"not for owners occupation "

[Fire]

I have started looking at some appartment prices in an area I'd like to buy in a few years time, and this is something which I have been noticing in a number of advertisments.

What does this mean? I imagien its self-explanitory in a way, but what exactly would be preventing me from owning and living in an apartment that is listed as such?

 

[Pornstar]

I think that means somebody is currently renting it out so you can only buy it as an investment. You could live in it when the lease runs out though.

 

[jellyroo]

Could mean they're serviced apartments, managed by a hotel chain. Often the owner is allowed a certain number of nights' stay per year - although this isn't really helpful if you're after a place to live.

 

[Rancid_Beasties]

Could be one of three things that I can think of:

1. Serviced apartment
2. Long term lease in place
3. Student accomodation

The only one of these three properties that you could live in is 2 or 3, if you are either willing to wait (2) or a student (3).

 

[bunsen burner]

What does this mean?

Here's a direct translation: Don't touch it with a barge pole.

 

[FIGJAM]

What bunsen said!

Granted, if it is just a year long standard resi tenancy, then that's fine, but in direct contrast to commercial property, long term leases have a negative effect on value. Agents hate them. Banks hate them more. And us valuers don't want to know about them.

 

[Fire]

Thanks a lot for the responses guys, its been very enlightening.

What bunsen said!

Granted, if it is just a year long standard resi tenancy, then that's fine, but in direct contrast to commercial property, long term leases have a negative effect on value. Agents hate them. Banks hate them more. And us valuers don't want to know about them.

Ah, well that would explain a lot. Is this what Rancid called "Serviced apartments"?

And another thing, what does "student accomodation" mean? is there some organisation that will forbid someone who is not a student from living in certain dwellings? If so, what classifies an appartment as "Student Accomodation"?

 

[FIGJAM]

Serviced apartments are typically part of a specialised operator, such as Quest or Clarion, and sound like a dream on paper (just collect the cheques with no maintenance, 10 + 5 +5 type leases, and other 'showbags' incentives). But they are hard to sell (you think the operator is going to free up an open for inspection day for you?), and if you buy them new, you will likely be fleeced by the developer when the stated yields blow out from say 5% 'off plan', to say 7% yields on resale.

Student accommodation can often have the same long term leases in place, with no management issues and the like. All sounding great on paper.

In fairness to both types, not all are subject to long term agreements. Some come to the end of their initial leases and can be lived in, whilst some are set on management agreements, which are breakable on 90 days notice and you can live in them. These aren't affected in the same way, and often are put in place so that the owner can get a higher return, but not have the hassles that go with a long term lease (particularly notable when trying to obtain finance...or again, sell the damn things!).

Of course, some Serviced/Student Apartment set ups won't want a bar of this, because it could seriously hinder their business and/or fill it with uncertainty. There is an old serviced apartment operator in the city, for example, who's bought up as many of the apartments in that development as possible, to protect their business.

There is a very interesting case in St Kilda Road, where the owners had a clause in their contract to end the lease at the end of ten years, or by default, accept another ten year lease. Those who were cluey ended the lease as per notice required in the contract. You could basically be asked to sell an identical apartment in the same building, save for the lease agreement, and have severe trouble selling one, and sell the unencumbered one in two weeks for about 30+% more!