15:44 PM, 3rd May 2016, About 9 years ago
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Having raised over £500,000 to take West Bromwich Mortgage Company to the Court of Appeal it has been suggested by numerous Property118 members that we should become a Landlords Association.
Sentiment appears to be that a group with courage to take legal action against rogue mortgage lenders and poor decisions made by Government is seriously needed in the UK Private Rented Sector.
Subject to levels of interest this is something that we are willing to consider further.
Towards the bottom of this article you will find an expression of interest form. The ideas we are considering are:-
The growth of Property118 has been tremendous over the last five years as can be seen from the statistics below. This year we are projecting in excess of 5 million page views.
Property118 Growth – 1st Jan 2011 to 31st Dec 2015
Property118 Stats – 1st Jan 2016 to 10th April 2016
Whilst there is no guarantee that we will convert Property118 into a Landlords Association it is something we are seriously considering. A decision on whether to progress will be made based on the responses to this article. Here are some of our thoughts to date ….
The existing Landlord Associations have a track record of being shy of litigation.
Property118 has a track record of raising funds and seeking justice through the Judicial System. Ombudsmen and lobbying have their place but rarely achieve much more than publicity for a particular cause. If we progress this ideas and Property118 Landlords Association is launched we may not always be successful in litigation but we will pick our battles wisely and ensure that in every case the minimum outcome will be far greater awareness of any issues affecting UK landlords which to choose to tackle.
Transparency is key. We are capitalists at heart which means that we believe that success has to be rewarded; for our members, for ourselves and for those who back us financially. We have discussed the possibility of implementing a similar structure to that of Shelter and becoming a registered charity but we do not feel this would be right in terms of our core objective for transparency.
Property118 already owns 26% of the shares in LettingSupermarket.com as well as having revenue sharing agreements with many of our website sponsors. If we were to create a Landlords Association we would do so whole heartedly. In other words, all of the existing business arrangements that Property118 has (which for the avoidance of doubt doesn’t include our private property portfolios) would be incorporated into the Landlords Association.
The founders of Property118 value the goodwill of the current business at £5 million. If we were to incorporate our existing business and transform it into a Landlords Association then we would want our members to own part of it and to be as financially committed to it’s success as we are. To achieve this shares could be sold. This initial share capital would be the foundations upon which Property118 Landlords Association is built and would also provide us with confidence that we are doing the right thing.
If we decide to go ahead our first objective would be to recruit 50,000 paying members within 5 years. This would produce circa £6 million a year of revenue, i.e. £10 per month per member X 50,000 members =£500,000 per month.
To enable members to own a stake we could initially offer 1% of shares via a crowdfunding platform for £50,000. The minimum investment could be just £10. Over-funding could then be considered, e.g. if there is enough interest to raise £500,000 then 10% of the shares could be made available and so on. Whilst such a structure would decrease our personal shareholdings it would also provide funds to facilitate a more rapid growth in terms of membership recruitment.
To provide some assurance to both members and investors that we wouldn’t simply draw all profits from the business ourselves we would be prepared to commit to capping all directors emoluments to the projected 2016 earnings level of £225,000. That would be the maximum that all Directors collectively could take out of the business in terms of salary, bonuses etc. Any additional income for the Directors would then rank on par with that of the shareholders from dividends.
Property118 currently operates on a profit margin of circa 35%. Assuming this figure is maintained and assuming the membership target of 50,000 is achieved then shareholders earnings would be £2.1 million per annum. This equates to gross annual earnings per £10 share of £4.20.
Now some people may say that a 42% ROI based on an initial target of recruiting just 50,000 members from a pool of what is said to be around two million landlords just isn’t right and that the returns are too high. Well that’s capitalism folks. Once this target is achieved the value per share will not be £10 either!
Some will ask, what if Property118 doesn’t grow and what if Mark Alexander were to die, so I will address those points now. I post less than 2% of all comments and articles on Property118, the rest are posted by our members. On that basis, why should Property118 stop growing, are landlords likely to face no challenges in the future? Nobody is irreplaceable or has a monopoly on good ideas. Nothing that has been achieved by Property118 has been achieved by one person alone. It has been the vision and engagement of a growing community of landlords that has brought us to this point. The question for us all now is this; where should we take it from here?
Membership growth is projected to be achieved organically, as has been the case for page views to date. This is because existing members share their interactions with Property118 and their positive experiences with other landlords. Momentum is continuing to accelerate, as can be seen from the stats, and we have every reason to believe this will gain further pace once we have proper funding and infrastructure to campaign and appeal against other injustices against landlords and back our challenges with legal action as neccessary and commercially viable. Furthermore, a broad, growing and solid financial and membership base combined with increasing revenue streams will provide additional opportunities to fund increased PR and brand awareness campaigns. Given that there are believed to be around 2 million landlords in the UK we would like to think the initial objectives we are considering should be realistic. What do you think?
Existing monetisation projects will continue unchanged, save for the fact that all income and profits will accrue to the new company.
We would also apply for EIS relief on shares. This has significant tax benefits – details here >>> https://www.gov.uk/government/publications/the-enterprise-investment-scheme-introduction
I am interested in the following ....
At last – a #landlords‘ union!! EXACTLY what we need! https://t.co/qr7Uvqpyft @IamALandlord @jamesalexandere
— Mandy Thomson (@lodgersite) May 4, 2016
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Mark Alexander - Founder of Property118
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Sign Up22:20 PM, 4th May 2016, About 9 years ago
Reply to the comment left by "Rachel Hodge" at "04/05/2016 - 20:36":
Further thoughts..... they are flowing fast now but it's late here in Malta so please bear that in mind, these are just thoughts. By tomorrow morning I might decide they were all crap ideas LOL
Not everything below is in response to your post, most suggestions are new ideas as they are popping into my mind.
I've had a quick look and so far around 100 people have completed the Expression of Interest form and said they would part with a tenner a month. That's very encouraging at such an early stage. I haven't added up the potential investment amounts people are considering but I suspect it's somewhere North of £100,000 already!
In terms of how we might attract new paying members, my favourite idea so far is to give them a month free and then to charge them a tenner a month if they wish to continue to comment or post questions on the forum and to continue to benefit from the membership benefits already suggested and many others that will no doubt become available in terms of discounts from sponsors etc. as the membership grows.
With regards to allocation of membership fees, maybe we could split these between running costs and salaries, a litigation fund, a marketing fund and a return to shareholders. That way, as funds grow we could take on more cases, our online presence would grow to attract more members and the associated benefits of strength in numbers and it's all very transparent. A committee of volunteers could be appointed to work with our legal advisers to decide which cases we take on and they could work within a clearly defined budget. That would also remove criticism being levelled at Directors whilst providing committed volunteers to maximise the legal fighting fund. Clear decisions could then be taken in terms of what is right commercially and which battles should be funded in part or in full from membership fees based on the knock on effect to landlords generally. The committee members could, for example, be voted in by members at an AGM. I'd like to think, for example, that if we had done this a few years ago we would be able to back the #TenantTax Judicial review without having to go cap in hand to landlords. On the other hand, cases like the one against West Brom are far more commercial as that case only directly affects landlords with mortgages with them. In cases such as that, perhaps members with more than 12 months of existing membership could pay less into any legal action than those who are not members? In the early stages though, and bearing in mind that there are significant indirect outcomes affecting a much wider group of landlords, the committee might decide that the initial legal investigative work should be fully funded. I really do think a committee, a bit like a Jury, would be the only feasible way to decide upon such matters. To continue this analogy, the legal advisers could act in the same capacity as a Judge in terms of directing the Jury.
I would really appreciate any other thoughts and feedback from anybody following this discussion thread.
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Rachel Hodge
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Sign Up22:23 PM, 4th May 2016, About 9 years ago
Reply to the comment left by "Robert Mellors" at "04/05/2016 - 22:09":
An organisation dealing with purely litigation on behalf of LLs would be something I would back wholeheartedly. I'd also like it to deal with lobbying and PR.
The other commercial fluff puts me off. Weakens the cause.
But what litigation would the organisation need to fight? All the stuff you mention, I agree with, but some of it doesn't affect me as I don't rent to LA tenants. So, my membership to the alliance would contribute to litigation benefitting other types of LL, mostly, apart from speeding up evictions. So the benefit to me would be much less than to you.
Also, the litigation you talk of couldn't possibly be funded by £10/month membership fee. Even at 50K members, which is a big target membership anyway, and would take time, it's just not enough. The type of action you and I would wish to see (notwithstanding the fact that we would be interested in different litigation possibly) would need to be funded by some sort of campaign organising charged with fund raising and litigation. Exactly like Steve and Chris are doing with Clause 24.
Mark Alexander - Founder of Property118
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Sign Up22:31 PM, 4th May 2016, About 9 years ago
Reply to the comment left by "Robert Mellors" at "04/05/2016 - 22:09":
I agree with every single one of these points Robert and many of the others made in this thread too. Landlords need more positive PR.
We should also tackle issues such as most other industries having rollover relief for CGT where's we have none. I could go on forever with such examples.
The point is though that nobody has had the inclination to do much and that's why landlords have become such an easy target. It is that we must seek to change. When the numbers swell and we start winning cases it will hopefully encourage and inspire more people to invest time, money and energy into fighting these types of battles as opposed to simply moaning about the unfairness of the system.
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Rachel Hodge
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Sign Up22:34 PM, 4th May 2016, About 9 years ago
Reply to the comment left by "Mark Alexander" at "04/05/2016 - 22:20":
So your thoughts currently are to start charging for use of P118 forum, which would also include some sort of advice and potential litigation body?
I think that may flop like news sites charging for views. People will just go elsewhere.
How many people donated to C24 crowd justice? 500-700? And that campaign has been ongoing since October 2015, and has a massive, united, social media backing - not just P118.
If you'd offer a pay-per-view service, I'd be interested; whereby I could contribute to funding the litigation I chose to fund. Like the C24 Judicial review fund!
Robert M
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Sign Up22:35 PM, 4th May 2016, About 9 years ago
Reply to the comment left by "Rachel Hodge" at "04/05/2016 - 22:23":
The examples I give are just examples, and of course I will think of ones which affect me personally as they are what come to mind, BUT, anything that helps to make eviction of bad tenants (not good tenants when landlords simply want to get vacant possession in order to sell the property) quicker and easier would be of benefit to ALL landlords. Likewise, anything that helps to hold defaulting (bad) tenants accountable, must also be good for ALL landlords.
Robert M
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Sign Up22:43 PM, 4th May 2016, About 9 years ago
Reply to the comment left by "Rachel Hodge" at "04/05/2016 - 22:34":
I agree that charging to view, and contribute questions, answers, etc to the Property118 website and forum is a bad idea and is likely to diminish the readership. However, charging for access to the legal advice or some other services would be okay, as readers then have the option to have this or not, and yet still be a part of the membership or the association. After all, surely the landlords who most need the support of the Property118 association are those who can least afford to pay for it?
Nigel Parry
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Sign Up22:51 PM, 4th May 2016, About 9 years ago
In response to Ed Atkinson and on a more general level; our experience of dealing with the NLA was that they were only interested in 'selling' to our members when we had discussions about creating closer ties to them. We as a landlord association did not feel that was in the best interest of our members and so we withdrew.
We still have excellent relationships with both RLA and NLA, and the waters have been muddied a little bit recently by the announcement by the British Property Federation (BPF) that they are 'changing focus' to lobby on behalf of institutional investment and not individual landlords. We are considering being founder members of a new 'association of associations' body which will include NLA and ARLA, but the figures being thrown around just don't seem to be worth it. Perhaps this proposition from Mark will be the foundation on which to build on?
I would certainly consider a recommendation for our association to 'purchase' shares in the new organisation. This could be interesting.
Mark Alexander - Founder of Property118
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Sign Up22:53 PM, 4th May 2016, About 9 years ago
Reply to the comment left by "Rachel Hodge" at "04/05/2016 - 22:34":
That's not quite what I had in mind and I do see your points. I did say that it's late here in Malta and some of my ideas would be crap ones LOL
However, two of the other businesses within the same ownership of Property118 are Litigation Warranty and PrivateProsecutions.org. Those business were created during my time as a non-exec Chairman of a barristers chambers. That's how I know we could most definitely deliver the first of the membership benefits on my list in terms of litigation. Those businesses would also be rolled into any new company for the benefit of investor/shareholders if we were to decide to progress the idea of transforming Property118 into a Landlords Association, Landlords Union or whatever other badge we decide to put on it.
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Mark Alexander - Founder of Property118
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Sign Up22:57 PM, 4th May 2016, About 9 years ago
Reply to the comment left by "Nigel Parry" at "04/05/2016 - 22:51":
Very interesting Nigel, which Association are you referring to when you say "we"?
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Mark Alexander - Founder of Property118
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Sign Up23:15 PM, 4th May 2016, About 9 years ago
I'd like to share another example of how I think such an organisation could help clean up our industry.
As we all know, rogue agents regularly disappear or declare bankruptcy leaving landlords and tenants out of pocket, deposits unprotected etc.
The Police are typically disinterested as they have limited resources and expertise to commit to white collar crime. They regularly advise victims that "it's a civil matter" but this is incorrect in most cases. The crime is fraud by abuse of position. Even when the Police do take an interest the CPS often drop the case because of the complexities. They simply don't understand our business model and faced with limited funds they would much rather prosecute somebody who has caused a physical injury, for example.
That's why we created PrivateProsecutions.org
What few people understand is that the Police or the CPS don't have to be involved in a criminal prosecution. Furthermore, and perhaps most importantly, unlike in litigation cases, if a Judge agrees that it is in the public interests for a case to be heard then the Crown picks up all legal costs whether the accused is found guilty or not.
However, there is a cost of getting such cases in front of a Judge. The prosecuting barrister need to present sufficient evidence to a Judge for him to consider whether a case should be heard. Prosecuting Barristers cannot offer no-win-no-fee deals so somebody needs to fund the barristers initial costs, typically £3,000 to £30,000. Sadly, victims of fraud are inevitably strapped for cash so these cases go nowhere.
An organisation with a Litigation Fund could finance such cases in the knowledge that if a trial proceeds they would get all the money back. Not only would this help to clean up the industry, it would result in huge PR for the organisation funding the cases.
I've put this idea to various Letting Agency bodies and not one of them wanted to fund any cases despite the positive publicity they could get from it. Needless to say, I find that very frustrating!
More info >>> http://privateprosecutions.org/
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