Episode 67 Homes Under the Hammer

Since we started making Homes Under the Hammer, we have seen

hundreds of people take the plunge and buy property at auction.

And we love bringing the stories to you.

But it can be a bit of a bumpy ride.

So fasten your seatbelts and join us now, as we follow people who bought their homes under the hammer.

Now, this programme isn't all about bricks and mortar.

It's about real people who have a personal tale to tell.

And you never know how things are going to turn out.

So here are the properties up for auction on today's show.

This semidetached on the outskirts of Cardiff appears to have everything going for it.

It doesn't look too bad on the outside.

Fingers crossed for the inside...

In Kent, this fantastic property gets my heart racing.

I get so excited when, on Homes Under the Hammer, I find properties like this.

And I find out who bagged a bargain in Shropshire.

I mean, it's a bit shabby, it's a bit dated, it's not exactly huge.

But then, it's only 30 grand.

All these properties have been sold at auction, and we'll find out who bought them

-and what they paid when they went under the hammer.

-You bought it, sir.

I'm in Penylan, a suburb of Cardiff.

It's well-connected - just 10 minutes to the M4 - and has good bus links to the city centre.

It has a pretty park, and the area is known for its tree-lined avenues

and period properties, which bodes well for today's lot.

Now, I've done my research and I discovered that houses on this street don't come up for sale that often.

So, very enticing when the auction lot that came up had a guide price

of just 158,000 quid, which, for a four-bedroom semidetached around here, fantastic.

Doesn't look too bad on the outside.

Fingers crossed for the inside...

Whoa.

Well, a nice entrance hall, I have to say.

Interesting stuff going on with the floor there. But a great-sized space.

I love this central area here.

And then you've got the main rooms going off it.

Lovely dining room, living room area there. Another one there.

A third sort of reception room there.

Ah! It's nice.

The two reception rooms at the front are light and airy, with high ceilings and big windows.

What does the back have in store?

So at the rear of the property, a really quite substantial conservatory,

although judging by the damp on the walls, I'm not quite sure how well it has been constructed,

because the damp actually goes all the way along the bottom at the front there as well.

So maybe it hasn't had a damp-proof course put in.

But it's a useful space. You've got a downstairs loo here. And then another room

which is more important

than the horrendous conservatory - the kitchen.

I say it's a kitchen - it's a room the kitchen should be in.

And, as yet, it doesn't have any units - oh, and a huge...

hole in the ceiling.

# Everybody's got a hole to fill... #

There was probably a leak upstairs in the past, so hopefully that could easily be fixed.

But as there's no kitchen at all, there would need to be a fair chunk

of money put aside to fit out this room.

The garden and garage outside are a real bonus, or at least

will be once the rubbish - oh, and the toilet - have been cleared away.

There's no denying there's lots of work to be done here.

Well, I came upstairs with slight trepidation. But do you know what?

What a glorious surprise!

Four really fantastic bedrooms, and a bathroom that's been pretty much refurbished for you. Up here,

stick a carpet down or sand the floorboards and you've got yourself basically a house that's finished.

I love this place, actually.

Three of the bedrooms are large doubles, and the fourth is far from small.

As much as I love this house, there is something which has been really concerning me,

and that is the amount of damp you've got, especially on these internal walls.

Now you wouldn't normally see that, unless there was a fairly serious problem.

My guess is that there wasn't a damp-proof course installed in these when the house was built.

And somebody started doing restoration, obviously,

and they haven't started with the basics, which is getting the damp issue sorted out.

This floor has been laid, and you can see it looks like concrete, but it's not actually.

Underneath there, there's a parquet floor, a wooden floor.

And this is what they call levelling compound, that they just put on to level the floors.

They then put these planks on - this hardwood flooring.

But the damp's come up, and that's why the hardwood flooring has bowed

in lots of places, like here and just throughout the house.

Clearly, the whole of this bottom area is just damp.

So, before you do anything else on this house, you want to take

everything on the floor off, you want to get a specialist in,

you want to inject a damp-proof course into all the walls, lay a membrane perhaps in the floor.

It sounds like an expense, but if you don't, you'll definitely have problems in the future.

So, although this has plenty of potential and definite kerb appeal, it's not without its issues.

We asked a local estate agent along to the house

to tell us what he thinks of it.

Pretty generously-proportioned, tall ceilings,

big generous rooms, large hall...

A little bit saddened as well,

because I can see that some work had been done, but not completed.

But the potential and scope is here, I feel.

All sounds good, but is this a potential moneymaker?

In my opinion, this property could be suitable as a rental property for a family.

And this would accumulate in the region of £1,200 per calendar month.

Sounds like a great opportunity for a rental investment.

But with a guide price of just 158,000,

and some of the renovation work already completed, could the easy money be in a resale?

Once finished, I feel that this property, if completed

to the standards one would expect for this area, the value would be in the region of up to £400,000.

I don't know about you, but I think this is a really great house.

Yes, it does have its problems, specifically the damp,

which will take a bit of money and effort to sort out.

But at that kind of guide price, 158,000 quid, there's money to spend

to turn this into what could be a fantastic family home.

I'm sure somebody fell in love with it when it went under the hammer.

Can I see a starting bid of 230,000?

230 I'm bid straight away, sir.

Thank you.

At 230,000... Five... 235...

At 235... 240 is bid. 245. 250.

255. 260. And five, can I, sir?

Thank you. 265. 270 is bid.

At 275... 280 I'm bid. Thank you.

I'm not going to dwell. One... 281.

£282,000. At £282,000...

Are we all done? At 282... Three.

Make it four, sir. I'm not going to dwell as long next time.

284... 284. Quick if he wants it.

285. 285. 286. 286.

At 286... "No," he says.

At £286,000...it's yours, sir. Thank you very much.

The persistent bidder was developer Mohammad.

But he'll be the silent partner in this venture, leaving it all to his son, Imran.

Together they bought the house for 286,000 -

£128,000 over the guide price!

I met Imran back at the property to hear why they were so keen to buy it.

-Imran, congratulations.

-Thank you.

-You've got a beautiful house, haven't you?

-Thanks a lot.

Tell me why you wanted to buy it?

Just thought of it as being a good investment, really. And the area

and location is really good as well.

-It went a lot over the guide price, didn't it?

-It did, yeah.

Were you surprised by that?

Not really, because knowing the area we expected it to be as high as it was.

What was your strategy at the auction?

Just see how it goes and hopefully bid to win.

That's what happened really, so...

This is Imran's first property investment with his father.

His day job is in IT, but it doesn't take a veteran developer

to see the potential in this place. What are you going to do to it?

We're just looking to get one of the walls removed, to make that into a larger reception room.

-OK, so the wall in between two of the reception rooms?

-Yeah.

And also, extend kitchen out in the back and get a new kitchen put in.

With a view to renting it out or selling it on?

I'll probably live in it myself for a while, and then sell it on

-maybe, or just stay here, see what happens really.

-OK.

Well, I can't blame Imran for wanting to live in what will be a beautiful house, himself.

Although there is the big issue here with the damp.

Have you thought through what you're going to do to eradicate that?

Yeah, we've spoken to a few builders, and they've mentioned

that the damp is probably because there's no heating on in the house.

There's no-one been occupying the house over the winter. And...

so that's probably the main issue, really.

Heating, once we get that on, it should sort most of it out.

Oh, right, OK. They don't think there's a problem with rising damp and the floors?

No, just in the back conservatory area there's no cavity wall,

so that's why you've got a lot of damp in that area.

But that we're planning on having redone as well.

The whole conservatory out the back?

-Yeah.

-OK. So roughly how much have you got set aside for doing the work?

Em... We're estimating about 20,000-30,000.

-To finish it off?

-Yeah.

-That's quite a healthy budget then.

-Yeah.

Let's hope the budget stays on the healthy side.

Once Imran has had the damp looked at, I fear he could be in for a nasty surprise.

-And in terms of timescale...?

-Got a few builders that can start end of this month.

And they estimate the work will complete in about a month's time, so...

-Six weeks and it should all be sorted then?

-Yeah, hopefully.

Well, listen, congratulations, well done.

-We're looking forward to seeing how you get on.

-Thank you.

Well, there's no doubt that Imran has got himself a beautiful home here.

However, I think six weeks to sort it out is a bit ambitious.

And I think those damp issues are going to be harder to solve than Imran thinks.

You can find out how he gets on later in the show.

I'm in Hextable, a village near Dartford in Kent,

to see a property that got my heart racing a little faster than normal.

I love auctions because you never know what's going to be up for sale.

I see lots of flats and houses, and just occasionally something rather special - and today, I'm in luck.

It's a grand detached house.

The guide? Just £330,000-350,000.

Looks pretty impressive, doesn't it?

Now, this one has got to have at least four bedrooms, right?

Wrong! For the past 46 years, this gorgeous Edwardian property has been

used as offices, but I can already see masses of potential here.

# Bend me, shake me any way you want me

# As long as you love me it's all right... #

My goodness, what a welcome! Look at this beautiful entrance hall.

And you've got these amazing tiles.

Do you know what I love about these?

All the different colours you've got.

And they've been really well looked after, which is fantastic.

You walk through here into a second reception room.

It's so big. I mean, this is a room in itself, isn't it?

Again, you've got gorgeous cornicing and this rather grand staircase.

Lovely newel post. It's got a really nice feeling about it, this place.

This could be a truly amazing family home, but it also has great investment potential.

With a footprint of over 5,000 square feet,

I reckon it could easily be turned into five substantial apartments.

It currently has four offices,

two storerooms and a kitchen on the ground floor.

Another five offices and a kitchen on the first floor.

And a further three huge rooms on the top floor.

What a size. I think what I love is the grandeur of this place.

You've got high ceilings, a beautiful bay window over there.

Again, such intricate cornicing. I mean, it's beautiful.

Not to mention that! Look at that staring at me!

An amazing marble fireplace.

Let's see what's behind here.

Let's get that off.

Wow!

Look at that, these beautiful tiles.

I love it.

I get so excited when, on Homes Under the Hammer, I find properties like this.

Really, really nice.

The one aspect that does slightly let it down is the lack of outside space.

While there's plenty of parking to the front, there's only a small lawned area to the side.

So not ideal for a family home.

But still, it's such a waste as an office block.

I would love to see this house converted back to residential.

Now, this would involve contacting the council and seeing how likely it would be to obtain a change of use.

Now, I do know that in July 2009, planning permission was refused

for change of use from the current office premises into a full daycare nursery.

Now, that was because of potential traffic hazards and noise pollution to neighbouring properties.

And so maybe, just maybe, the council would look favourably

on an application to change this house back to residential.

I would definitely be calling the council first, before going to the auction.

It's easy to fall in love with the charm of this place, but if permission

to change its purpose was granted, the new owner could be on to a real moneymaker.

Whilst the old romantic in me wants to turn this into a gorgeous family house,

the investor in me sees this potentially as five flats.

Now, if you obtained the permission to convert this, quite frankly I think it's a licence

to print money.

The possible planning issues could put off potential investors.

But with a guide price of 330,000-350,000, I reckon it's worth a gamble.

Does a local estate agent agree with me?

Detached house.

Lots of accommodation. Some of the rooms have been

chopped around a bit. It was commercial units.

You've got some partitions separating it.

But it wouldn't take an awful lot of effort

and a lot of imagination to get it back to what it once was.

Lovely, lovely home.

But is there more money to be made if it was kept as offices?

If you were to keep it as a commercial unit and rent it out on an annual basis,

you're probably looking at an income of approximately £30,000 per year.

That's a potential income of £2,500 per calendar month.

Mmm, tempting. But if the new owner falls under the spell of this place,

and decides to convert it to a family home, how much could they be looking at?

If this was a single residential dwelling,

you're probably looking in the region of about £600,000-650,000.

And there's always my money-making idea of converting the property into flats.

I think you'd comfortably get five two-bedroom apartments.

You'd be looking at about 160-170 for each of the two bedrooms, and maybe 180-185 for the penthouse.

So you're looking at an income of nearly 800,000 if they were apartments, as a resale value.

As things stand it's a great office space.

But I think it would make an incredible home for someone.

You could turn this into flats, or you could be extremely indulgent

and make this a single dwelling, although the lack of garden will always cap the value here.

Everything is subject to planning, of course.

So let's see who fell for this as we go to the auction.

Lots of interest in this particular one.

350 to start me?

350 I have, thank you. At £350,000 is bid. 355, do I see?

355 I am bid. And 360. 360 is bid.

365? 365.

And 370? 365 is against you. 368?

368. And 370? 370. 372. 375.

375. 378 for you? No? At 375...

378 in a fresh place, and 380.

380 I am bid. 382. And 385...

385 I have. And 388. And 390.

390 is bid. 392.

395.

395.

398. 398. And 400.

400. Now five.

405. And 410.

Lots of parking.

405,000 then, are you all done?

Sold at 405,000.

And your bidder's number is?

So for 405,000, £55,000 over the top guide price, the new owners of this

huge house are husband and wife, Philip and Sam.

They own a construction company together.

I met the couple and their four children at the property to find out their plans.

So Sam, tell me, why have you bought this house?

We just think it's a fantastic property, and we just think it would just make a fantastic family home.

-Having four kids and...

-Oh, so you bought it to live in with your family?

Absolutely, yes. Yes, we want to restore it to its former glory.

'Music to my ears.'

But with his background in construction, it wasn't the vision

of a dream home that first attracted Philip to the property.

We looked at it as an investment originally because of the guide price. Just as an investment.

But then when we walked in and saw all the beautiful covings and finishes

and whatnot, we fell in love with it. Then Sam came along after...

-That was it!

-That was it!

Sam, tell me, when you first saw it, what did you think?

I thought, "Wow!" I mean, from the outside, I thought it was just great.

And then, coming in, as you say, the features, the fireplaces, the covings, the hallway...

I mean, just to actually walk in and have

that kind of hallway. And the stairs - the stairs as well.

The stairs are fantastic. I just thought, "Yeah."

That's everything that I said when I first walked in.

This isn't the couple's first auction purchase.

They already own two other rental properties.

So they're far from novices in the property game.

Now, I do think we're slightly jumping the gun here,

because as it stands this is a commercial building.

-It is.

-It doesn't have residential use, does it?

-No.

Have you even had a chat with the council yet?

We haven't.

We have a planning consultant who's had a preliminary chat.

And they do have, under their UDP, the Urban Development Plan,

a policy not to...

put buildings back to residential because of the loss of employment,

unless you can justify and show good cause.

So at the moment we're just collating information to get that ready.

You're just trying to justify what a great cause you as a family are, really?

Yeah. The building has been empty for a while. It's very unloved.

It's more suited to a house.

That's what we think anyhow!

As they own a construction company, Philip and Sam have all

the expertise and contacts to do the work themselves.

And Sam has big plans for the heart of the home.

Basicially the kitchen will move from where it presently is,

and where the kitchen is now will actually become, hopefully, an open breakfast area

with, off it at the back, a utility and downstairs cloakroom.

And then all being well,

where the old fireplace is now, we aim to put a...open it up into

a nice archway that would then lead into the breakfast room,

-which is what the kitchen is now.

-That sounds fantastic.

-That's the plan.

-And that's just the start.

The family plan to create an eight-bedroom dream home.

Three of the bedrooms would be en suite,

there would be a deluxe family bathroom, study, grand living area and a separate dining room.

Basically, they aim to restore this old shell back to its former glory.

So, what sort of money do you think you'd need to spend on a property like this to get it up to standard?

Em, more than we have.

But I think about £90,000.

OK. And you are in the industry, so that does help you both.

-That's 90 cost, yeah.

-Yeah, 90 cost.

-Which, if you could stick to that, would be fantastic.

-Yeah.

Philip is going to have to keep a tight hold of those purse strings.

Their four children have their own ideas for their dream home.

Verity, Bea, Tom and Ben, what do you think of your new house?

-It's good.

-Brilliant.

-Do you like it?

-Yeah.

What I want to know is, where are your bedrooms

going to be based, and how are you going to divide all those rooms up?

Me and my brother are sharing a room, and we're on the top floor.

You've got lots of rooms on the top floor, so what are you going to do with them?

A homework room,

a train room, and a PlayStation room.

So you're going to have three different rooms to do all those different things?

So what are you most looking forward to about all of this?

-Just sleeping in it.

-Just sleeping in it?

But I suspect Mum and Dad have a few sleepless nights ahead of them

before Tom gets to sleep in his new room.

You've taken a massive risk, haven't you?

You've steamed in there, you've bought a house, you've spent £400,000 on it,

without the planning permission. So, it's a bit of a gamble, isn't it?

It is. This is probably the biggest gamble we ever took without planning before.

So what's your plan B, if the council turn around and say,

"No, I'm really sorry, it has to be used as a business"? What then?

Well, I personally think we'll win.

-Do you?

-Yeah, we wouldn't buy it otherwise!

Guys, good luck with this.

-I hope you get the planning, that's all I can say.

-Thank you very much.

-And you.

-Thank you.

Sam and Philip have a huge obstacle standing in their way - planning!

Will they obtain the permission to turn this from commercial into residential?

They so desperately want to turn this into their dream home.

You can find out if they're successful later in the show.

Coming up, I head for Telford in Shropshire, in search of treasure.

Well, this may look like an average little flat, but I reckon it's a gold mine in disguise.

Find out if Philip and Sam won their battle for planning permission at this commercial property in Kent.

It's more suited to a house. That's what we think anyhow!

But first, in Cardiff, it's decision time for Imran.

It's tempting to sell it, but I'm still not sure.

This four-bed semi in Penylan Cardiff was bought at auction by IT analyst Imran.

Along with his dad, he paid 286,000 for it, a massive £128,000 over the

guide price, but this was no case of auction fever.

What was your strategy?

Just see how it goes and hopefully bid to win and that's what happened.

Even the obvious signs of major damp didn't faze Imran as he set about transforming the house.

Five months later we're back to see what he's done.

The outside looks exactly the same, but inside, well, that's a different story.

# It's amazing, it's amazing

# All that you can do

# It's amazing

# Makes my heart sing

# Now it's up to you... #

Oh, well, does this place have the wow factor?!

The main entrance now has a glamorous white quartz tile floor and the once empty kitchen

is now one to be very proud of with base-unit lighting

and all the mod cons, including an American-style fridge.

Upstairs, those four empty rooms are now luxurious boudoirs.

Complete with ultra-modern fitted wardrobes.

This place has got real show-home appeal.

Done quite a few changes, changed the stairs to a spindle staircase,

a few of the ceilings were not really in very good condition so they were replaced and boarded up.

And everything was repainted,

new glass in the windows as well.

And that's about it!

A slight understatement, I think.

Imran doesn't do things by halves.

In fact, the main lounge is now double the size.

There used to be a wall by here which has been knocked through

and this room has been made into one large room, it was two small rooms.

And we have also got this double-door entrance which used to be

two single doors and now it's made into one large entrance

and it lets a lot of the light through.

It makes it look much nicer.

And it's not just the inside that's been given a whole new lease of life.

The garden, if you remember, used to be a big mess.

And we decided to get it cleared out and returfed.

But not everything has changed.

The old conservatory is still there.

You remember my concerns about the damp patches in there

and throughout the house, well, my suspicions were proved right.

This place had a nasty case of rising damp which Imran discovered to his cost.

The damp problem was quite bad...

in the conservatory area especially, so the builders who did the work

sorted a few things out and we noticed after they left we had the same problem

so we got some damp specialists to come in

and look and they fixed everything and since then it's been OK.

With the damp issue resolved, rather than knocking the conservatory down

as he'd originally planned, Imran simply painted it and laid a new laminate floor.

Thanks to the rising damp, the old wooden floor in the front reception room was warped and bowed.

So Imran replaced it with more eco-friendly bamboo flooring.

Not only is it cheaper than traditional wood

but its expansion/contraction rate is also lower than hardwood.

Bamboo is more moisture resistant, a useful bonus where there's a history of damp.

Imran was originally hoping to finish the house and move in in just six weeks.

But the extra work on damp-proofing extended the renovation to five months.

What effect did the extra time have on the budget?

Imran planned to spend 20,000 to 30,000.

We spent around 30,000, or just over.

So, 30,000-33,000, something like that,

so it's not too bad. It's as expected really.

We got a nice finish on the house as well.

Well, he seems happy but what do two local estate agents think?

As soon as you come into the hall, it hits you.

You've got quartz tiled flooring,

the central doors into the main lounge which are fully glazed

and you get this sense of space and a wow factor.

The overall house is great for any buyer.

They've got partial blank canvas in some rooms and the important rooms,

you have that wow impression

which is important for selling.

It looks like a show home and this is the kind of property

I'd love to show my clients around.

Imran and his father bought the house for 286,000 and spent

just over £30,000 bringing it up to its current show home condition.

So, when it comes to those all-important valuations,

anything above the £320,000 mark will see them in profit.

The resale value of this property is £385,000.

In my opinion, it could hit £400,000.

That sounds really good.

It's probably what I expected, maybe just higher.

I did think it would be about 350 to 400,000 but that sounds really good.

Sounds like Imran could be tempted to sell but this place could also be a good rental opportunity.

The rental figure for this property would be £1,200 per calendar month.

I'd imagine you'd be looking around £1,100 per calendar month.

Yeah, that would be a good option as well if I wanted to rent it out

and if I found another place for myself.

It's tempting to sell it but I'm still not sure.

There's other people I'd have to consult first before that happens.

We'll see what happens.

Whether Imran and his dad choose to sell or rent it out, they'll see

a good return on this place so their hard work hasn't been in vain.

It's been difficult but it's worth it.

At the end, it's turned out as a good result.

Better than I expected.

Does that mean Imran will quit his IT career

and follow in the footsteps of his property-developing dad?

I may be at the auction place again to get another place

and do that but it depends how it goes with this house

and see what happens and then I'll decide after.

This is Dawley in Shropshire which has a long and ancient history.

Today, you won't find castles but you will find commuters

since its facelift in the 1960s made it popular with people

wanting to escape nearby Birmingham at the end of the working day.

The question is, will I be desperate to leave Dawley

or manage to uncover a bargain here?

Just south of Dawley High Street is this ex-local authority housing estate.

Fairly pleasant, lots of greenery, houses spaced out and I'm here to see a one-bedroom flat.

It had a guide price of £30,000. Let's take a look inside.

'There's something substantial and solid about this red-brick block'

and the estate has a nice atmosphere with well-maintained gardens galore.

'Through the front door, will I find a well-maintained flat?'

Not exactly a lot of space.

Let's hope it improves. We have a bathroom there, bathroom and loo.

There's a sink unit but you can't get to it because of the door.

Good news in terms of the lounge. A nice size, so we like that.

A bit further through, a kitchen in need of some tender loving care.

And through finally to your one bedroom.

Good news is it's got a bit of in-built storage.

Bad news - what is that?

Looks like a bit of historical damp. That needs checking out.

It's a bit shabby, it's a bit dated, it's not exactly huge, but then it's only 30 grand.

'30 grand for a one-bed flat isn't too bad. But what's worrying is the disintegrating wall in the kitchen.'

There's plenty of damp in this place.

If there's a competition, this patch would win outright.

I'm going to take a look outside.

Yeah, the problem is with the exterior of the building.

It means it's the responsibility of the freeholder

so I'd get on to them. That's what you're paying £30 a month maintenance and ground rent for.

In terms of legals, the good news is the local housing authority have a policy of selling

all their properties with a new 99-year lease so that's a big tick in the box.

Bonuses like that can save lots of hassle, paperwork and money post-completion.

In this case, that would give you more time to enjoy your very own square of garden out the front.

OK, it's not very private but it's yours and I'd take outside space

over no outside space any day, no matter where it is.

The communal area at the back is useful for hanging washing.

All in all, the whole block is well-designed but will it jazz up your bank account?

Let's say you're an investor looking to spend your money.

You don't mind where you buy.

What's your best bet?

You might think astronomical London rents and a flat there would be a good way to go

however it's not how much you get back in rent that's important, it's the yield.

Say you spent 200,000 quid on an apartment and you get £900 a month in rent - that's a 5% yield.

If you spent 40 grand on this place and get £400 a month in rent,

that's a whopping 12% yield.

Forget your posh London pads. I know where I'd put my money.

So there's a potentially fantastic yield here.

12% on a property like this, when anything over 7% is usually regarded as good.

In a climate where banks struggle to give you much interest at all,

certainly on your savings, this must be worth thinking about.

I asked a local estate agent along

to see if he agreed with me

about this stellar little investment.

First impressions are...

Well, what can I say? It needs a lot of work doing to the property.

I'd say you'd need to spend,

excluding the damp problem,

approximately £5,000 to £6,000

getting the kitchen and bathrooms sorted out and then another 1,000

to get the decor in good order.

There could be a significant outlay to bring this flat up to standard.

But I reckon once finished it's got great rental potential.

Very good rental investment in terms of getting good yields on these types of properties.

You'd estimate around £400 per calendar month.

So, if the buyer bought close to the guide price and keeps a close eye

on the renovation budget, they could reap rental rewards from this neat little property.

But what about resale?

Once the works have been completed,

I'd put this on the open market at around £50,000.

This may look like an average little flat but I reckon it's a gold mine in disguise.

And I reckon there's a profit here ready to be dug out.

Let's see who spotted it at the auction.

A one-bedroom leasehold ground-floor apartment.

20, can I say?

20 I'm bid, standing. At £20,000.

21...

22. 23. 24...

At 24,000. Another one?

At 24,000. The bid is in the middle at £24,000.

25, standing behind you.

25. 26. 27.

28. 29.

30. 31. 32.

33. 34.

Shaking his head. Still with you, sir, at £34,000.

At £34,000 for the first time.

At £34,000 for the second time.

A third and final time at £34,000.

You bought it, sir. Well done.

So, for £4,000 over the £30,000 guide price, the new owner is Ray.

He's a mortgage adviser with a small portfolio of buy-to-let properties.

He bought this flat with a business partner.

If Ray looks familiar, that's because we've met him before

back in 2008.

I wanted to know how things were going for him in these difficult

and different market times and what tempted him to buy this little lot, as if I needed to ask.

Ray, good to see you again.

Nice to see you again, Martin.

Last time we met in Telford you were working on a one-bedroom flat.

Two-bedroom flat in the St George's area. A maisonette.

-We were doing that last time you came.

-How did that go?

It went fine. We rented it out within about two weeks of completion, redecorating and refurbishment,

and we're getting a reasonable rent, thank you.

Remind me what you do - you're a mortgage broker.

-I'm a mortgage broker by trade...

-Phwoar! You've had a few

interesting years then, have you?

And a few more to come, I think.

-Really?

-Yes, it'll stay fairly quiet for the next four or five years.

The people we feel sorry for are the first-time buyers.

Even now if you want a 90% mortgage as a first-time buyer

you're still paying 6% or 7% interest rates.

When you consider the Bank of England rate is 0.5, that's a huge mark-up

to get on the ladder as a first-time buyer.

Let's talk about this property.

Why did you want to buy it?

The most obvious answer is rental return but in terms of a property

it's a flat but only one of four, so you're not talking high rise.

It's got a courtyard, a garden, a fairly large living room

and it is what it is, but it'll be a nice property when it's done up.

And this is the kind of thing you look for, is it?

We look for good rental returns and that tends to be

the one and two-bedroom flats

rather than houses. You get a better rental return and we're playing it very safe in this market.

We want to make sure our rental is well covered.

How times have changed.

Today's buzzwords are "safe" and "secure"

rather than "risky" and "gamble".

Ray's certainly not taking too much risk here,

considering the yields it can produce.

-Tell me what you're going to do to it.

-New bathroom, new kitchen.

Renovate throughout, change the doors and, in reality, a total refit.

As you've identified, if you walk around, the biggest issue is the damp.

But we think that problem has been resolved.

It looks like it was a leaky pipe from outside.

We'll only know once we strip off all the wallpaper and skirting boards

and strip it back to basics but we think it's not as bad as it looks.

Ray has set aside £7,000 to cover renovation and legal costs

and hopes to have the flat ready to rent within a month.

-So, what's the future?

-To take it slow and steady.

We're not looking to rush these.

We'll probably be doing one or two a year, two a year, building up a small portfolio for the future.

If the market changes and we can start selling them quickly,

we would up what we're doing, but at the moment

we have to respect the situation we're in and the market we're in.

So, Ray giving good advice on how to survive in what are still quite difficult market conditions.

In terms of this place, he's got himself a corker of a property.

Still, that damp could give him more problems than he's expecting.

Find out how he gets on later in the show.

All our buyers hope the journey was worth it. They took the right turns and avoided the pitfalls.

Hmm...decisions, decisions.

Did they make the right ones? Let's go back and find out!

We're back in Hextable, Kent,

where I met construction company owners Sam and Philip and their four children.

The couple bought this substantial detached property for £405,000.

It had been used as offices for 46 years.

Surprisingly, Philip didn't initially plan to convert it into their family home.

Looked at it as an investment originally because of the guide price.

When we walked in and saw the beautiful covings and finishes, we fell in love.

Fortunately, they had the vision, contacts and practical skills to make their dream home a reality.

Unfortunately, they didn't have planning permission.

Because it was bought as a commercial building,

Philip and Sam had to apply to the council for a change of use permit.

If it was turned down, not only would the couple's dream

be shattered but they would also be facing a costly mistake.

This is probably the biggest gamble we ever took without planning.

Nearly a year later, has the gamble paid off?

It looks like this Edwardian house is back to its former glory.

# At la-a-ast

# My love has come along

# My lonely days are over

# And life is like a song... #

How wonderful it is to see this glorious character property

transformed from functional office spaces into a beautiful home.

The family hope to move in within days but I wonder how easy a process it was with the planners.

It took about five months in total.

We had a planning consultant on board as well and we got marketing reports

and feasibility studies done on the use of this as offices.

There's a lot of empty offices up the road with better

travel connections and whatnot.

So, once we put that in alongside the planning application, it went through quite fast.

Five months just to get the permissions, but after that, Philip and Sam didn't stop.

We were hands on all the time.

Structurally, we haven't changed anything.

Internal partitions have been moved and taken down, and rooms

have been made larger where there was no load-bearing walls.

And equally, up here, we have in-filled doors, opened up doors, to get the better use of the space.

The first floor, which once housed five offices, a kitchen and a toilet, now has four huge bedrooms.

# A dream that I can call my own... #

Verity and Bea each have their own en suite bathroom, as does the master bedroom.

But as well as that, it has made use of the old storage cupboard.

That's now Sam's dressing room but this isn't her favourite room in the house.

I'm especially pleased with the kitchen.

That's my pride and joy! The kitchen design is fantastic.

It was such a small space with partitioned walls and an old little scullery bit, and now it's...

Well, it's just this big space.

Philip and Sam have knocked through the old chimney breast

to create this large open plan kitchen, with adjoining breakfast room.

In this area, this originally was a couple of rooms with a corridor down this side, with a door at the end.

The chimney breast in the middle, we have opened that up and made this into one large area

with a breakfast room and a very nice kitchen, which is my pride and joy.

And Philip has his own favourite spot.

Everything has worked well, but I'm pleased with the size of the garden.

The garden felt so poky at first,

but it's really opened up now and it feels so much different outside.

To the front of the house, the tarmac has been replaced by turf,

and to the side, the breakfast room

has bi-folding doors opening up to a huge barbecue patio area.

There is certainly plenty of outside space for Philip and Sam's two young sons Tom and Ben.

But they also staked a claim to the top floor of the house,

and were hoping for a train room and a games room.

There's certainly space for that.

But I wonder if it will stay this tidy

once the boys have moved all their toys in.

Over the weekend we'd planned to start. Yes.

And it will be a family home, and we hope to stay here for many years.

Sam and Philip bought the property at auction for £405,000, and have spent 140,000 doing it up.

That's a total outlay of £545,000.

But have they invested their money well?

What do two local estate agents think?

It's very nice. It's been redecorated sympathetically.

The rooms are spacious, there are lots of nice features.

I think it's absolutely fantastic.

They've made fantastic changes.

The eight bedrooms, four bathrooms... It's stunning.

Looked at as an investment, it may not have been the way to go,

but as a family house, it's perfect.

If we are looking for a down side, it would be the size of the garden in relation to the size of the property.

Whilst there is lots of parking, the garden area is quite small.

Philip won't be too pleased to hear his pride and joy described as "quite small".

Will the resale values cheer him up?

Remember, the couple have £545,000 invested here.

I would suggest that we quoted an asking price of £950,000.

You would be looking to achieve in the region of 900,000-950,000.

-That's more than we expected. We're very pleased.

-Very pleased with that.

I should think so! If Philip and Sam were to sell the house at the higher valuation,

they could be looking at a massive pre-tax profit of about £405,000,

minus selling expenses, of course.

But this venture was never just about money.

We're pleased about the valuation, obviously, but we didn't buy it for the value.

We bought it on what we saw and believed to be a nice family house.

It's a beautiful family house, and the value doesn't come into it.

It's the house. It's not for sale.

Earlier in the show, we were re-acquainted with mortgage broker Ray.

This was his second appearance on Homes Under the Hammer.

He'd previously bought a property as an investment buy-to-let in 2008.

Since then, he's acquired a small portfolio of properties.

His latest edition was this one-bed flat in Dawley which he bought

with a business partner for £34,000.

Working in the mortgage industry, Ray was aware that the old phrase "safe as houses"

isn't always the case in the current climate.

# Living by numbers

# Living by numbers now... #

We look for good rental returns and that tends to be the one or two bedroom flats

rather than houses, you get a better rental return.

And we are playing it very, very safe in this market.

# You can count the days but does it all add up to you...? #

Not only was this place safe but it was a sure bet,

with a potentially staggering rental yield.

But the flat didn't come without issues - there was a nasty case

of damp which Ray believed to be caused by an exterior leaking pipe.

It's been just three weeks and now we're back to see if the damp issue

has been resolved.

Today's weather should be a pretty good test.

# I can't stand the rain

# Against my window... #

Not only has the damp been sorted but there's a brand new fitted kitchen.

# Our sunshine has come... #

The lemon decor in the bedroom has been washed away

with a clean, magnolia paint and newly fitted carpet

which extends through the rest of the flat.

# No more rain in this cloud... #

The damp did cause a lot of mould and we did have to have drying facilities.

It took us ten days to dry the flat out completely.

It had obviously been left for years to spread throughout the flat but that's resolved.

Other than that, it was very straightforward.

We wouldn't have done it so quickly if there'd been any major issues.

In just under three weeks, nearly everything was changed.

There are new windows, the doors have been replaced

and the bathroom, which isn't quite finished,

already looks a million times better than it did.

# My sunshine has come... #

Well, as you can see, we've totally redecorated it throughout.

There was a horrible pink, flaky wall.

We put in new kitchen units, new worktop, retiled completely and, if you remember,

there was horrendous damp in that corner which spread throughout the house so we've rectified that.

New lino. It's not a huge kitchen but for a one-bedroom flat, I think it's quite nice.

'Doesn't look bad at all. Ray hoped to have the flat ready

'to rent in four weeks so he's ahead of schedule.

'How are the finances looking?'

We haven't had every single bill in yet, obviously, it being this quick

but we're anticipating the actual refurbishment cost will probably be 6,000 to 6,200.

If you include other costs like solicitors' fees,

auction admin fees, the whole lot will be under £7,000.

Bang on budget as well.

Ray has already got people interested in renting the flat from him.

Our offer is 425 at the moment, so that would give us a yield - an incredible yield -

just short of 13 % which you can't sniff at in this day and age.

Absolutely, but Ray's ignoring this great rental return

and instead is going to put it on the market.

We're hoping to actually make a really good profit.

We'll wait till what the estate agents say they feel it's worth.

If the valuation is below what we have in our own mind,

then we will just let it out because at that sort of yield,

it's not worth selling it cheaply

but if we can get what I hope to get for it, then it would put

money straight back in the bank and allow us perhaps to go and buy

two flats from the purchase sale of one.

Well, this is a business after all and if anyone has a finger

on the pulse of the current market, it's mortgage adviser Ray.

But despite getting this place for a bargain 34,000 and spending

just under 7,000 refurbishing it, I'm really not sure of Ray will get the resale figure he's after.

Let's hear what two local estate agents think.

I like the flat. It's presented well, it's very fresh, clean

and very tidy. And the kitchen in particular

is a big bonus.

The modern, clean look with magnolia walls and white woodwork

is what's required for rental or sales markets.

But which is most favourable?

Absolutely for the rental market right now.

The first-time buyers' market is pretty much null and void

due to mortgage lending. The rental market's doing well.

It is quite a struggle in the sales so I'd recommend renting

the property out, possibly £425 per calendar month.

I would recommend £400 per calendar month.

The 425 is accurate because we already have an offer on at 425,

and from my point of view, that's excellent.

So, as Ray worked out, £425 per calendar month would give him

and his business partner a cracking 13% yield - an annual income of just over £5,000.

Are the resale figures as impressive?

It sounds quite harsh but if we were to market the property for sale,

I'd say offers in the region of £50,000.

I would recommend no more than £49,950.

A little low.

We're putting it on the market for £62,500.

Probably trying to get 60,000.

Not quite the resale estimates Ray was hoping for but at least

he has the rental option as a very sound back-up.

I really don't think he can lose with this one.

I'm glad I bought it to be quite honest.

Even at 50,000, that still gives us a 20% return.

55 would give us somewhere in the region

of 35% return, and on my valuation, it gives us 50% return

so you can't complain at any one of those figures.

# I can't complain... #

Since filming, Ray's reduced the asking price of the flat to just under £60,000

but still there was no interest so it's back to plan A, and he's going to rent it out.

It's the end of the road for the buyers on today's programme

but there are plenty more where they came from.

For your chance to see what happens, join us next time on Homes Under The Hammer.

-See you then.

-Goodbye.

-Goodbye.

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