We ended up completing on a deal in Hatherley Grove W2 on the 1st September. The hope was to flip the property prior to completion. The strategy was to apply for planning permission for another 430 sq. ft., in addition to the existing 700 sq. ft. of space, by way of a mansard on the top of the building.
We had managed to negotiate a long four months between exchange and completion; and attempts were made for a resell, both off market and by way of an auction. The property didn't sell, in part due to the poor market, especially in the auctions rooms, and in part due to the existing residents trying to scupper the sale; they figured out a flip was being attempted and perhaps didn't like the idea of someone profiting from a block they lived in.
Some objections were filed with the auctioneer and the council. One of their objections was that we did not own the area for which we were applying for planning. This is obvious, and it’s not a requirement to own the space before submitting a planning application. A planning objection can only be filed on a planning basis, not on any other.
Truth be told, we were hoping to resell this property, as the time and hassle factor involved in the negotiations could be better spent elsewhere. However, now that our client has ownership we will need to grab the bull by the horns, and ensure we are able to implement the planning; assuming it is of course granted. The chances are very strong as the majority of the street all have mansards.
The property is very nice, and a great deal even as it is. It’s a share of freehold, and the purchase price was £1,000 per sq. ft. A tenant has already been found for the property, at £500pw, giving a yield of 3.7% p.a., which is a strong yield in W2. We have another plan, if for some reason we are not able to implement the planning permission for the mansard, which is to convert it from an existing two bedroom flat to a three bed - two bathroom property; without the need for planning. This is our default position.
This area around Queensway is earmarked for massive growth in the coming years. A Knight Frank report in 2014, focusing exclusively on W2, highlights this is a growth area to watch out for; and this is where the smart money will be going. Of course, this was prior to the Stamp Duty rises and the Brexit vote. Nonetheless, once the dust settles, the fundamentals will override the temporary market conditions. The report focuses on the area between Westbourne Grove and Hyde Park, it points out there was planning permission for 239 new units in this locality, and at the time only 137 were under construction. Bear in mind these are not new units coming on the market; they are ALL conversions, the external of the buildings are kept intact and the internals are worked on. Looking at it from this perspective, it can be argued no new stock will be coming on to the market. Given this, there is little risk of oversupply.
The demand side is driven upwards by the regeneration which is due to occur in the area. A wealthy far eastern buyer has purchased Whitley’s Shopping Centre as part of a wider regeneration plan.
In property, it important to stay flexible and be able to adapt to the changing market conditions; as there are things you can control, and things you cannot.
—————
Agony Agent is here to help!
Q: I need to refurbish the kitchen in my rental property. As I am new to this, do you have any tips please?
A: Decorating or fitting a kitchen for a property is all about return on investment. You want to spend enough that you get a durable, hard-wearing kitchen, but not so much that it takes you years to break even through your rental income. If you imagine spending £10,000 on a kitchen for a property which will rent for £300 pcm, you can see how long it would take to earn that money back. However, if you invest too little, you could find yourself having to replace everything a year down the line.
Whether you are replacing the whole kitchen, or just doing up an existing one, my top tips will help you save money and time – as well as keeping your tenants happy.
As with bathrooms, moisture is one of the biggest threats to your sparkling new kitchen. Once mould has set in it’s pretty hard to stop and is notorious for eating away at plaster and paintwork. There are plenty of ways to prevent moisture damage and mould, for example, use a mould-resistant paint (one that is also wipe-clean) and use tiles where possible. Although expensive, tiling will last and keeps moisture at bay. If your budget doesn’t stretch to a tiled floor, try lino flooring. Lino is cheap, easy to fit and easy to clean – as well as being water resistant. Needless to say, carpets are a no in any kitchen, as is laminate flooring, which can expand and buckle when wet. Install a good extractor fan or cooker hood and advise your tenants to use it every time they cook, to whisk away steam and condensation. If your units are looking a little dated you’ll need to weigh up the expense of replacing them against your intended return on investment. Think again about the type of tenant you’re trying to attract, and this should help you decide what to go for.
If there is no structural damage to the cupboards, but they look shabby, why not paint them, with cupboard paint, and replacing the knobs for some fresh new ones? You could even keep the ‘shells’ of the cupboards and simply replace the doors but, whatever you do to them, stick to neutral colours. When it comes to appliances and white goods, even unfurnished properties will be snapped up quicker if they have the basics on offer. A washing machine, fridge and cooker will go a long way to attracting tenants. Before you go full steam ahead and start including fancier goods such as dishwashers, consider again the type of tenant you want and how much they’ll be paying in rent.
As always, any gas appliances will need fitting by a Gas Safe registered engineer and will need an annual safety check.
If you need any help or assistance with the refurbishment of your rental property, contact our office for free advice on this subject.
