Whilst looking at a deal that we are considering in W1, I noticed the disparity which exists on the doorstep of this property. The deal we are looking at is at £1,100 per sq. ft., across the road the properties in Quebec Court have a comparable at £1,700 per sq. ft. This is a low comparable for a sale in late 2017. Previous comparables are even higher at £2,000 and £1,800.
We sourced a property in Quebec Court back in 2016, for a client. It was 550 sq. ft, on the 7th floor. The market price was £800k, we secured this deal for £625k, which equates to only £1,136 per sq. ft.
The current valuation of this property, based on the last comparable, will be £935k. The deal was done in September 2016, this means the property has increased by roughly £300k in a year and a half. This means the investor has doubled his money, as only half or less would have been put into the transaction, the rest of the funding would have been raised by way of mortgage.
The odd thing is the block we are looking at purchasing is selling at £1,100 per sq. ft., and Quebec Court, which is close, is selling for £1,700 per sq. ft. They are only a 3 minute walk away from each other, or 0.2 miles according to Google. And, if you walk a further 0.2 miles down you will get to a tower, which doesn’t exist at this point in time. But it doesn’t stop the developer Almacantar from selling it off plan. I have heard from a good source that someone has recently purchased an apartment there, at £4,400 per sq. ft.
This is a location I know well, our office used to occupy the tenth floor of this building until they, like everyone else in central London, decided to make good use of permitted development. Under this scheme you can get office to resi conversion without the need of planning. The developer took advantage of this and is converting the former office block into high end residential apartments.
It is now being marketed discreetly, as they do not publish their prices on their website.
The hike in prices relative to the short distances between the buildings is stunning. And I have been in and around this location for over 15 years. Still this disparity amazes me.
A new build apartment like a new build car carries a premium. What is being built there is also a superior product, as it will have many facilities which the other two blocks will not. The maintenance of these will be reflected in a hiked up service charge no doubt. However, the fact that you have access to them will be reflected in the property prices themselves.
The bottom line is, you have a price differential of 60% from one building to another, which is only a stone throw away, and then a hike of 260% with another block the same distance further south. All of these share almost the same post code, and if you take a 5 minute walk from Marble Arch, north down Edgware Road, you will come across all three blocks!
£1,000 per sq. ft. is not a big deal anymore. Ex councils are selling for this sort of level in the right places. Areas in Wembley are being valued and sold for £650 per sq. ft.
This shows that although the deal we are looking at may seem high to the outsider, a closer analysis will reveal we are coming in at the lower end of the scale relative to the area. We feel the deal we are looking at will rise to match the rest of its neighbours, in a relatively short amount of time. Get in touch if this deal interests you.
Agony Agent Is Here To Help!
Q: Can I use my property as an HMO and how would this benefit me?
A: An HMO is a house occupied by more than two people who are not members of the same family. The ideal property for an HMO would be a house or a large apartment with two plus bedrooms excluding the lounge. It would be ideal for the lounge to be enclosed, and not open plan with a kitchen, as this could be used as an extra bedroom.
More often than not, your property will fall into the category of HMO if it: has three habitable floors; has at least two/three unrelated tenants who are not members of the same household; has a number of tenants who have separate agreements; is a bedsit or hostel-type of setup; is student accommodation; is a building which was converted into a number of self-contained flats but does not yet comply with the 1991 Building Regulations. Do not take this list as gospel, as this varies from council to council. It would be best to check with the local housing department in the area.
It is not easy to set up an HMO, so you need to ask yourself if you prepared for some start-up costs, improvements and changes to comply with the regulations. Becoming an HMO landlord is a whole different kettle of fish to an AST tenancy. It will start with talking to your mortgage lender about a specialist mortgage – they may not allow you to purchase an HMO, or intended HMO, with a standard buy to let mortgage, so it is best to double check.
Even if your new investment property is already set up as an HMO, it will require a licence in your name. The licence entails inspections, fees and will need to be renewed every twelve months. Complying with the inspections will mean installing some of the basic requirements, for example, fire alarms must be installed in all bedrooms and shared areas, with heat detectors supplied in the kitchen; fire extinguishers; illumined means of escape must be provided; gas supply and fittings must be checked by a registered engineer annually; electricity safety checks must be carried out every five years; the facilities supplied must be suitable for the number of tenants living in the property; and remember all communal areas must be maintained to a reasonable standard by you.
In terms of the benefits of an HMO, the biggest benefit to you would be the financial side, as you could potentially take a standard £500 per week property, rent it out to say four people and charge £250 per room per week, increasing your weekly income by 100%.
Being an HMO landlord is more for the serious landlord, who is prepared to invest time and money for a better return. It’s not for the fainthearted, however, if this sounds like your kind of challenge, the rewards can be substantial. We can support you, whether you want to manage your own properties or take advantage of our fully-managed service.
BUY TO LET OPPORTUNITY
Westbourne Terrace, London W2
Purchase Price: £749,950
- A stunning apartment in a Grade II listed white stucco fronted building, it sits just a stone throw away from the famous Hyde Park
- Comprising of a reception room, two well proportioned large bedrooms, a well-equipped kitchen and two bathrooms
- Share of freehold and reasonable service charges
- The apartment measures over 1,000 sq. ft and features decorated ceilings, a beautiful fire place and residents’ parking
- Expected resale value is £1.1M
Call us now for more information!