Episode 49 Homes Under the Hammer

If you're like Martin and I and you absolutely love property,

it can be difficult to switch off, even in today's market conditions.

Whether you see your dream home on holiday, while walking round town

or in an estate agent's window, you're never short of stimulation.

But one place that can really get your pulse racing

is in the auction room!

When it comes to buying property, everyone has different requirements,

whether it's a new home or a house you want to rent out.

That's right. For most, location is key.

For others, it's about the character

and for the rest it's about how much money it can generate.

Let's find out what inspired our buyers on today's show.

It may not look much, but this house in Dorset is full of surprises!

But where it gets really exciting...is there.

I'll be on Portobello Road, London,

to check out some groovy '70s decor.

This harks back from that era, too.

A serving hatch. I love that!

And when this cottage in Newquay sold at auction in 2005,

it wasn't everything it was cracked up to be.

Catch up with it later to see its transformation.

All these properties have been sold at auction.

We find out who bought them

and for how much, when they went under the hammer!

I'm in historical Sherborne in Dorset. It is a lovely place.

That is the abbey.

Founded around AD 700, the abbey has developed from a Saxon cathedral

into one of the most beautiful parish churches in England.

For many, it's one of the showpiece attractions of Dorset

and our destination of Sherborne is simply magnificent.

Just a few minutes' walk away, this is the house.

Three bedrooms, guide price 100,000 quid. Sounds pretty good.

First impressions are pretty favourable, too.

The roof looks a bit shot, and the windows need an overhaul,

but I do love that stained glass around the door.

The original brickwork is in a healthy state and thankfully,

it's not been painted over.

So this house has the makings of a very good property indeed.

Ooh, that's a nice start. Love the floor.

That would be beautiful.

It'll take a bit of cleaning, but it's definitely worth doing.

Nice entrance hall. We like that.

Interesting new balustrade. Bit unusual.

But that's more original. Floorboards to die for. Fantastic.

And an old original fireplace which is pretty.

That's the front sitting room. Rear sitting room there.

New plaster, which is good to see.

Floorboards in great condition.

So all looking good. What is really nice is lots of original features

like these doors. The original doors.

Somebody's stripped them back, though.

They fit perfectly, so that is good to see.

Through to the kitchen. Not massive in size.

I think you could do something with it, with a bit of imagination.

Again, I don't know quite what's going on here.

There's paint, looks like it's been recently used paint,

all over the place. And new windows.

I need to investigate this a bit more.

Now, I'm visiting the property a few weeks after the auction

you'll see in a moment.

It turns out that the new owners had to do a considerable amount of work

after they'd won the bidding, but before they could get a mortgage.

At least that means it's now in a better state for me to take a look.

Upstairs, a really nice feel to this house. Intrinsically nice.

Bathroom and loo there, exactly where it should be.

Then three decent-sized bedrooms.

But where it gets really exciting...is there.

Yep, it's just a loft hatch, but I can see, looking up there,

that there's enough headroom to make another room, another bedroom,

to turn this into a four-bedroomed house.

That's what some other houses in this street have done.

One of those was recently on the market for 260,000 quid.

So, bearing in mind the guide price of this place was just 100,000...

..I think it's worth considering. Don't you?

Well, that's a potential margin you don't see every day.

Maybe that's why the new buyers

were so keen to meet the mortgage requirements to get the property.

With gorgeous floorboards, fireplaces and sash windows,

this place looks like a winner.

And it's just a short walk away from all that Sherborne has to offer.

At the rear of the property here, not a huge amount of space

but quite a useable area.

At the moment, though, dominated completely by these two sheds.

So what are your options?

One, you could knock them down to create maybe a little courtyard

and maybe a garden of some sort.

However, I'm a big fan of sheds. You can never have too much storage.

Personally, I would tart them up and keep them.

Trust me!

Yes, I confess to being a bit of a hoarder.

So any storage is always important to me.

But if you prefer outside space, you can always pull them down.

Time to see what a local estate agent will make

of this highly attractive period house.

It's in a very sought-after location

and was guided at £100,000.

It's a lovely house. Potentially, it's all here.

It's a Victorian semi-detached house,

a stone's-throw from the town centre.

Although it needs a lot of work,

potentially it's a very nice property.

My only reservation is the size.

It's a bit small, but it has a lot of space that could be converted

if it was worth it.

It doesn't normally increase the value of the property

by a great deal.

So it would be very much a personal choice

rather than actually increasing the value of the property.

True, because it would be possible to reconfigure the layout here

to maximise the space, so there are options.

What I would do is turn

one of the downstairs reception rooms into a kitchen.

And the small room at the back

I would turn into a utility room-cum-downstairs loo.

You don't have a loo, at the moment, downstairs.

But I would keep, basically, the rooms very much as they are

because it's a nicely-proportioned Victorian house.

Let's talk figures. How much could someone stand to make here?

I would have thought the price,

when renovated, if done to a high standard,

would be somewhere in the region of 210 to 220,000.

The rental for this property

per calendar month would be about 650 to £700.

Well, great location, good house.

Potential to expand. What more do you want? A great one to go for.

Let's see who spotted it when it went to auction.

Lucerne. Three bedrooms.

It's a super buy. Guide £100,000.

I do have a proxy bid which I'll execute from the rostrum

so that it's quite clear that it's my bid.

I'm starting the bidding at £80,000.

At 80,000, ladies and gentlemen, it's my bid.

Looking for 85. At 85.

90 is my bid. At 90.

95.

And 100 is the proxy bid. At 100.

At 105.

At 105. Anyone else?

110 on my left.

110. 115.

120. 120. 125.

125. I'm out, ladies and gentlemen.

125. Lady's bid.

At 125.

125. I'll take two if it helps you.

127. 127. 130.

132. 135.

135. Lady in black at 135.

135,000. Are you all done, ladies and gentlemen?

136. 137.

137. 137 standing. 137.

138.

139. 139.

140. 140. 141?

At 141,000, then, standing straight in front of me.

Are you all done, ladies and gentlemen?

Lady's bid. Straight there. 141.

Congratulations. Well done, you.

That winning bid of 141,000 was made by Linda,

a local housing association manager.

Originally from South Wales,

20 years ago she visited friends in Dorset,

fell in love with the place and made this part of the world her home.

I went to the property to meet Linda and find out about her plans.

-Linda, lovely to meet you. Congratulations.

-Thank you.

-Nice house.

-Yep.

-Yeah. Why did you want to buy it?

I like the location. And the house has good development potential,

I thought. I really like it.

-Have you done anything like this before?

-I've done work on properties

I've lived in, but not taken on a property just to develop.

So it's a first opportunity, really.

I'm doing it with my partner, who's a carpenter, so...

-That's useful.

-We'll be doing a lot of work ourselves.

Don't forget, they've already had to do work to get a mortgage.

We've rewired it, we've had a specialist's report on damp,

dry rot, for mortgage purposes.

-Before you bought it or after?

-After we bought it, before completion.

We had to sign a building licence to do that.

You bought it at auction, the hammer went down.

You've exchanged contracts.

In between that time and completion,

-paying the rest of the money, you had to do all the work?

-Yep.

But if you hadn't completed...

We were going to make sure it completed!

But if it hadn't completed, you'd have done all this work...

-And lost the money.

-The deposit and all the work.

The mortgage company we went to,

they stipulated before the auction there were a couple of things to do,

but when we'd completed that, they re-inspected and said,

"We're not satisfied. We need more work done."

So there were two days solid

with eight of us in here just making it habitable.

There were no windows in this room and upstairs.

They wanted windows in the back of the property.

-They wanted a lick of paint around...

-What?!

-Yep!

Plaster. We plastered that wall there and most of this room.

-We're going to rip it all down, so it was a waste of money!

-What?

-Yep.

-You're going to rip it all down?

Because our plans are to knock those two rooms into one

and put French doors in, so it was a waste of money.

How much did it cost to do the work that you had to do for the mortgage?

About 5,500. That's not all wasted

because we had to have the electrics done

and the specialists' report, the damp and dry rot treatment.

We've probably wasted £1,000 of that.

Bearing in mind the fact your partner is a carpenter,

presumably for anybody else, it could have cost a lot more.

It could have been.

If we hadn't been in that position with friends in the trade

and Simon being a carpenter,

then we would never have done it.

Now all that's over, the renovation can begin.

They intend to go up into the loft to gain an extra bedroom.

On the ground floor, they'll demolish the wall

between the two sitting rooms.

How much will it cost to do the works from this point on?

-What's your budget?

-Our budget was 30,000 including the money

we've already spent.

-What kind of timescale?

-Six months.

A baptism of fire for first-timer Linda, then.

But she's got Simon and plenty of building friends to lend a hand.

So, a real cautionary tale, here,

and an indication of the state of the mortgage market at the moment!

All that work they had to do, some of which they will take out,

just to get the mortgage. And you know what?

If they hadn't done it, they'd have lost their deposit and the money

they spent sorting it out.

Blimey! Anyway, having spent that money,

they now have to get on with restoring the place.

Is it turning into a money pit before they've even started?

I like what they're planning.

Let's see how it progresses later in the show.

# Getting hung up all day on smiles

# Walking down Portobello Road for miles... #

I'm on Portobello Road, famed for its wonderful Saturday market,

jam-packed with antiques, crafts and tourists.

The area was developed by the Victorians

who built beautiful grand squares.

But anybody visiting in the 1970's

would have found it an edgy London suburb,

rough and gritty with an exciting vibe.

Today, you have to have more than grit to live here -

you have to have buckets and buckets of cash!

It was Portobello Road's starring role

alongside Hugh Grant and Julia Roberts

in the film Notting Hill that sealed this area's reputation

as a glamorous and fashionable place to live and hang out.

The property I'm here to see is something of a gem.

It's in this row

of brightly coloured Victorian workmen's cottages

and it's right on Portobello itself.

I can't stress enough

how sought-after and desirable this area is.

To find a house up for auction is a find indeed.

Here it is, pretty in pink, and with a stunning guide price to match.

700,000 for a two-bedroomed mid-terrace!

I did warn you!

I'm going to go inside and hope we strike gold.

Yes, you heard it right. Just two bedrooms for £700,000!

But this is London and very desirable Notting Hill.

The good thing is, you've got this entrance lobby here.

It's always handy to bung your umbrella and dirty boots there.

But my first impressions are it's really big inside.

It's certainly quite deceptive.

You've got wonderful high ceilings.

There's lots of intricate plasterwork and cornicing.

I know it's not original to the building.

I'd get rid of a lot of this. It's far too fussy.

I think it was probably renovated in the '70s.

The floors are not bad. If you sanded those up and re-stained them,

they could look quite nice.

The wall here has been knocked through to create this double space.

It does have an old-fashioned feel about it,

but I quite like this house.

Maybe it's because I'm a child of the '70s,

but this house really sparkles for me.

Unfortunately, not everything in the house is as sparkling -

namely that kitchen!

Ooh, now that's a disappointing kitchen.

Very brown and fern green everywhere.

Incredibly '70s.

And look at this. This harks back from that era, too.

A serving hatch. I love that!

In the '70s,

I bet that serving hatch was a great way to pass a fondue set

from the kitchen downstairs to the dining room upstairs

for dinner parties.

But I think this place needs a more modern look now.

I really see a lovely big extension here,

with a glass roof and going out onto that bit of outside space,

to really open this kitchen up.

I know I'm always going on about valuable outside space in London.

But this kitchen is just too small.

It would really benefit from having a big open space here,

lots of light coming in.

Imagine, you could entertain friends, have dinner parties.

This house, in this area, needs a good kitchen.

Talking of space, the stairwells in this property may look narrow

but they lead up to two good-sized bedrooms.

Again, the decor is hardly trendy London,

and could do with being more contemporary.

As for that bathroom suite, well, I'm hardly tickled pink!

But if it's hard to relax in that garish bathroom,

I've found a chilled-out haven at the top of the house.

-#

-I climb way up to the top of the stairs

# And all my cares just drift right into space... #

It's a lovely sunny day, the market's in full swing,

you want to escape the hustle and bustle with your newspaper

and glass of wine.

Where do you go? That's right, your own private roof terrace, of course!

Doesn't get much better than this, you know.

# On the roof it's peaceful

# As can be... #

It really does feel peaceful up here.

Calm, quiet and secret.

A peek over the railings into next door's yard

shows that they've already extended the kitchen, so that settles it.

Since you've got this terrace,

you could sacrifice that square of garden down there

but it does mean spending more, and this property is already expensive.

OK, so 700 guide is a lot of money.

But would it shock you to hear that properties like this have been known

to go for double! Yes, that's 1.4 million!

There's a lot of work to do to bring it up to that standard.

The financial climate has tightened even the richest Londoners' wallets.

But this location is second to none.

I could even say that investing here really is as safe as houses.

Just to make sure, I asked a local estate agent what he thought

of the house's potential.

To realise the highest price in resale,

you'd probably flip the property completely.

You'd attempt to get a Mansard conversion,

ie, add an additional floor,

Put the kitchen up there, have that gallerying over the reception space

on the first floor and then get two, possibly three bedrooms out of the

ground floor accommodation.

A third bedroom may have its downside, as it would make

the two existing bedrooms smaller.

How much could this property be worth, once renovated?

Resale values are topping out at the moment

at around 1,300 to £1,350 per square foot.

Which would bring us up to a resale value of around 1.35 to 1.45,

assuming we were able to extend.

That's 1.35 to 1.45 million!

So if it did sell for around its guide price of 700,000,

you'd still be quids in, even after

the several hundred thousand you'd need to spend on renovations.

Would it be worth considering rental?

Depending on the specification and the finish,

we'd take it right up to being worth 1.25 to 1.3 million,

we'd expect to get 1,250 to 1,300 a week.

Walk down here on a Saturday

and you'll find tourists taking pictures of these houses

and dreaming of the day when maybe

they would be able to live in such a place.

This is a lovely home in an exceptional location.

The guide price is almost irrelevant.

It's an opportunity as much as it is an investment.

They don't come along like this very often.

Let's see who went for it at the auction.

Bidding was keen for this one. It started at the £700,000 guide price

and soared upwards in steps of just five grand.

800. 805.

810. 815.

820. 825.

830.

835.

And still the bidding goes on.

At five grand a time.

We could be here all day!

Let's come back later.

945 in the aisle. 945.

950.

950.

955.

Make up your mind. If not...

955.

960.

965.

965.

970.

975?

970 on my left.

First time. Second time.

975. 980?

Yes? 985?

It's either yes or no. 985.

980. First time.

Second time. Third and last time. Have you all done?

Sold at 980. Well bid. You got there.

Eventually, the successful bid came from Simon.

He's local to West London

and has been in the property business for 20 years,

building up a portfolio of 15 properties.

He paid 980,000 for the house,

a hefty £280,000 over the guide price.

So he must really have wanted it.

I met him there to find out why.

Simon, congratulations. You've got a great house here.

Why did you want to buy it?

Thanks, Lucy. It is such a lovely road, Portobello Road.

It comes up so infrequently.

And I thought I had to go for it,

and I did - and here I am!

You really wanted this, didn't you?

I did want it, yeah. I felt that there is a profit in here.

With the right development done

I think in a couple of years it will make more money. A lot more money.

Simon is right. This is such a great opportunity in one of London's

most desirable areas.

What are his renovation plans to maximise the potential profit here?

In a nutshell, to build a new bedroom on the roof. A new bathroom.

Totally refurbish the kitchen, new electrics, new plumbing.

A new conservatory at the back

to incorporate the yard area.

And it will provide a new dining room area and kitchen.

All very modern.

I do have to get planning for the roof extension,

but as there are two or three already existing

and we have an established use on the roof terrace at the moment,

I think we'll be lucky and I think we'll get that.

I think that will provide the key to the profit in this property.

That extra bedroom.

But it's quite a lot of expenditure just for one small bedroom.

It's not going to be that big.

In my opinion, as a lowly developer,

I do know what the tenants' requirements are.

Three bedrooms will make it much more easily lettable.

It will open that door slightly.

And to help Simon open that door,

who better than his trusty builder, Mark,

but known to many as The Commander!

So I rendezvoused with him up on the battlements,

to hear his attack plan!

Mark, you're not the usual typical builder

that I meet every day on building sites!

No, I don't do "usual". I do unusual.

Would you say this is going to be unusual?

I've known Simon for 30 years,

so no, we're going to make some money out of this place.

-Are you?

-Absolutely.

Tell me, how will you get a third bedroom in here?

This roof here will be mansard

so basically we've got to raise the height of the whole thing

and put possibly two dormer windows here, a Velux at the front.

That will allow us to hopefully get the extra bathroom, extra bedroom.

And then downstairs,

all the drainage has got to be changed,

a conservatory, knock through the kitchen,

possibly rearrange the living room, I don't know. We'll see as we go.

Tell me, Mark, what would you price this job at?

The project cost I'd estimate about 64,000.

-For all of that work?

-Yeah.

-Yeah.

-Sounds quite cheap to me.

-That's why I'm a busy builder!

I'd be extremely surprised if all this could be done for 64,000,

and if they'd even get the planning permission.

It's a massive job

and Simon assures me they won't be scrimping on style or quality.

He's set aside up to £100,000,

but I wonder how much of that he'll have left?

Simon and the Commander seem pretty confident

and hopefully there won't be any nasty surprises

to cause costs to spiral out of control.

Talking of surprises,

I had one for Simon.

Simon, did you know that you've got access to Ladbroke Square Gardens?

We have the key to that, do we?

I'm telling you that with this property you can use the gardens!

Right. Because I've just had a phone call from Savill's, the auctioneers,

saying they have another bundle of keys.

Which I wasn't aware of. I'm going to pick them up.

That's brilliant news for me!

-Great! Fantastic!

-How happy are you now?

I think you've just put 50 grand on the price.

The reason he's so excited is that Ladbroke Square Gardens

is one of the largest and most exclusive private gardens in London.

There's even a tennis court.

But he will have to pay an annual fee to get a key.

Even at nearly one million pounds,

I think Simon has got a great buy.

He's a confident character, he knows his turf.

But getting planning permission

for that third bedroom may not be a dead cert.

Find out how he gets on later in the show.

Coming up, this cottage in Newquay was sold at auction in 2005,

in need of major structural repair.

Later, we'll show you the amazing finished result.

Back in London, has that extension caused problems?

You might upset the neighbours, you might upset the conservation people,

or upset Fred Bloggs down the road.

First, we're back in Dorset to see how the buyer of this house

got on with the renovations.

We're returning to the beautiful Dorset town of Sherborne

where Linda paid 141,000 quid for this three-bed end-of-terrace.

Her partner, Simon, is a carpenter.

They intended to renovate it, add a loft conversion,

then either sell or rent it out, depending on the market.

But to satisfy the mortgage company,

they had to do a lot of work before they could complete the purchase.

They wanted windows in the back of the property,

-they wanted a lick of paint around.

-What?!

-Yep.

Plaster. We plastered that wall

there, and most of this room only to rip it all down again!

Four and a half months later, we're back.

The main structural work is finished.

On the ground floor, the wall dividing the two living rooms

has been removed, creating a large, open space.

Once decorated, this will be a perfect through room

leading to the refitted kitchen.

Outside, I'm afraid they didn't follow my advice

to keep some storage space.

Those two sheds were both demolished

but a lovely courtyard has been created.

However, I can't see any sign of that loft conversion.

Did Simon and Linda have a change of plan?

We decided against the loft.

We weighed things up and spoke to people about it.

It was the time it was going to take.

Add another couple of months on

to the work for not much financial benefit.

They had originally planned to do

the work, including the loft, in about six months.

So, without that, how long had it taken?

After we'd sorted it out and paid for it, and the stuff we did

for the mortgage people, it was about five and a half months.

-Yeah.

-We thought it would have been quicker,

but I found the bathroom took me longer than I expected.

Simon is a skilled carpenter,

so the doors, skirting boards and stairs were no problem.

But tiling was a challenge he took on in the kitchen and bathroom.

This is the bathroom.

It was probably the hardest room for me to do, really.

I wanted to create quite a stunning look to it.

It's the first time I've ever tiled, so it was a bit of an experience!

We were lucky that the bath suite was on a half-price offer in town.

We were lucky with that.

I wanted really clean lines, no knobs or anything on here.

So we've got touch catches.

I'm really pleased with it.

It's everything I thought it was going to be, really.

I'm not surprised. It's an impressive result

so now Simon can add tiling to his CV.

I'm sure plenty of muscle and skip loading was needed to clear

the sheds in the back yard.

It's a big transformation out here.

We've knocked through and put the French doors in

to let the light through the building and open it up.

It's a nice sun trap out here,

so we wanted to knock down the buildings and open it up.

It's created quite a big space now.

I'm really, really pleased with this.

Both Linda and Simon have worked really hard here.

And got lucky with a bargain on that bathroom suite.

How much have they had to spend

on top of the 141,000 they paid on auction day?

In terms of budget, I think we've spent 26,000, plus legal fees.

Probably 27,500 all together.

That brings their total gross outlay to £168,500.

But will they see any financial return?

Time for two estate agents to give their expert opinion on the house

and advise on its current value.

I think the standard of finish in this property is superb.

They've paid a lot of attention to detail.

It's very good quality and you can tell they've spent

a lot of time and trouble getting it right.

What I like about this property is they've kept the character features

within the internal structure,

so beautiful fireplaces, but put the contemporary kitchen in

and bathroom, which really complements it nicely.

Linda and Simon are looking to sell,

but would consider renting the property short term

if the resale figures didn't add up.

So how much rental could they generate?

I would estimate the rental value of this property

at £675 per calendar month.

The value I'd put on this property

for rental would be about 850 to £900 per calendar month.

-Crikey! That's good!

-Yeah!

Not that we're really thinking of renting.

But it's nice to know.

Let's see how much the house could achieve if it was put on the market.

Remember, it's got to be more than 168,500 to see any profit.

The value I'd put on this property for resale purposes today

would be round about £250,000.

I would value this property based on the open market price of £250,000.

Crikey! If they sold for that,

they'd see a pre-tax profit of around 81 and a half grand!

Pleased with that!

Yeah!

-That's, um...

-A lot more than we thought.

-Yeah.

We were expecting 215, 220 maybe.

-But that's...

-Brilliant.

-..totally different. Yeah.

-Great.

-Really pleased.

Sounds like those figures have definitely convinced them to sell.

So what's the time scale?

We're going to move in, just for the short term.

We've got our eye on something else to buy.

We're waiting for that to come on the market.

When that does, we'll sell this one

to buy something in the village where we are.

So, all's well that ends well.

It's just a shame they had to do all that extra work to get the mortgage.

We're now returning to a story we first featured in 2005.

The beautiful Cornish countryside around Newquay was the location.

With such stunning views, it was easy to see

why house prices here had gone up over the years.

The property I went to see was guided at £80,000.

Four miles inland of Newquay is the little village of St Newlyn East.

You'd hope the thing coming up

for auction was some charming little cottage.

It is!

Just imagine what this could look like

with a bit of attention and better weather.

Add a few rambling roses

and you've got yourself a really cute cottage,

all for a guide price of £80,000.

As soon as you come in the front door, you realise this is not an

average end-of-terrace property.

For a start, you've got that entrance there and then...

..this room on the right...

..and this room on the left.

I get the impression that's setting the scene

for some interesting stuff here.

And interesting it certainly is.

You've got two parallel rooms at the front of the house

that lead into a corridor and then through to two rooms at the back.

In this study, there's a great-looking fireplace

and the kitchen looks out to the garden.

But I'm concerned about all these cracks.

Well, it was all going fine

and then I came into the rear of the property and I saw this.

At first glance I thought this was just really bad Artex

or some funky wall covering.

But it's not.

In fact, it's very, very serious.

I reckon if I...

..take that off...

I hope the new owner doesn't mind!

Um... See this?

This building is made from stuff called mundic block.

It's very prevalent around these parts, in Cornwall especially.

What they did is they used concrete for the construction.

But that concrete contained bits and pieces from the mines.

The result is that, over the years,

it deteriorates.

It basically means the whole of the rear of this property

is likely to fall to pieces, as you can see.

The serious effects of that - other than the obvious -

are you can't get a mortgage on this property.

Not good news.

It appears that this sweet cottage is becoming very bitter indeed

and means that whoever buys it will have to use cash.

There's little chance of getting a loan on this property.

Upstairs, though, there are four good-sized bedrooms

in need of modernisation,

a small shower room and a toilet on the landing

and, of course, more cracks.

At the rear of the property there's a good-sized plot of land

but look at that.

You can really see the problems with this house.

It's almost a text book of things that can go wrong with property.

Those cracks go all the way through. The whole rear is mundic block.

It's a nightmare. The only thing to do is take the whole thing down.

Demolish the whole of that rear.

The good news is what you might build in its place.

If you look next door, they've put a dormer window on the rear there

and that's where the view is, so it's a nice thing to do.

Great news is you've got the option

to do that because it's an existing structure.

Planners will say "Go ahead."

I think that any buyer interested

in maximising their potential from this rotten lot

should invest their money into creating two cottages, not one.

They'll need to keep those bill costs to a minimum.

Even given the fact that half this property will have to be demolished,

I still really like it.

I believe it's a good investment and somebody can make money from it.

So let's go to the auction.

It's going to make £100,000.

100. 110.

120.

120 I've got. 125. 125,500.

126. And a half.

27.

And a half. 127,500 I've got against you, sir.

128... Sorry, what have we got?

Here. That's 128. Asking for 128 and a half, sir.

128 and a half. 129, do I?

At 128,500 I've got. Is there nine?

129.

129.

29 and a half.

130? At 130.

135? 135. 135. Thank you.

135. 140. I've got at 140.

At 140. At 140. 141.

At 141. 141. Do I see two?

142. 142.

142 and a half. 142 and a half.

At 142 and a half. At 142,500.

Now we go. Front row. 142 and a half.

143? 143.

44? Yes?

Half. 143 and a half.

144. 144.

At 144. 145.

At 145. At 145.

At 145 this time out.

At 145 first time. Second time. Third and last time. 145.

Congratulations, sir. Well done.

The final bid at £145,000 is well over the guide price of 80.

Paying that amount are building partners and brothers,

David and Mark. They've both been in the building industry for many years

and felt it was time to start on their own.

This is the second acquisition for their property developing company.

David, very nice to meet you.

-You too.

-And Mark.

-Hi.

-Nice to meet you.

What was it about this property

that you thought for your second venture was right?

When I saw it in the paper and I came to see it,

I thought it was an extremely pretty cottage.

On the front. It was a liquorice allsorts cottage. Fabulous.

With the big lump on the back,

it being mundic block, it puts a lot of people off.

It's a lot of work. You have to demolish it and rebuild.

So it's a big project to take on if you were just a homeowner.

You can't move in and do it around you. So that took a lot of people

out of the equation.

-You knew about the mundic block problem?

-Sure.

The mundic block doesn't really matter. You can't sort it anyhow.

The fact it is mundic block puts a lot of people off.

That's a sort of benefit there anyhow. That helps, basically.

It helps.

Not only does the crumbling mundic block not put David and Mark off,

it's one of the main reasons they went for it.

So what have they got planned for this shaky little cottage?

Best case scenario which we wouldn't envisage having any problems with

is getting planning for a pair of cottages -

the original Cornish stone-built one at the front here,

two beds, bathroom, lovely pretty little one,

and possibly a three-bed new cottage at the rear.

Well, two properties are better than one,

and the brothers have given themselves a budget of £100,000

for the work.

They don't want to waste any time and have already had plans drawn up.

These are literally hot off the presses!

Yeah, I picked them up this morning.

Talk me through them, then.

Well, this first one, we basically keep the original cottage

with a porch area coming out there.

We've got a lounge, staircase in the middle and kitchen.

Upstairs a double bedroom and a single bedroom

and we'd give a floating freehold across the new build,

which will be the new build,

and we add a bathroom on the first floor of the new build.

Because the back one becomes what you'd call an upside-down house.

You've got the bedrooms downstairs in this one.

And the bathroom underneath the bathroom of this house.

Then we have the lounge and kitchen

upstairs because of the views across the fields.

You can see the sea from the back, so that's very nice.

What we haven't got a plan for yet is we want planning

for a third bedroom in the loft, with a dormer.

So this back one becomes a three-bed unit.

Any idea of time, how long this is going to take?

Probably about six months, I'd say.

Really? To completely finish it?

If we don't keep going in the pub next door!

About six months, yeah.

Well, the plans looked great but the timescale was ambitious.

So when we first returned to check on progress after five months,

it was no real surprise that the main difference was that half of it

had been demolished

and that only the groundwork for the new house had begun.

But stay with us till later and you'll see the fabulous finished

development three years on.

"Time is money" is a much overused expression, but you know, it's true!

If your project runs over schedule,

you can bet your bank balance will take a hit.

Let's find out how today's purchasers have been getting on.

We're back in stylish upmarket Notting Hill,

specifically, the world-famous Portobello Road.

Developer Simon bought this two-bedroomed house for 980,000.

He had grand plans to build a third bedroom on the top

and extend into that yard space.

He was confident he could walk away

with a great return on his investment.

I think that will provide the key to the profit in this property,

the extra bedroom.

We caught up with Simon five months later

to see how the project had gone.

Curiously, he had not done any work at all.

# It's the same

# It's the same

# It's the same... #

In fact,

Simon had a change of plan.

He decided to take advantage of improving property prices

and put the house back on the market with a local estate agent.

I obviously sold the property on without doing any works.

Which was not my original intention,

but I was, er, pressurised, if you like,

by the offer that came forward.

As the property has the kudos of being on Portobello Road,

more than 30 people phoned up about it.

One offer was just too good to refuse.

I did, in fact, receive an offer which I accepted of 1,250,000,

which was certainly a tremendous profit on my original purchase price

at auction, 980,000.

Simon judged the market perfectly.

His resale made just over 25% pre-tax profit,

minus any legal fees, of course.

Although he could probably have made more if he'd done the alterations,

Simon feels he may have saved himself a headache

with the planners.

There is always a risk when you apply for planning

that you won't get it.

You might upset the neighbours, you might upset the conservation people,

or Fred Bloggs down the road, I don't know who you can upset.

So by selling it on as I had,

I definitely risked my exposure to the planners

and I also saved myself the expense of going through the motions

of the planning application

and I think it was the right decision for me, at the time.

It sounds like Simon made a shrewd decision.

Planning permission could have proved much trickier

than he'd first hoped.

He fears the work could have cost 150,000,

50,000 over his original budget.

Instead, he's managed to make a fantastic pre-tax profit

of £280,000 in just five months.

Only in Notting Hill!

So what do two property experts make of that 1.25 million resale price?

Coming in for the first time, it's a lovely house.

In terms of the area, it's very much what people want.

There's a huge short supply.

There's lots of lovely period features

and that lovely cottage feel.

Although no renovation work was done here,

how has the value been affected by an improving property market?

Demand has really picked up from overseas buyers.

There's a real shortage of stock.

That's had a positive impact on prices recently.

The market has improved certainly over the last four or five months.

There's still a bit of caution out there.

People think we're through the worst of the troubles

and are prepared to commit.

With that healthier market in mind,

what do they think this property is worth?

We'd be looking to achieve around 1.2 million.

In this condition,

I'd put this property on the market at 1.25 million.

To hear that news is very good, very satisfying.

I didn't undersell it. It's exactly the right price.

So great news. Really pleased.

Even though Simon could have made more money had he held onto it

and done the work,

he has no regrets about selling it sooner rather than later.

You can always look forward in two years and say,

"I've sold it too cheap",

which you will because property prices will go up,

but at the time I think I made the right decision.

I've obviously sold it for the right price.

I've taken my profit, I've moved on

and I'm off onto a new project.

All very exciting for me.

When we first visited

this delightful four-bed Cornish property just outside Newquay,

brothers David and Mark had just bought it for 145,000.

They're both builders and planned to convert it into two separate houses.

But behind that quaint exterior

lay a disaster.

The rear of the property was an extension built of mundic block,

which was crumbling away.

So they planned to knock it down and rebuild.

When we first returned four months later, the demolition had begun.

Where originally two cottages had stood, only half of one remained,

plus a large hole.

The brothers had successfully obtained planning permission

for the new building and groundwork had begun.

David and Mark had spent 145,000 on auction day

and had a budget of £100,000 for the new build and renovation.

But were they sticking to that? How much had they spent so far?

Pretty bang on with what we expected to spend to get out the ground.

When we get out of the ground.

The demolition, the planning and the architect's fees.

There's always extras in any project like this. The unforeseen.

If we get within £10,000 either way

of our original estimate, which is about £100,000,

then we'll be extremely happy.

And it's looking at the moment that we'll do that.

I hope so, because David and Mark

had completely knocked the innards out of the cottage

and only the groundwork had begun on the new build.

Three years later, we went back to see the two houses.

Both of them were completed and sold a couple of years ago.

Through that new porch

into the original cottage to the left of the stairs,

there's a wonderful new living room.

Every little bit of space has been used.

On the other side of the staircase, a superb kitchen has been created.

The old cottage looks fantastic. What a transformation!

Upstairs you'll find the new bathroom which has been built

in the new property above the bathroom on the ground floor.

Once again, the original front cottage has a cottage

attached to the back.

Unfortunately, we can't get inside today, but as originally planned,

that has two bedrooms and the bathroom on the ground floor

with a living room and kitchen upstairs.

And it's a three-bed house,

because the planners agreed to an extra bedroom in the attic.

However, attaching it to the original cottage wasn't easy.

We had quite a bit of difficulty

joining the new build to the old build

because it was all the mundic block

when we knocked it down and we had cob.

So we built two concrete stanchions

and more or less put a concrete ring beam around the whole cottage,

enabling us to join the new house onto the back.

And we got a nice bit of slate on the front.

It's a quite pretty little house in the end. Couple of dormers

at the top. Very pleased with it.

David and his brother Mark sold both houses to local people.

There's a professional couple in the new build,

while the cottage with its bathroom and two bedrooms upstairs

is now home to Sue, a matron at the local hospice.

And there must be something about the place

because David's moved down here.

He's renting another house in the village. What about his brother?

My brother, Mark, we bought an old cafe in London

which we got planning permission to turn into two flats.

He's working on that at the moment.

As well as that property in London,

they also have a three-bed bungalow nearby to renovate as well.

But have there been any problems with this one?

There's been a lot of soundproofing problems between the two bathrooms.

Just for the bathroom floor alone it was £500 just to soundproof it.

There were extra costs which I didn't realise. But overall,

it was a pretty standard build with added extras,

but pretty good in the end.

The brothers paid 145,000 on auction day for the cottage

and had budgeted £100,000 for the work.

They initially sold the cottage for 190,000

and then six months later the new house achieved 215,000.

So there could be a very impressive £160,000 gross profit

if they managed to keep to the budget.

The initial budget was about 100.

We went over that by probably I'd say 25%

because of all the extras that were unforeseen.

The flooring soundproofing between the two houses was expensive

and the stanchions and stuff.

It was quite an awkward site to work on. Not a lot of area.

£135,000 gross profit before the usual expenses

didn't sound too bad.

Sue's very pleased she bought the cottage. It's a wonderful new home.

Really, it was the minute I walked into it.

It had such a lovely atmosphere about it

and it was perfect for me, being on my own at the time.

I didn't want a big garden or anything.

It was perfect to move straight in. Didn't have to do anything.

What do two estate agents think of the refurbished cottage

with its bathroom built on the first floor of the new house.

They've done a really good job. It has the outside facade of a cottage

with the benefits of a new house.

Given the original project, he's done a very good job.

Super property. Not very large, but it has everything you want.

The whole thing is reasonably compact, but that does no harm.

It just dictates what the purchaser wants at the end of the day.

Quite close to the beaches, quite central to the A30.

Newquay airport quite close by.

It could be a second home, or someone looking for an investment

on a rental basis.

The cottage has the thumbs up from the estate agents.

But it's looking like there could be a change of occupant.

Having been here for 19 months, it's time for me to move on.

But I'd like to keep this place and let it out.

So how much rent could the cottage earn?

In the rental market,

we'd be looking at 550 to 600 per calendar month.

Rental would be very popular for this

as an alternative to an apartment in Newquay.

£650 a month quite comfortably for this one.

Was that the sort of income Sue expected, and who does she think

the cottage will appeal to?

I guess that would be about what I would think it would be worth.

I think this would suit a young professional couple.

It would be perfect for that.

How much are the properties now worth? David sold them in 2007,

just before the property crunch took hold, for 190,000

and then the three-bed house for 215,000.

I would suggest this is probably worth about 150 to 155.

I'd market it at 159,950.

If I was bringing this property to the market today,

I'd imagine 165 to 170.

The house at the rear, three bedrooms and the outside space,

I'd say a guide price of 200.

I haven't actually seen the inside of next door,

but assuming it's finished to the same standard,

I'd expect that one to achieve something in the region of 185, 190.

Property prices are recovering,

but 165 to 170 for the front cottage

is still 20 to £25,000 less than David sold it for two years ago.

I think you'll get more for it than 170, even today.

It's a one-off cottage.

If someone wants that, they'll pay a bit more cos it's a premium thing.

There aren't that many about. It's worth its money.

And that valuation of between 185 and 200 for the new house?

I would say that would be round about right as the market is today.

That wouldn't be far off. But I'd say more for the front one.

So David's moved down to Cornwall.

Is he going to spend more time on the beach

or is he on the look-out for property opportunities?

Yeah, I'll carry on building. I've done it all my life, so I enjoy it.

It's something I enjoy

and I'm beginning to enjoy

the design part of it more now than the build.

I'm trying to put a bit of that into it as well.

It goes to show, you never know

the stories you're going to hear on Homes Under The Hammer.

So join us next time for tales of subsidence and success!

-See you then.

-Bye!

-Goodbye!

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