The usual city benefits as mentioned earlier. Plus it is safer to live in a city centre block than a four bed house. A four bed house will mean more personalities more arguing over bills. On the flipside if you live in a two bed city flatshare an find you don’t get on there is no where to hide.
6) What would be your top tip to someone thinking of renting by the room?
If you’re a landlord or tenant in Manchester the best advice I can give you is to contact www.padshare.co.uk 0161 839 9654.
7) Traditional letting agents don't tend to touch flatshares. Your company is one of the few that do. Why should a landlord consider using the services of someone like yourself rather than going it alone? And what are your charges etc
My six years experience says it all. My success rate is 99% and the team working here in the office ensure a smooth operation. We run a bespoke software application so all payments to Landlords are always on time. We have a full maintenance division that can handle all eventualities. All tradesmen are tried and tested and we fight to keep their prices down. Due to the popularity of my service I can pick and choose who I accept as a tenant and I always get the right price for the Landlord. We charge a two week letting fee plus the full management monthly fee is from 8% depending on how many properties are in the portfolio. We also still offer the standard rentals so the Landlords really do get two bites of the cherry. One other nice touch is our ability to do short lets of three months. Typically we would charge an extra £100.00 per month which is great for the Landlords.
8) Where and what should landlords buy in the centre, and are there any pitfalls they should be aware of?
Landlords should go by the five minute rule i.e. try and buy property that is just a five minute walk home. Always buy a car space. Be very careful the building management company is competent and that the fees are not about to increase. Try and buy in the property auctions.
9) Do you offer help finding suitable investment properties?
Yes our Pad Residential side of the business www.getapad.co.uk can help with sales and investment. Lastly if you are going to visit Manchester for business or leisure be sure to contact us to book a superb value for money room in our Pad Aparthotel, check www.padhotels.co.uk