Newsletter | February 2012 | An Olympic let - is it worth it? (Feb 2012)

We are now receiving enquiries in their droves about lettings over the Olympic period from 27th July to 12th August or realistically from 20th July to 19th August.  The para-Olympic games start on 29th August until 9th September and so at the very best, the requirement will run from 20th July to 16th September.  Interestingly, 90% of these enquiries are coming from landlords which tells a story in itself.  At the moment there is very limited demand from tenants.  Most prospective tenants will have booked their tickets and their flights/transport arrangements and you would have thought their accommodation too which is why the majority of the best hotels are fully occupied.

 In my opinion, it is the hoteliers who will benefit from increased occupancy and rates and not the majority of landlords – in fact I offer a word of caution to investor landlords who are considering losing their long term, blue chip tenants for this short term gain.

 Looking at the pros first, the clear advantage is that the average increase is 400% of the long term rental value but this may vary depending on the property and location.  Rents will be paid in full and in advance for the entire let but will include all utility bills including gas, water, electricity, water rates, television licence and Council Tax (with the exception of telephone, internet and satellite/cable television).

 Now to the cons and the clear risks to landlords.  The major drawback is the void period running up to the let and more importantly, following the let.  If long term investors jump on this 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. 

These Olympic landlords will also need to apply for planning permission to let their property for less than 90 days.  Without it, they are breaking the law and could be fined up to £20,000.  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 £1923 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.

 The final major risk on my list is the wear and tear element.  How can you be sure that the tenant will treat your property as their home during this short period?  No deposit will cover the replacement value of furniture and fixtures and fittings, let alone any replacement of carpets or redecorations.  All references on tenants should be checked carefully.

 In conclusion, my advice to long term investors is to ignore the hype and temptation unless your current tenancy at your property is actually coming to an end in July or if you are one of those homeowners who want to avoid the Olympic gridlock in London and flee to calmer and possibly warmer climates but please take heed of my cautions above.

 Don’t jump the gun this Olympics - there are many hurdles to clear in the race to let your home this year!  Achieving a Gold Medal let is not necessarily as easy as hopefully Phillips Idowu’s ‘Hop, Skip and a Jump’!