Does Rent-To-Rent Work In Article 4 Areas?
Listen to this week episode to discover what is an article four area, how to identify article four areas and three top tips to help you get around it for your Rent-to-Rent business...
Before we get into the episode, I want to thank everyone that has joined us for the official Rent-to-Rent room on Clubhouse. We will be live every Thursday at 6 pm, so be sure to follow me on Clubhouse @simonsmith. I look forward to seeing you there.
Article four directions are legal means by which a local authority can require property owners to seek permission to convert a single dwelling house into a small HMO. In other words, normally, in a non-article four area, you can apply for an HMO licence on any property.
In an article-four area, you have to get planning permission, and you have to change the use of the property before you can apply for the HMO license.
First, you have to do your research, do your due diligence on your area and speak with the local council to learn the legal parameters you need to work within. You need to find out which areas are within the article-four direction. For example, you can have one side of the road within the article four direction and on the other side non-article four so you need to know your areas well.
TOP TIP - you can draw a search area on your Rightmove searches to eliminate article four areas, so you can really target your goldmine area.
You don't need to be scared of Article four areas, but you need to know it inside out. Listen to this weeks episode to find out how Article Four applies directly to the Rent-to-Rent model and discover three main ways to work around it.
In this episode, you will discover
What is an Article Four Area
How to research for your chosen target area
How it applies to the Rent-to-Rent model
Should you avoid Article Four Areas
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Podcast Transcript↓
[00:01:10] Welcome to the podcast today. We've got a massive show lined up for you. How to get around article four in your rent to rent business, all the hacks, all the things you need to know, plus your chance to win a free. Yep. I set up a free mini mentoring call with myself. I'm never ever done this before, but I felt like.
[00:01:35] It was time. I wanted to give back, not done a little competition for a while. So stick around for your chance to win and stick around for a massive, massive episode before we get into it. Just want to do a massive, massive shout out to everybody that joined us for the official rent to rent room on clubhouse.
[00:01:56] Every Thursday, 6:00 PM. I kicked off last week. We're going to be doing it every single Thursday. 6:00 PM. Be sure to follow me on clubhouse at Simon Smith, I'll put a link in the bio of the podcast, or should I say the description? Make sure you join me there. So. Competition time. I wanted to find a way to interact with you more.
[00:02:23] And I wanted to find a way just to get feedback so I can keep improving the podcast and keep serving you with the best value possible. So the competition is this. I want you to go on your podcast platform, give us a review. Okay, give us a review. Let us know what you like, maybe what you would like to see on the show, print screen, the review, post it in your Instagram stories and tag me in it at Simon Smith on line and for the next 48 hours.
[00:02:54] Anybody that does that, I'm going to be DM-ing you we'll arrange a call and I will help you or do a 15 minute. a 15 minute mini mentoring call. 15 minute mini mentoring call. 15 minute. Minute management is a bit of a tongue twister. And I'm going to help you. Do you, you can tell about coffee this morning, right?
[00:03:13] So article four directions or the legal means by which a local authority can require property owners to seek permission, to convert a single dwelling house into a small HMO. In other words, normally in a non article four area, you can apply for a HMO license on any property. In a article four area, you have to get planning permission.
[00:03:42] You have to change the use of the property before you can apply for the HMO license. Okay. And of course, if you're trying to do rent to HMO's, that can be problematic because you've got to change the use before you even get the HMO license. Now, first things first. Wherever you'll operate in. I would urge you to do your due diligence in your area.
[00:04:07] Speak to the council, find out if there's article for what sort of legal parameters you need to work within. And also what areas are within the article four direction. In other words, you can literally have. One side of a road. another side of the road, non article four. So top, top tip. You're going to need to know and research your area and the article four impacts in side out.
[00:04:40] And I've actually seen it done in the past where you can get a. A map of your Arctic four area, and you can actually draw it on your right move searches to eliminate article four areas or non article four areas so that you can really target your searches. So top, top tip, you need to. Not be, don't be scared of article four, but you need to know it inside out.
[00:05:05] And the best way to do that is to speak to your council. Get them to send you a copy. Sometimes you can download a copy on line and cross reference it, make sure it's right and make sure that, you know, road by road, what you're dealing with. Now, if you're in a bigger area, then. You know, clearly you're not gonna want to know or be able to know every single road in the whole city, but I would pick, you know, a few mile radius and just learn that, you know, learn that.
[00:05:38] So that's basically what you're dealing with now. It is possible to change the use of the property, but the problem with rent to rent is we don't want to commit to a property and then be denied. The change of use, and then we're stuck with a property that we can't hate HMO. And you know, that is probably if you're going down that route, that will probably be a deal breaker.
[00:06:03] So I want to discuss with you today, three top tips, the three main ways to work around this in your rent to rent business. So the first thing is to target existing. HMO's. Now genuinely speaking, the reason they implement article four in an area is because there are too many hate chemo's in too small of an area and they want to limit the supply to ensure that it doesn't get over-saturated for a star, but more importantly, that there still properties available for just families and people that don't want to how share.
[00:06:46] So that will mean that. On the one hand, if you're in an article, four area is rubbish, but then on the other hand, you know, that there's demand, uh, you know, there's loads of HMO's because they've had to restrict them. So what you want to do, first thing is target existing HMO's. And the way to do that is to get your local council HMO register. [00:07:08] Yeah. They will give you a list of all the registered HMO in an area and you'll know exactly. Which properties to target. Now, a lot of you would have heard me say before that I don't really bother too much with HMO lists. However, in an Arctic four area, it is essential. And I work within Nottingham, which is an article four area.
[00:07:34] And we, you know, we have done that. We make sure we've got the list. We make sure we know road by road. I also work in Darby, which at the moment isn't. An Arctic four area. So I don't have that problem, but yeah, that's what you want to do. You want to target existing HMO's and you want to try and add the value?
[00:07:52] You're probably thinking why would a Oh owner want to give you their property to run? And there's tons of reasons why. One of the main ones is that there may be struggling to get high occupancy rates that they don't want to manage them themselves. That they're tired, that they don't want to do the work that's needed to, to allow them to compete in today's market.
[00:08:16] So you'll be surprised target existing HMO's you can do that through right move through the HMO register for Zoopla through even targeting room, let websites to see. Landlords that look like they've got loads of rooms available. You can even approach them through that point. Number two, you want to focus on areas just outside of article four.
[00:08:42] So usually auto four he's in the city center because that's where there's generally more HMO's so a great hat is to learn. The parameters and just go just outside of article four, then you don't need the planning and you can apply for the HMO license quickly convert it, no issues. Okay. Another thing that I think is really interesting is if you think out of the box, maybe your gold mine area is going to be near an airport, which is normally outside of town or near a massive Amazon, which is normally outside of town.
[00:09:21] So those businesses and those areas will often be outside of article four. So that's a really, really cool hack. And that's what I've done. A number of times in not a gum now with just outside of article four. And then we apply for the license happy days, no issues. And it's great because people can still commute to the city.
[00:09:43] But we appeal to a slightly different market that need to be in a specific area, which is outside of the city. So that's food for thought and last but not least, you can pivot and you can do serviced accommodation where article four does not apply. So yeah, that's right. You can do essay in article four areas.
[00:10:09] No problem whatsoever. Now. As always, this is not advice. This is, um, these are my opinions, my experiences based on my local council and my particular business. But I would urge you to do your own due diligence. Check out your councils, check out the registration and one little, you know, little, um, what would we say just want to preempt something is at the moment serviced accommodation is largely under legislated.
[00:10:41] But this may change. So at the moment is a great way of operating in article four cities. You can do construction bookings, you can still do mid to longterm stuff for multiple people and get maximum gains, but you don't have to dance to the odd school for drum. So those are my three top tips on rent to rent an article for number one, focus on properties, existing HMO's we've licenses inside article four.
[00:11:12] Of course, make sure that they've got a decent amount of time left on the license and you can always do some due diligence to see. And ensure that it's likely the license would be extended because of the six months left on and they don't plan on extending this one that you want to know about it.
[00:11:29] Before you commit to a five-year agreement. Number two, you want to focus outside of article four. So learn the boundaries, learned the roads, get it on, right move. Get it on your wall. You should be at C Smith street. Okay, cool. That's outside of article four, which means XXX or, you know, Um, Jones street that's just within.
[00:11:51] So I'm going to have to do this, this, this. This might work for NSA, but it won't work for a HMO and last but not least you can pivot and you can move to serviced accommodation. And this is one of the biggest reasons why I've managed to do 40 deals in two years, because I've not been constrained to just HMO.
[00:12:10] Or just S a I'm doing both, which means the whole market is open to me. So I hope that's useful as discussed for the next 48 hours. You can bag yourself a free mini mentoring call with me. All you've got to do is review the podcast. Hopefully. Kindly, but also put some things that you want to see on the podcast that you want me to cover, whether that be topics, um, you know, things that you want to know or questions you've got for me.
[00:12:43] And I'll feature them in future. Sure. Podcasts do a screenshot, put it on your Instagram stories tag at Simon Smith on line, and you will receive a D M. Inviting you to a private one-on-one mentoring call and I'll answer any questions you've got and try and help you on your Jenny.
[00:13:14] Thanks for listening for more information, check out simonsmithonline.com. See you next time.