Episode 78 Homes Under the Hammer

Hello. From first-time buyers to property veterans,

people are buying their property at auction.

So previous experience is required.

The only necessity is you do have the finance to buy what you bid for.

For sure. And then you can get down to your auction rooms

and bag yourself a bargain.

The important point to remember is that when you buy at auction

and you win your bid, you have exchanged contracts.

That's right. It's vital to know what you're letting yourself in for

and to have the finance in place.

So did today's winners find themselves well-prepared

or ill-equipped?

In Stoke-on-Trent,

this three-bedroom house next to a commercial property

could spell disaster.

Trust me, it's happened to me - it's not good.

In Epsom, Surrey, there's a small two-bed flat

fit for a size zero supermodel.

And this is incredibly small. Look.

And there's something rather tantalising behind this hoarding in East London.

All I've got to do is figure out how to get in.

These properties have been sold at auction.

We'll find out who bought them and what they paid for them

-when they went under the hammer.

-Sold.

I'm in the Birches Head area of Stoke-on-Trent,

a brisk walk from the centre of town.

There's strong demand for student housing

and in this central location, commercial and residential buildings exist side by side.

The property I'm here to see is in Glover Street.

Let's hope it's not as run down as the sign.

Now here's a really important tip for you.

When you're thinking about buying residential property on a street

which includes commercial property like that,

and even worse, when it's right next door to commercial property,

you have to be very, very careful

because a mortgage provider will possibly say,

"That house isn't strictly residential and we're not going to lend on it."

Trust me, it's happened to me. It's not good.

What have we got here?

£41,000 was the guide price.

It's a three-bedroom terrace.

The first step in the right direction

would be to look at removing the stone cladding,

not everyone's idea of kerb appeal.

As for the commercial neighbours,

there's a garage which renovates vintage cars

and this storage unit for an ice-cream van.

Huh! Nice bit of wood cladding. That's nice to see.

And holy moly, what is going on there?

Artex gone mad on the walls.

Cor! Makes the corridor feel terribly cramped.

Brr! Try and get over that.

What have we got here? We've got a front room, there.

A reasonable size. Gas fire. Have that checked out, of course.

Then through to the kitchen.

Not bad! Actually, very good. It's a lovely big space.

It would make a perfect family kitchen.

Yes, you're going to have to replace the units but you've got the area to do it in.

And just off the kitchen, bathroom and toilet.

And just to blend in with the rest of the house,

there's more cladding in here.

# I'm feeling

# Glad all over Yes, I'm

# Glad all over... #

But the real issue with the bathroom is its location,

as it's downstairs.

The answer could be out back, where there's a lot of space

that could be used for a two-storey extension.

You could move the bathroom upstairs and have another reception room downstairs.

However, there is a ceiling price in this area

and I'm not sure whether it would make financial sense to do this.

There may be more possible solutions upstairs.

Well, upstairs, more attacks of the wood cladding - crikey.

We've got three good-sized double bedrooms,

one there, one here and one at the front down this corridor.

Now, you didn't really want to move the bathroom and lose one of those,

but if you wanted a loo upstairs,

this master bedroom is big enough to have a shower cubicle and loo in the corner.

That is how I would get a loo and bathroom upstairs.

Apart from that, it's pretty good.

Of course, the numbers would have to stack up to do this

but at that £41,000 guide price, it seems a good, solid house.

It's just that with the cladding and Artex, it doesn't look attractive.

To find out its potential,

I asked a local estate agent to tell me what he thought of this property.

Generally speaking, the property requires a new kitchen,

general updating inside, possibly new windows,

general decor and cosmetic work.

The bathroom, probably not too bad, recently fitted, I would imagine.

Not surprising about the interior

but could that back yard be used better?

With regards to extending, there is quite a large rear yard area.

I imagine that could be something that, subject to planning, is possible.

You could make it quite a large place, really,

quite a big family home if it was done.

Whether it's viable remains to be seen.

As it's in the middle of a commercial area,

that could lower the ceiling price for residential properties.

But if the house were spruced up, what sort of value could it reach?

Once renovated, I would imagine the property would be worth

somewhere in the region of £70-75,000.

If placed on the rental market,

I would suggest somewhere in the region of £450 per calendar month.

Well, all in all, a decent enough house

that isn't going to cost too much to sort out.

Most of your budget's going to go on replastering the walls.

Let's see who fancied it at the auction.

Lot 45 is 3, Glover Street in Birches Head, Stoke-on-Trent.

Where shall we start it? 35?

Thank you, sir. 35,000. Seated left.

£35,000. At 35,000.

36, can I say? £36,000.

37, 38.

39, 40.

41, 42, 43.

44? 44, 45.

46. 47.

48. 49?

48 and a half.

49. 49.

Another half. 49 and a half.

50. Another half?

No? At £50,000. The bid's right. At £50,000.

For lot number 45. At £50,000, then, first time.

£50,500 behind me.

At £50,500.

51? 51.

51 and a half.

52. 52 and a half.

53. No? At £53,000. The bid's still here.

At £53,000 I'm selling.

First time at 53.

Second time at 53.

Third and final time. All done at 53, then...

Are you back in, sir?

53 and a half. 54.

Definitely out? 54, bid's here.

Not hanging about. 54 first time,

second time, third and final time, at £54,000.

That's your lot, sir. Well done.

And the new owner of this lot is David,

who got it for £54,000, £13,000 over the guide price.

I met him and his son Alex to hear about their plans for it.

Alex, David, good to meet you both. Congratulations.

Why did you want to buy this place?

Well, basically, Alex is at university here in Stoke

and he's got another couple of years to go

and I didn't want to pay rent to anybody else,

so we bought the house for him and a friend.

-I didn't want to pay rent to anyone.

-You don't have to pay rent to Dad?

-No!

-Excellent!

-I couldn't afford to if I wanted to.

-Oh, wow.

-So you get to live rent free?

-Yes, it's a definite bonus.

But you figure you'll end up paying in the long run?

I'll end up paying in the long run.

I paid for his rent while he was in halls,

so this is another way of doing it.

So what was it about this house particularly that attracted?

Well, it wasn't its good looks!

-You don't like the stone cladding?!

-Not very much, no, no.

It seemed a good price for a good-sized house

in a fairly good location and close enough to the university.

So apart from being very ugly, it ticked all the other boxes.

Alex is on a photography course at the local university,

so hopefully, he should have some ideas

about how to develop this house.

But then, an artistic streak runs in the family,

as dad David used to be a graphic designer,

before turning his hand to renovating and selling properties.

As they both have an arty background,

these two should have ideas about how to get this place picture perfect.

There's not an awful lot that needs doing to it, structurally.

The missing chimney breast here is a problem.

I'm not sure that that's been sorted out properly

but I'm not expecting to pay huge amounts of money sorting it out.

I'm reasonably happy.

How did you buy this? Did you take a mortgage out or was it cash?

-It's cash.

-Right.

Because one of the issues could've been that it's next to a commercial unit.

Some mortgage lenders don't like that

-but that wasn't an issue to you.

-No, no.

It's worth bearing in mind when we decide what to do with it in the future.

I think it's almost a bonus that we're next to a few businesses

because we don't have to be as noise conscious

as we would be if we were down a quiet street of neighbours.

-For all those very few, very quiet parties...

-Very!

-..you're planning.

Yeah.

Yes, I'm sure it'll be canapes and dry sherry all round,

with maybe a foxtrot or two.

But joking apart, since it will be Alex's home,

I think he may suddenly become quite house proud.

David has just three months to get the house ready

before Alex starts the new term.

How does he plan to make the house student proof

with his five grand budget?

I plan to do as little as possible, really

I don't want to make it too nice and make the students uncomfortable.

Basically, try and deal with the Artex,

try and clean the place up and redecorate.

We're probably going to have to take the kitchen out

and put a new kitchen in.

The bathroom looks OK as it is. I think that's usable.

So more or less a tidy up and try and make it look more appealing.

Long term, Alex is going to be here for a couple of years,

so we'll think about what's going to happen at the end of that.

We might investigate extending up into the attic space,

perhaps extending out the back.

We'll see about that later on.

There's a great space out the back.

It be a shame not to do something worthwhile with that area.

It looks as though something's been there already,

so we can do something with that.

Looks like Alex is picking up developing tips from Dad.

For now, David wants to get the renovation just right

and aims to do most of the work with the help of Alex and his family.

What level of finish is he aiming for?

After all, even students have standards.

It has got much better, definitely.

I mean, a lot more money gets put into it that it used to

and because students are paying a lot more to go to university,

they expect a lot more as well.

But I think the attitude of students hasn't changed,

so the houses do end up looking the same anyway.

-That's very honest. But not this one.

-Not this one!

Well, if David wasn't worried before - ahem - he might be now!

So, Dave doing something for son Alex

that many parents are doing for their offspring,

buying them somewhere to live in while they're at university

and it does make good financial sense.

The question is will the house survive the onslaught of the students?

You can find out later in the show.

Over there is Epsom racecourse grandstand,

where the runners and riders in the most prestigious of all races

in the horse-racing calendar, the Derby,

will cross the finishing line.

Today's property is just around the corner

but will it be a runaway favourite or fall at the first hurdle?

Let's find out.

And if you want to be in area that's a winner,

you can't go far wrong with Epsom.

In 2005, it was named as the best place to live in the UK.

With its excellent schools, good shops,

great transport links to London and rural feel,

it's easy to see why.

Right, so let's get back in the saddle

and on to today's property.

Well, it's a self-contained second-floor flat

in this beautiful-looking detached house

and it's just a few minutes from Epsom town centre.

And that all-important guide price - £155,000 to £165,000.

Which is exactly what it went for five years ago.

That gives you some idea of how wobbly the property market is.

From outside, the house looks well kept and tidy

but what's it like inside?

So you've got two flights of stairs to walk up

or you could use the lift.

Now, the flat seems as though it's in really good condition.

My God, it's like it's just been painted,

the carpets look like they're in good condition as well,

although I would say it's a little bit on the small side.

We've got a little bathroom there

but a really good-sized lounge.

Now, where's that kitchen?

Here's the kitchen.

Come and have a look at this.

Now this is incredibly small. Look.

It's really pinched.

You can barely open the oven.

I think if I was to take this flat on,

I would definitely look at ways of how you can improve this.

Think about taking out these walls here, opening this space up.

You could put some units along here, a nice breakfast bar, perhaps.

At the moment, there's nowhere to sit down and eat.

I think once you did those improvements,

this flat would be so much more saleable

and it would look a million times better.

Because let's face it, that's a one-person kitchen at the moment.

Making it open plan would not only make it more sociable

when cooking up those meals,

it would also create a more spacious living area.

In general, there is an acute lack of space here.

In the flat there's two bedrooms but two very small bedrooms.

The main room next door is long and narrow.

The only possible place to put a bed is right at the end.

It would have to be a double bed, not a king-size

and there would be a tiny gap to get out.

You've got to think about your storage system in this flat.

I would possibly use this bedroom, which is even smaller,

as a sort of overspill room, to put some wardrobes in here.

You could also use it as a guest bedroom.

So there you have it. Two very small bedrooms.

Something else I've noticed. There's lots of these storage heaters.

Personally - they're not as economical -

I don't really like them.

I'd look at upgrading them to gas central heating if possible.

But storage heaters aside, there's not a lot that needs changing in this mid-terrace.

The bathroom's in good nick

and though there's no window, it's clean and bright

so there's no need to change it.

It would make an ideal starter home for a couple on the property ladder

and there's more.

The plus here is that the owner would share the freehold with the other ten flats.

That gives them a say in the upkeep of the place.

Although that does not add value,

it would definitely make the flat more saleable.

So remembering the guide price of £155-166,000,

it's time to find out what a local estate agent thinks of it.

'This flat in my opinion is very well-presented throughout.

'It's been, obviously, redecorated in recent years.'

It's very clean and tidy

and anybody who purchases it won't have to do too much to it at all.

The room sizes leave a bit to be desired

but what is the main positive here?

Having a share of the freehold is a massive benefit.

You'll be a leaseholder and a one-eleventh share of the freehold,

which means you're not dictated to by freeholders

and you have a greater say in what can be done in the upkeep

and looking after of the main building.

OK, so what are the rentals and resale numbers?

Once renovated I believe the property on the open market would achieve around £215,000.

In my opinion, the property would let very easily

and would achieve £850 per calendar month.

Small it may be but this flat has huge potential

and there's not a lot to do here.

There's a long lease and there's the share of the freehold as well

that adds to this being a good one to go for.

Who took a punt on it?

Let's go to the auction and find out.

Lot 238 takes us across to Epsom.

Will somebody give me 140?

Thank you. 140.

142 and a half. 142 and a half. 45?

47 and a half? 47 and a half.

150. 150. 152 and a half.

52 and a half. 155? 55.

57 and a half?

No. 155 in the aisle. Is there 156 anywhere else?

156, 157.

57, 58.

59, 160.

Yeah? 160. 61?

It's against you both.

It's with you, madam, sitting down on my right, at 160. 161 anywhere else?

For the first time at 160.

For the second time at 160.

For the third and final time at £160,000...

Selling now. Sold to the lady sat on my right at £160,000.

You look in shock.

The shocked-looking buyer of that lot was Rebecca

and the reason she was nervous?

It was her first ever auction

and she was bidding on behalf of her partner Rod,

who couldn't make it there on the day.

But she got it. Not bad going for a first-timer!

I met them both to find out more about their plans.

What's the story behind you buying this flat

and getting it for 160,000?

Well, we had been to see it before.

It was on the market and we put an offer in previously.

And then we found out it was going to auction. Our offer was turned down.

So we went to the auction instead.

-So how much was your offer?

-The same price, 160.

-So pleased with that price?

-Yeah, Rebecca did the business.

-How much would you have gone up to on the day, Rebecca?

-165.

So you had £5,000 to play with - you're well within budget.

Yeah, and we're going to spend that money on the flat

and try to spruce it up a little bit.

Rod and Rebecca should know about correcting problems,

as they both work in osteopathy.

They've been together two and a half years.

As Rod works full time as an osteopath,

and Rebecca is still training,

it was down to him to buy their first ever property.

So what sort of treatment do they see this patient needing?

Well, we're going to be knocking the walls through in the kitchen

to make it open plan and putting a new kitchen in with help from my friends,

who are going to come down and put the units in

and tear everything else out.

We need to do some plumbing as well because the washing machine is in the second bedroom,

so we need to bring that through into the kitchen.

We need to put together some new wardrobes for our bedroom

but apart from that, there's not a great deal to do.

Are you going to paint it? It doesn't need painting.

It doesn't but I think it probably needs a lightening up.

-It's magnolia, which is...

-Not my favourite colour, either.

I'm glad you said that.

-What about carpets?

-I think we're going to go light,

open the space out a little bit,

rather than this dark terracotta colour.

It's not very nice.

-So who's going to be around most to control the work?

-I think I am.

-Are you prepared for this?

-I am prepared.

I reckon Rod's got himself a little gem here -

that's Rebecca I'm talking about.

# Every little thing she does is magic

# Everything she does just turns me on... #

Not only did she go through that auction process for him,

she seems to be project managing the refurbishment as well.

But Rod hasn't been entirely hands-off.

Rod's actually drawn out a small plan so everything fits in.

-He's drawn out a small plan?

-Yes.

-Good one, Rod.

-I thought I'd do that before we went to the auction just in case.

Yeah, everything fits in

and we can always use the second bedroom as extra storage space if we needed it.

Originally it was one bedroom and they put a partition in,

so we can always take that wall down if we decided to do that.

That option does seem more practical,

though losing a bedroom wouldn't be a value-adder.

But opening out the kitchen would definitely get a big tick from me.

They plan to do the changes in six to eight weeks.

Rod wouldn't need permission from the other freeholders,

it would be polite to warn them about the works planned.

So how does he feel about having a share in the freehold?

I don't know a great deal.

I know that as a result of having a share,

we don't pay a large ground rent on the property

and it would give me the opportunity to have an influence on any changes

that are made to the actual building itself,

so it's definitely an advantage.

When we were first looking, we weren't looking for a freehold.

That was a bonus, so we were pleased to get a share of it

but it wasn't an absolute necessity

but I think it's a good thing that we've got it.

They seem to have fallen on their feet here

and apart from the bedroom sizes, seem pleased with what they've got.

It all seems too good to be true.

I can't think of any negatives at all.

We're in a nice location. It's five minutes up to the downs,

10 or 15 minutes to the station, so you can into London,

so I think we've got the best of both worlds, really.

It was meant to be, wasn't it? You didn't get it first off,

-followed it to auction...

-Persistence.

..and you won the property - persistence, exactly.

Congratulations. I'm pleased for you.

It's going to be lovely to see what you do to this flat.

I think Rod and Rebecca have bought well here

but the flat is on the small side, so storage will be an issue.

But they have got some good ideas, though, to open up the space.

But is their timescale of four weeks realistic

and will they finish the work before they have to move in?

You can find out later on in the show.

Still to come. In Walthamstow, East London, will this plot of land

be a sight for sore eyes?

Bit of a mess, actually.

Did this small two-bed flat in Epsom, Surrey,

give Rod and Rebecca big problems?

Getting people in, because we were relying on friends a lot,

it has been stressful.

But first, in Stoke-on-Trent,

did David manage to make this three-bedroom house student proof?

Earlier, we were in the Birches Head area of Stoke-on-Trent,

where this three-bedroom, clad all over house

was sold for 54 grand.

It was bought by former graphic designer David

as student digs for his son, Alex,

and to save himself a few bob on Alex's rent bill.

Although the house was in good shape,

it was dated and tired

but David's big quandary was whether to give his son a tasteful contemporary home

or something sturdy enough for those fabled student parties.

Well, now it's four months later, term time for Alex.

The house is still standing and the cladding has been cleaned up.

Inside, the living room's been given a lick of paint.

But it's the kitchen that has seen some real changes.

It looks like David has given Alex a stylish new kitchen

to prepare some culinary delights.

The kitchen, initially, I'd hoped to leave much as it was.

A lot of the house I'd hoped to leave much as it was,

without spending too much money,

because it is, basically, just a student let.

But when we investigated further,

I decided I needed to strip all the kitchen units out.

They weren't serviceable.

Well, the units may have been past their sell-by date

but the real problem was that missing chimney breast

because nothing was supporting the brickwork upstairs.

So that was quite a pressing issue, to do something to stabilise that

because it could've been dangerous.

We considered a number of options,

maybe putting steel beams in, maybe removing the whole chimney breast.

In the end I decided to rebuild the missing chimney breast back in

and so support the weight above it.

I reckon that may have been a blessing in disguise

because that brickwork gives the kitchen extra character.

And talking of character,

the bathroom is now a very different proposition.

That oppressive wood cladding has been painted and totally transformed.

So far, so good and it's not all down to just David's efforts.

Alex and his fellow lodger Mikey did a few jobs here and there.

This room is my creation alone.

And towards the start of the house,

I did a lot of the demolition-y things

that are a bit more enjoyable than the rest.

They've been great, though. They've helped.

They've done some of the work. A lot of the painting they've done.

They even managed to draft their girlfriends in to help.

The other two bedrooms seem to have had modest transformations

but those just hide the work David did to combat some damp problems he encountered.

And the hall isn't the result of some wild party

but a job in progress.

But downstairs is a different matter.

Originally, all the walls here in the hall, stairs and landing

were covered in a dark wall board.

There was a false ceiling in both areas that was covered with tongue and groove.

We pulled all that out and discovered the arch here

but the corbels were missing,

so I had to replace the corbels there.

Some of the detail on the wall here was all boxed in,

so I uncovered that.

There was just a plain concrete floor,

so I've tiled the entrance hall here

and I've yet to put a new stained-glass front door in.

That hard surface will be handy when it comes to the party season.

But then I reckon that Alex and Mikey might now be a little wary

of inviting too many people round.

I think they really like it.

I think one of the positive features to come from it,

because they've invested time and everything in it,

they feel a sense of ownership

and I think they're, hopefully, going to look after it

rather more than they would than normal students living in somebody else's house.

I really care about this place now, probably more than my dad expected.

I think he feels a little bit safer now,

knowing that I've put a lot of work into particularly this room

but the house itself.

I don't want to see it get destroyed by students.

Maybe that was David's cunning plan all along.

But before he can call time on the house,

there's still plenty to be done.

That'll include clearing out the courtyard,

which now resembles a building site.

But with the end drawing closer,

how much will be added to the £54,000 purchase price?

We originally set the budget at £5,000.

I didn't want to spend more than 5,000 doing it up.

As of last week when I totted the figures up,

we're at the £4,000 mark.

There are still some things to finish off,

so I expect it will creep up

but I think we'll end up under the £5,000.

That will take David's investment to £59,000

but he has two very happy tenants.

Time now to see what two professionals think of the house.

'My first impressions are the owner's making a nice job of the property.'

The entrance hall is a nice feature as you walk in

and he's put a nice kitchen in also.

I think they've done a reasonable refit.

The kitchen's had some attention, as has the bathroom.

It's a pretty good job.

Do the estate agents think David has tapped into the right market?

It's possibly a little bit too far away from the university

to appeal to all students, I would imagine.

We are close to the town centre

and the majority of buyers in this area are first-time buyers.

With the students well and truly bedded in,

what could David charge as rent?

If he puts this property up for rent, I would say £400 per calendar month.

If it was let to students, it would be around £35 per room per week.

This property would achieve £395 per calendar month.

If it was let to students, £35 per week per student.

That sounds a bit cheap from what I'm told other students are paying.

Most students in the area are paying at least 50

for their rented accommodation.

Even at £50 per week, that would be a yield of just under 4%

because David is not getting any income from his son, Alex.

If rented to all non-students,

the yield could be a pretty healthy 8%.

But would a resale figure be tempting?

If I was going to put it on the market in a finished state,

it would be somewhere around the £80,000 mark.

I would put this property on the market at £74,950.

That could mean a possible pre-tax profit of 21 grand.

That would be something to propose a toast to

but that may not happen, as Alex has taken quite a shine

to the responsibilities of running a home.

I reckon he knows which side his bread is buttered.

When his student days are over, he even expects to continue living here.

So more partying opportunities, Alex?

Interestingly enough,

they were worried about what would happen to their property if they had parties,

rather than me saying anything, so, as I say, I think...

We're not proper students.

They've invested in it and they want it to stay as it is.

That's true. We've put a lot of work into it.

We wouldn't want to see it tarnished, really.

I'm in East London, E17, to be precise,

well known for its high density of residential housing.

So to hear that something's up for auction, a plot of land,

that's a bit of a rarity.

£195,000 was the guide price.

All I've got to do is figure out... how to get in.

Well, it may look like a fortress but at least it's well situated.

It's on Forest Road, which is a main thoroughfare,

so it has good bus links,

with a short ride to both over and underground rail links.

Closer to home, there are plenty of shops and services

right on your doorstep.

Oh!

Well, I eventually managed to get in.

So what have we got?

A bit of a mess, actually.

In fact, it's a fairly typical scene when it comes to disused plots.

People seem to treat them as a dumping ground

and you need to be pretty careful where you tread.

But the plot itself is large

and looking at the neighbours either side,

you can get an idea of what could be built here.

But take a look at the low-profile terraces at the rear

and you'll see that some sort of height restriction will play a part.

Now, the plot has a history and it's all to do with planning.

Previously, it has had planning permission

for the building of seven flats,

six one-bedrooms and one two-bedroom.

That's great news.

The bad news is the planning's lapsed.

That is not great news.

Planning consents on any plot of land can be fraught

and even more so when in a built-up area such as this.

While permission was previously granted to create a three-storey building

to accommodate seven self-contained flats, that was in 2005

and a lot can change in four years.

As I'm not sure how the council would react to a new planning application,

I thought it best to ask a local estate agent

whether this was one to watch or walk away from.

The council is very proactive in making derelict sites into housing.

There is a shortage in Waltham Forest.

A positive start, because where there's a shortage, there's a demand.

As councils are under more pressure than ever to build houses,

the estate agent thinks that the planners would be receptive

to turning this site into a useful asset.

You need to put in a new planning application

and see what you can build on it.

Mainly it would be one-bedroom or two-bedroom flats.

That's the need in this area.

In fact, the estate agent thinks you could largely go with the plans that were passed previously.

But with the build costs and the currently tougher market,

the return won't be what it used to be.

For a one-bed, you're looking at sort of 165,

for a two-bed about 195, but it would be a tough market.

And the potential rent?

For a two-bedroom flat,

you should be looking at 900 to 950 per calendar month.

On a one-bed, you should be looking at £725 per calendar month.

That's an annual rental income of over £60,000.

Even if the total cost of buying and developing the site

reached three quarters of a million,

you'd still get an 8% return on your investment.

Not bad but there are risks.

So a decent enough plot in a reasonable location,

apart from the parking.

But the big issue here, of course, is that lapsed planning.

Without it, it really isn't worth that much money at all.

Now, it has had planning in the past so a precedent has been set

but there's no guarantee you're going to get that planning again

and that's a big risk.

Let's find out who decided to take it on when it went to auction.

It's lot 22, the site on Forest Road, Walthamstow, E17.

Where do you want to start? 170 with you.

170.

175 with you.

180. 185.

190, 195.

195, 200.

205? 205.

210?

215?

220?

221?

222?

223?

224? 225?

226?

227?

228? 229?

230?

230. 231?

232?

231.

232 back here?

If not, 231 on my right.

231, first time.

Second time.

Third and last time. Have you all done?

Sold. 231.

The buyer of that lot was Prashant,

a property developer who originally started out as a pharmacist.

Intriguing!

I met him back at the site to find out more.

-Prashant, lovely to meet you.

-Pleased to meet you, as well.

Congratulations.

So how did you go from pharmacy into property development?

-What was that link?

-It just worked out

in the sense that some of the pharmacies that I bought

actually I bought freehold

and there was some development potential in some of them,

mainly putting in extra mansards,

extra houses in land at the back, that sort of thing.

So how long ago did you start this?

It's been the best part of 25 years now.

-And where? Always in this area?

-Always in Hackney. I started off in Hackney,

been brought up in Hackney, so a good old East End boy, really.

And like many East End boys, Prashant is pretty shrewd when it comes to doing business.

Before the auction he discovered that the site had planning permission.

But he also unearthed a priceless nugget of information

that left him with one very big ace up his sleeve.

We made a couple of phone calls to the council

and found out that the planning in fact had not lapsed.

-It hasn't lapsed?

-It hasn't lapsed, no, no.

I think what happened was

the planning for this particular plot was done

at a particular date in 2005 before the new rules came in

which said you only get planning for three years.

When the planning for this particular plot came through,

it was valid for five years.

So we're OK as long as we build to 2010.

-So you go to this auction and you've got a bit of information...

-Yeah.

..that nobody else has got.

You must be like...

Erm, we weren't sure that no-one else had got the information,

because obviously the council wouldn't tell us.

-We did try to make and enquiries and say...

-"Who have you told?"

"Has anyone else been asking these questions?"

It just goes to show the value of doing your own research.

Prashant has turned a development plot fraught with difficulties

into a project he could start next week.

Suddenly, it isn't so ugly after all.

# Everything is beautiful

# In its own way... #

Are you going to stick to the plans that have been passed?

Yes. I've got a couple of things I might try and do.

-Such as?

-Such as trying to get an extra floor.

-An extra floor?

-Yeah, yeah.

-That's not exactly a subtle change, is it?

-No, no,

but we have been successful in this sort of thing before.

If you can actually do something with the roof structures,

change the roof structure slightly,

now you don't need to get planning permission.

-This is with the recent relaxation of planning rules.

-That's right.

There might be a way of creating a little bit of extra value on this.

Again, this story highlights the advantages of research.

Noting the changes in the law has given Prashant the potential

to increase the size of his development.

I'm not surprised to hear that he also has investigated how to build it, too.

We were thinking that probably we will do this in a way to make it very, very quick.

The building is very straightforward,

-so maybe we can some prefabricated blocks coming in...

-Right.

..or maybe a steel frame.

-Steel frame?

-A steel-framed building.

It's just like a Meccano set, very quick to do.

How much is it going to cost to do it and the return you're going to get?

The most that it will cost to do will be round about £500,000.

We're going to try and get that down to about £300,000.

That's a massive reduction in building cost,

yet the 40% saving doesn't just come from construction methods.

Prashant is currently looking into grants from the local council

and even EU funding.

That's because this development is going to be for a rather specialised kind of rental accommodation.

So this is a kind of a halfway house,

a special needs building, really,

-for people who have been addicted to drugs.

-Right.

And then they've got to actually find a place to live

after they've had their programme.

That's a very specialist rental scenario.

Does it pay well in terms of rent, to rent these things out?

-Well...

-Is it financially good?

Generally, rents are about between three and four times

what you'd get on the open market for a similar flat.

-Three and four times?

-Yeah.

For special needs accommodation, the rental is incredibly high, yeah.

Remember, the rental return on a one-bedroom flat

could be £725 a month.

But a flat for people in need could be more like £600 per week.

Prashant could nearly pay his build cost off in a year and a half.

But while the returns can be incredibly high, so is the risk.

So are there any special things you need to consider with this kind of project?

Apart from the fact that we have to provide a flat for a warden,

we'll probably be putting in some CCTV cameras just to be sure

-and probably an alarm system.

-Right.

Just in case someone has an event.

-Well, listen, what a great story. Congratulations.

-Thank you very much.

-And it all comes down to research, you see.

-Yeah, yeah.

-And luck.

-A little bit of luck, a lot of research. Well done.

-OK.

Well, there you go, if that isn't an advert for doing your research

before you buy at auction, I don't know what is.

Prashant has got himself a fantastic opportunity here.

Planning, for goodness sake!

It's going to save him months, loads of money

and on top of that, he might even get a grant

for half of what it's going to cost to do these flats. Brilliant story.

Find out how he gets on, and if his luck continues, later in the show.

As the saying goes, Martin, you win some, you lose some.

So did today's buyers' gamble pay off or not?

Let's see how they got on.

Time to go back to Surrey now,

where Rod, an osteopath, and Rebecca paid 160,000

for this two-bed flat in Epsom.

It was their first step on the property ladder.

The only trouble was it was a bit small.

In fact, so small that Rod decided not to take any chances

when it came to their furniture.

Rod's actually drawn out a small plan, so everything fits in.

-He's drawn out a small plan?

-Yes.

-Good one, Rod.

I did that before the auction, just in case.

But with some redecoration

and rejigging of the living room and kitchen layout,

they did have some hope of creating some space.

We returned two months later to find out how they'd got on

and whether Rod's plans were accurate.

Well, on first glance it definitely seems to have paid off.

The cramped, one-person kitchen is now a far more sociable area.

So in the kitchen and lounge area, we've taken down a partition wall,

which came from this wall out to the corner here

and back down into this wall here.

Put in brand new kitchen units, brand new appliances.

In the lounge, it's had a lick of paint and new carpets.

We're quite pleased with it.

It may be an optical illusion

but it's amazing what a fresh lick of paint and lighter carpets can do.

The flat may not have increased its footprint

but does at least seem more spacious.

However, as Rebecca explains,

they had to think of ways round the lack of space.

There was quite limited storage before,

so we've utilised the roof space.

We've put some floorboards down up there.

We've added some wardrobes and things like this

to add more storage.

We've just had to really try to declutter our old place

and try to fit everything in.

As it is, I think we're doing fine.

We've got everything in we needed to get in with a bit of space to spare.

Nothing motivates getting rid of those unwanted presents like teasmades and foot spas

more than moving into a snug flat.

That bathroom was fine.

It was in good condition

and just needed a bit of redecoration to get it into shape.

It seems that Rebecca was the person for the job.

I've been really hands on during this renovation.

I've done a lot of the DIY. I've learnt a few skills along the way.

Tiling, for one, was quite difficult

but I managed to live up to the challenge.

She's very, very handy.

Her DIY skills are definitely better than mine.

She's done incredibly well, getting everything done.

She's made a really good job of the kitchen

and, really, everything she's put together.

# I'm every woman

# It's all in me... #

But it's not all down to Rebecca.

With the help of some friends,

Rod did the kitchen demolition and reconstruction.

The only person they contracted in was a plumber.

While everything did go according to Rod's plans,

there was one minor hiccup.

When we were putting the kitchen in,

we had to change a lot of the electrics after some of the units had been put up,

which was stressful.

But luckily I know a very good electrician who helped us with that.

Apart from that, we've been quite fortunate.

Everything, through luck rather than judgement, I think, has fitted in quite nicely.

It helped that the flat was already in good condition

but it still took some clever ideas and planning from Rod and Rebecca

to make this into a home.

With their friends' help,

they managed to keep the budget to about £2,300

and did it all within four weeks.

There are some minor details left to complete

but they're very relieved that the end is in sight.

It's been quite a stressful time trying to get everything done

because I work full time, Rebecca works as well

and getting people in, and because we were relying on friends a lot,

it has been stressful.

It's a huge relief that I've got a lot more time on my hands,

not having to spend my whole time on this flat.

Even though I've enjoyed it, it's taken up my whole life

and it will be nice to sort of have a bit of me time.

As Rod and Rebecca bought the flat for 160,000,

their renovation bill of £2,300 takes their total outlay so far

to just under £162,500.

Time to find out from two local estate agents

if their efforts have paid off.

I like the way the owners have redecorated the property in lighter colours,

which has made the smaller rooms feel larger.

Taking down the wall between the kitchen and the lounge

has given it a sense of space

and made the property feel larger than it originally was.

'I think they've done a lovely job. They've kept it nice and neutral.'

There's a few bits and pieces they could change,

just to give it a bit more of a wow factor

but as it is, I would say they've done a good job.

So positive feedback for Rod and Rebecca, there.

But could the flat be improved in any way?

I don't think that there's anything I would particularly want to change.

The rooms are still a bit on the narrow side

but we can't do anything about that.

I think the property is presented as well as it can be.

They have maximised the space.

It lacks a little bit of storage but equally, there's still space

to put a few more built-in units around.

Remember, the couple have invested about £162,500 in the flat.

So what could they get if they sold it?

The property would currently resale for around £230,000.

The property would resale for between £240,000 and £250,000.

-Wow.

-That's a lot. That's more than we were expecting,

so we're really pleased about that.

It's really good.

That top estimate could give them an £87,500 pre-tax profit.

For a first step on the property ladder, that's pretty amazing.

The estate agents reckon they could expect a rental income

of up to £1,000 a month,

which would give them a yield of about 7%.

All round, it's been a job very well done.

So one day, when they decide to upgrade to something bigger,

will Rod and Rebecca venture back into the auction rooms?

Yeah, I definitely would like to bid at auction again.

It was an experience and I feel like I could do it again

and get another good result.

# Everything is beautiful

# In its own way... #

Yes, even this piece of wasteland in Walthamstow, East London.

It went to auction and Prashant, a local developer, bought it

for £231,000.

He did some research and discovered that this plot did still have planning permission.

It hadn't lapsed, as the catalogue stated.

The proposed development was for flats for people with special needs.

These would be partly funded by local authorities and the EU,

a very worthwhile development.

But nine months later, the hoarding remains up

and the wasteland is still a dumping ground.

The only things developing here are the weeds.

We asked Prashant what's been happening.

We contacted some of the local authority services people

and unfortunately, because of the recession,

they've cut funding for lots of projects.

So we took a separate tack.

We thought we'd finish the complete planning permission,

including all the buildings control notices etc.

We did that and then we contacted a few agents

and they said that they can get a lot more money for us for this particular project.

As the recession has affected Prashant's plans,

he now aims to sell the plot with detailed planning permission.

That would make this site a far more attractive package to investors

and is an arrangement that suits him.

This is a really good idea

because we're taking a lot of the tears out of it,

in the sense that we don't have to overlook the project ourselves.

We've done all the, if you like, easy bits,

which is getting all the planning and everything, the paperwork.

It's ready for someone to start building.

So with that nine-month delay and full planning permission in place,

would the development still be housing for those in need?

The planning permissions haven't changed from that,

so the project will still be for people in need

who can't get accommodation elsewhere.

It will just be done by someone else.

No, we don't regret it.

I think it's a good outcome for us.

We can move on to possibly a different, better project somewhere else,

a bigger one, maybe.

Sounds like Prashant's already casting his eye about

for an alternative project to this.

He paid £231,000 for the plot of land,

so how much more did it cost to get this package ready to sell?

We've spent 25 grand so far, including everything.

That includes everything, really -

architect's fees, building control,

for the salaries for people who work for me, etc.

And we're getting offers in the region of about £450,000 now

for this site,

so it's a healthy profit if we can actually move it on now.

If Prashant can get that buyer,

he's hoping the whole venture could make him

a possible pre-tax profit of around £194,000 -

all without one brick being laid.

But time and planning permission wait for no developer,

so should plan B fail, Prashant already has plan C lined up.

Well, if we don't sell, our planning permission runs out in four months,

so we'll start building at that point.

We'll put in our building control notices

and start laying the foundations and hopefully, it will be a quick job.

As Prashant has invested £256,000 in the site,

it's time to ask two local estate agents

whether he should cut and run from this project

or go for the build.

In my opinion, the idea of selling the land on is a great idea.

That way, he doesn't have to do the work.

If he's made his profit at the front end, then fantastic.

Selling on the plans is a good idea because it gives you cash flow.

However, if he was to build it,

then obviously, there's a greater profit margin.

He could make more money from building

but once you've committed your money,

the longer it's out there, the more risk factor is involved.

Far better in this market place, take the money and run.

Once built, because it's quite a niche market,

it would take longer than normal to sell it

but there is a higher profit margin in that

because special needs properties

do sell for 15 to 20% higher than market value.

The agents have differing opinions about the best way forward

but let's get down to the nitty-gritty.

As Prashant has already invested £256,000 in the project,

what could he get if he sold the site with planning permission?

If the land was sold with the planning permission,

it would sell between £400,000 and £550,000.

I think this plot of land is worth, with the planning, around 400,000.

I think that's about right, really, yeah,

because we're talking to a couple of people, as I said earlier,

about 450,000.

That would be about right, with planning permission.

Working on that figure could give Prashant a pre-tax profit

of up to 194 grand.

But would selling on a completed development

be more attractive?

Remember, nine months ago, the build here was quoted at 500,000.

Add this to his spend so far, and the total would be 756 grand.

So what could he get if he sold?

If the owner was to build the flats that have been approved here,

six one-beds and one two-bed,

you're looking at around 1.2 or 1.25 million collectively to achieve.

If the building was completed, it could be worth up to £1.5 million.

I think those values are absolutely at the top.

They're beyond what I thought the place would be worth

once it was built.

I thought nearer about 900, 950.

But 1.25 might actually tempt me to build.

Even at that lower value, Prashant could be looking at pre-tax profit

of about half a million pounds.

So how does he feel about that?

I feel very, very happy.

Much happier than I was earlier.

Suddenly, Prashant can see the benefits of staying the course

on this one

but he's not going to rush into it because, as we know,

until he's done his research, Prashant won't make a move.

I'll have to sit down and think about this.

There are two things, aren't there?

One is always take your profits quickly

because you don't know what's going to happen later on

but I'll have to sit down and think about it

before I make up my mind exactly what to do.

We hope you've picked up plenty of useful hints and tips on the show.

And we'll have plenty more handy home-buyer advice next time on Homes Under The Hammer.

-See you then.

-Goodbye.

-Goodbye.

Subtitles by Red Bee Media Ltd

E-mail [email protected]