Episode 70 Homes Under the Hammer

Despite all the doom and gloom, the property market

can still be a tempting place to invest your money.

It's important to be cautious and do all your research.

But you can still get bargains buying your home under the hammer.

If you're looking for a variety of property and good value too,

then the auction house may be for you.

So here are the properties that lured our buyers to the auctions on today's show.

In Mid Glamorgan there's a property

with an unbelievable guide price of just £9,000.

No, you did hear right - £9,000, nine grand. Yes, yes.

I find a rather tasty house in Bucknall, Stoke-on-Trent.

I don't know whether it's just me, but this reminds me of a chocolate bar!

And in Edinburgh, a flat that's full of surprises.

Huh! You open a door expecting to find a cupboard

and there's a set of stairs.

All these properties have been sold at auction.

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

-when they went under the hammer.

-It's yours, sir.

Four miles north of Maesteg in South Wales

lies the former mining town of Caerau.

Once a thriving place,

it's been hit hard by the loss of the mining industry.

That sadly resulted in high unemployment

and collapse of the property market here.

I'm here to see a property which had a guide price

of just £9,000.

No, you did hear right - £9,000, nine grand. Yes, yes.

What do you expect for that? A garage? An old toilet block?

But no. In this case it's this -

an old former Baptist chapel.

Looks incredible. Praise the Lord!

But should I get my hopes up?

It does look rather dilapidated from the outside.

And a £9,000 guide price

suggests there could be something seriously wrong here.

The building was built in 1901 and was in regular use until 1998.

But since then, like many such churches and chapels,

this has fallen into disuse and disrepair.

As you come around the side here, straightaway I'm very concerned.

This whole wall almost seems to be a little bit bowed

and the roof line is quite extraordinarily odd.

On a building of this size,

structural issues like that could be very expensive to put right.

Let's take a look inside.

It's when you view the building from the back

that you really get an idea of how bad that roof line is.

It's more like a roller coaster than a roof.

So, does this place have more cons than pros?

You can't get into the building from the front. You come down the side through this door,

which leads you into the rear of the building and this, what I guess is the vestry.

Imagine this being used for Sunday school classes in years gone by.

Not that impressive a space.

There's a bit of additional stuff there, an old kitchen.

But the most impressive thing is through here.

Now, this is more what you expect.

Fantastic, big room.

A lot of the original features still here, which is unusual.

The pews are here, and you've got the pulpit.

You've got this balcony up here with this amazing ironwork.

However, a few serious issues with the roof.

I can actually see daylight coming through.

So, again, more expense to sort this place out.

But what... what an amazing room!

This really gets your imagination going.

MUSIC: "Only Time" by Enya

# Who can say where the road goes

# Where the day flows?

# Only time...#

Unfortunately, the ravages of time have taken their toll here

and it looks as though it's not just superficial damage.

So perhaps time has finally run out for this chapel.

It's easy to let your imagination run wild when you visit a place like this,

contemplating maybe converting it into a family home.

Sadly, I don't think the location

warrants the amount of money you'd have to spend to do that.

I think much more realistic options would include

either keeping the building and converting it into four or six flats.

However, I am concerned about the structural issues I've talked about.

The likely option, I think, is, sadly, to knock it down

and put maybe two, three, four houses in its place.

MIKA: # This is the way you left me

# I'm not pretending

# No hope, no love, no glory

# No happy ending...#

The general state here means

I really can't see a happy ending for the chapel now.

But, for a developer,

the story might be very different.

In fact, it could be a heaven-sent opportunity.

What would a local property expert recommend for this site?

My recommendation for a change of use would be to convert into flats.

I'd recommend looking in the region of between six and eight flats,

a mix of one- and two-bedroom properties.

But if flats were built,

what sort of resale or rental value could they have?

For a one-bedroom property I'd be looking for £50,000 to £55,000,

for a two-bedroom possibly up to £60,000.

For a one-bed property, you'd be looking at about £300 per calendar month,

for a two-bed up to about £350 per calendar month.

Remember, the chapel was guided at just £9,000,

so, even with build costs, those kind of values

could mean a substantial return for resale or rental.

But the building itself may not be in good enough condition to convert, so what then?

It might be an option for a full demolition

and then rebuild into small terraced two- or three-bedroom properties in this area.

They are achieving in the region of about £65,000, possibly £70,000.

Probably looking at about £325 per calendar month as a rental.

Again, providing planning permission was obtained,

there could be quite a decent profit for any would-be developer.

So this building may no longer draw in congregations,

but it might just bring in some serious money.

Well, I love old chapels and churches.

They have such atmosphere and character.

However, given the state of this one, I fear it may be about to be issued its last rites.

The big question is: will it be demolished completely or converted into flats?

I guess that's down to the new owner.

So let's find out who bought it when it went to the auction.

Go on to lot number 20 in the catalogue,

which is the Hope Baptist Chapel.

Who's going to put that in? There's been a lot of interest in it.

Who's got ten for it?

Ten surely to start me.

Eight, then. Eight I'm bid. £8,000 is all I'm bid.

At £8,000. This is no money for it.

£10,000. Thank you, sir. Is that another one on the right?

£12,000. Thank you, sir. I've seen you. At £12,000.

And again, if they like. At £12,000. £13,000 if you like.

£13,000. Thank you. £14,000 will you?

At £13,000, seated here. At £13,000.

£14,000. Thank you. £15,000 can I, sir? £15,000. Thank you.

£15,000, seated on the aisle.

At £15,000.

£16,000, on the side. I saw you bid, yes.

£17,000. Thank you. At £17,000. £18,000 is bid.

At £18,000. Against you on the aisle.

You'll have to hurry. £19,000. Thank you. At £19,000.

£20,000 in the back of the room.

At £20,000 he's out to the bids in the room.

At £20,000 and one, if you like.

At £20,000. £21,000 I'm bid. Thank you.

£22,000 will you, sir? I'm selling all the time. £22,000 I'm bid.

At £22,000. He's out on the phone at £22,000.

He'll have to bid quickly. £23,000 is it? Yes, thank you.

£23,000. £24,000. Again, £24,000. £25,000 if you want it.

At £24,000 it's still a cheap property.

£25,000 on the phone. At £25,000.

Again for you, sir? £26,000 can I, please?

£26,000 I'm bid. Thank you. At £26,000.

I'm selling all the time, make no mistake.

At £26,000. The bid's on my right in the room.

Is that a bid? Yes or no? £27,000 on the phone I'm bid.

At £27,000. £28,000 in the room.

Please ask him to be quick on the phone.

£28,000, yes or not?

£29,000. Thank you. Fill it up, will you, sir?

£30,000 bid in the room.

At £30,000 I'm bid. Is he coming again? Yes or no?

At £30,000. The phone bidder is out.

At £30,000. Are we all done?

At £30,000. It's yours, sir. Thank you very much. At £30,000.

Phoar! £30,000.

The successful bidder, hidden behind the pillar, was Paul.

The purchase is to be a joint venture with his brother-in-law, Ceri.

Paul and Ceri run a builders' merchant's

and have over 40 years in the building trade between them.

So I was intrigued to hear how they were going to use their experience

to tackle this dilapidated chapel.

Paul, Ceri, good to meet you both.

Why did you want to buy the church?

Well, we didn't actually plan to buy the church.

One of our employees was driving past one day,

told us he saw the place and it was for auction.

Paul went to the auction the next day and we bought it there and then, on a whim.

-On a whim?

-On a whim, yeah.

This isn't a simple project, though, is it?

You'd have thought this would have required a bit of pre-planning.

Well, no. We don't normally give a lot of pre-planning to much.

If we'd given it a lot of planning, we might have changed our minds.

So spur of the moment is usually best.

So far we've never lost out by doing something on the spur of the moment.

So, touch wood, everything's worked out OK.

So - dare I say it? - they've taken a leap of faith with this building,

hoping that Hope Chapel can be a whim that wins.

MUSIC: "Faith" by George Michael

# I gotta have faith

# Because I gotta have faith, faith, faith

# I gotta have faith, faith, faith #

So, what kind of projects do you generally get involved in?

More or less the same thing. We bought a school in Ogmore Vale, the valley next to this one.

We knocked the school down, put 12 houses on there and rent them.

The old yard we owned as a builders' merchant's we knocked down, put five houses on there,

and we rent that as well.

-So it's generally buy somewhere, knock it down, put something in its place.

-Develop it.

-Is that what will happen here?

-We'll knock this down, develop it, put four houses here for rent.

Right. Er... why are you knocking it down?

Well, have you seen it? It's not in the best shape.

There are some serious structural issues here as well.

If we didn't do something about it,

we'd have to spend a lot of money to keep it.

This scheme is quite well-advanced,

as Paul and Ceri have already had plans drawn up.

So, talk me through the plans.

Basically we've got here a block of four two-bedroom link houses,

with rear access for the parking and some small gardens just behind.

I'm quite surprised that you can get four houses into this space,

because it isn't massive.

No, they won't be huge houses,

but they're a reasonable size.

We've got houses like this elsewhere so we know they work.

At what stage are these plans, then?

-Well, they're very close, hopefully, to being passed.

-OK.

We've had good information that they will pass so, fingers crossed, there'll be a result.

Give me an idea of costings on this.

We've a costing idea on that - somewhere around £120,000 to build the four.

-Right, so 30 grand each.

-Thereabouts, yeah.

Paul, you'll be heavily involved in this project. How long do you think it'll take?

Timewise we hope to wrap it up in eight months, providing we have no hiccups with planning.

The buildings will go up in timber frame,

so it'll be a quick build anyway.

So hopefully eight months should be more than achievable.

The timber frame is also quite efficient

in terms of U-values and that kind of stuff.

U-values it's very good but also costwise it's very good.

Good luck with it all. Clearly I won't recognise the place when we come back.

No, hopefully not.

-I hope it turns out great.

-Thank you.

-Thank you.

# Because I gotta have faith

# Mmm, I gotta have faith

# Because I gotta have faith, faith, faith

# I gotta have faith, faith, faith #

Paul and Ceri certainly have the experience to take on this project

and the added advantage of owning that builders' yard. How good is that?

However, they still have not officially got planning permission

to knock down this old chapel and put those four houses in its place.

And you never know what might happen.

You can find out if the houses are built

or if some divine intervention occurs to save the old chapel

later in the show.

Staffordshire may not be top of most mystery writers' lists of locations,

but, for me, a line in the auction catalogue hinted at something worth investigating.

I've travelled to a place called Bucknall in Stoke-on-Trent

and the auction catalogue tells me I'm here to see a rare opportunity.

Here it is. A semi-detached house, looks attractive from the outside.

I wonder what makes it a rare opportunity.

Intriguing? Let's go inside.

MUSIC: "The Pink Panther Theme"

From the outside it looks, well, quite unassuming,

but this auction lot obviously has something up its sleeve.

Well, there's absolutely nothing small and compact about this house.

It's a really good size.

Lots of different colours and swirls and whirls

and old-fashioned carpet and wallpaper everywhere.

You've got to see beyond that

because this has got a nice solid feel to it.

A really spacious lounge.

You've got these lovely little doors. They add a bit of character.

A nice big window letting in loads of light.

I don't know whether it's just me, but this reminds me of a chocolate bar!

As you can see, it completely needs modernising.

But it's got good, solid bones.

A chimney breast made of chocolate?

It's a nice idea, but probably as useful as a chocolate fireguard.

And the kitchen's hardly what you'd describe as sweet.

Although it is a good size and isn't in bad nick,

a bit of upgrading wouldn't go amiss.

And the carpets, well,

let's just say they're probably not to everybody's taste.

You've all heard of a HIP pack, which was launched in 2007,

and they were mandatory for anybody selling a home.

Well, they've now been scrapped.

However, sellers will still be required to get an EPC.

That's an Energy Performance Certificate,

and it shows how energy-efficient a property is.

Now, this is a requirement under EU law, and they cost around 60 quid.

So all property developers and homeowners out there need to know,

when renovating a property, be mindful of insulation,

because draughty windows and gaping floorboards are a no-no.

DAWN PENN: # No, no, no...#

OK, so perhaps this place

isn't as hot a property as it should be at the moment.

But a little time and money could easily remedy that.

Nothing I see in the three bedrooms or the bathroom is unusual

for a house of this age.

OK, so I'll come clean.

This is the rare opportunity the auction catalogue refers to.

It's not just a huge garden to the side.

This is actually a building plot,

because there's outline planning permission to erect a house here.

Now, a new property in this area could achieve as much as £120,000.

When you consider the guide price was set at just £90,000,

this auction lot is a rare opportunity indeed.

TAKE THAT: # Could this be the magic at last? #

So there's plenty of scope to make some serious cash here.

If you got planning permission to develop this site and did so,

the profit would probably pay for the refurbishment of the house - and then some.

But it's not all good news.

Stoke is an ex-mining area, so you should obtain a mining report

before you even think about buying this.

Obtaining a mortgage at the best of times can be difficult.

It could prove impossible if you discover you're extremely close to a mine.

It's vitally important you carry out a report before going to the auction.

And some more bad news, I'm afraid.

This building plot is actually next door...

to a substation.

MUSIC: "High Voltage" by AC/DC

Well, that's a bit of a shock.

So this property's a real mixture of good and bad.

But do the POSITIVES outweigh the NEGATIVES?

What does the local estate agent think?

The house itself has got lots of potential.

It's a good size. Three good-sized bedrooms,

and obviously a generous-sized plot.

There's a substation which is quite close to the plot.

This may be off-putting to some people

but I can't imagine it would prevent a sale.

But let's talk figures.

How much could the plot of land be worth if sold separately?

Potentially, the plot on its own could be worth in the region of £35,000,

which would have a slight impact on the value of the property,

but only to the extent of around £10,000.

So, potentially, £35,000 just for the plot.

How much would a refurbished house with a smaller garden be worth?

After renovation,

I would imagine this property would be worth in the region of £90,000.

So the property alone, once renovated,

could be worth that £90,000 guide price.

So any revenue from the potential building plot

would mean a decent profit.

The estate agent thinks that the house could be rented out for around £450 a month.

So perhaps the catalogue description was right.

This is indeed a rare opportunity,

and, if everything goes to plan, it will be lucrative for someone.

But of course the mining report is a worry,

and the close proximity to the substation is not ideal.

Somebody wanted this, though. Let's find out who as we go to auction.

Lot 36, this is the Bucknall area, Stoke-on-Trent.

It's a semi-detached house.

It has outline planning permission to build another dwelling

within the existing garden.

So, what shall we say for lot 36?

£70,000, then.

Lot number 36. £70,000 I'm bid. Thank you. At £70,000.

£75,000 I'm going to say now.

Yes? £75,000. At £75,000.

£75,000. £80,000.

At £80,000.

I'll take two if it helps.

At £82,000.

£84,000 is it? £84,000.

At £84,000.

Another two? £86,000? Yes, £86,000.

At £86,000.

I'll take one if it helps. New bidder, £87,000.

£88,000 is it?

At £88,000.

£89,000. £90,000.

£91,000. £92,000. £93,000. £94,000.

£95,000.

At £95,000. Bid seated left, at £95,000.

At £95,000. Against to your right.

£95,000, then, first time.

At £95,000 second time.

Third and final time at £95,000.

You've bought it, sir. Well done.

For £95,000,

the successful bidder for the three-bed semi in Bucknall is Ian.

He's a surveyor and manages his own construction company

that specialises in commercial properties.

I was interested to hear how he viewed this house and potential building plot.

-Ian, congratulations. You bought this house.

-Thank you.

-And a plot with outline planning.

-What are you going to do with it?

-The house is going to be renovated and rented.

The building plot it looks like I've sold already.

-How much money have you been offered to sell that?

-£35,000 for the plot.

-Wow!

So it's almost like you've had 35 grand knocked off of this.

Yes, I suppose so, really. Yes.

He paid £95,000 at auction, so if he gets that £35,000 for the plot,

then, in effect, he'll have got the house for just 60 grand.

This is Ian's third property purchase.

He has previously bought and refurbished a house for his son.

Also, he has an ongoing project

with a lot he bought over two years ago.

On that, he hopes to build a new home for himself and his wife, Claire.

We previously filmed at that purchase too.

And we'll see the outcome of this development in a later programme.

# Let's get busy busy...#

So clearly, once that gets started, Ian's going to be pretty busy.

But meantime he decided to keep his property portfolio ticking over

and has wisely selected this slightly less demanding project.

How long do you think it'll take to get this house up and running?

Six to eight weeks, I think.

-Are you going to be getting your hands dirty?

-I'll let the wife do that.

-SHE LAUGHS

-She enjoys that sort of thing.

-Can you really leave her to it?

-Oh, very much so, yes.

She's done all the design work on all the previous houses,

-and she does like to enjoy it, get a hammer out, get a saw out.

-HE LAUGHS

-And how far away from your work are you?

-A two-minute walk.

So the location here is ideal, really,

to look at the property,

and you can oversee it when it's rented.

-So you'll sneak away from work, do a bit of work here, sneak back again...

-That's it.

-Your wife can be here making you a nice cup of tea and a bit of lunch.

-That's right.

Then she'd get her paint brushes out.

MUSIC: "Good Thing" by Fine Young Cannibals

This looks like a really good project for Ian.

He's got some potential money for the plot of land,

his wife Claire will do the decorating

and it's just two minutes from his office.

What budget are you looking at? How much do you need to spend to update this?

The kitchen will have to be totally replaced.

The same with the bathroom.

I would expect... a maximum of £10,000.

Wow! That's for a new kitchen, a new bathroom, all the carpets need changing.

I'll probably keep some of the carpets.

What about that cladding above the fireplace?

-Don't you think it's nice?

-Are you going to keep that as well as the carpets?

-No, that'll come off.

-Good. I'm very happy about that.

The polystyrene tiles as well might have to go.

-Ian, congratulations.

-Thank you.

-I hope you keep to that £10,000 budget.

-I will, definitely.

-Well done.

-Thank you very much indeed.

MUSIC: "Good Thing" by Fine Young Cannibals

Ian, the shrewd businessman, has made money already.

That is fast going.

With a team of first-class helpers on hand, he plans to complete this in just six to eight weeks,

and for just £10,000!

Will he or won't he?

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

Coming up, in Edinburgh I see a flat

where you seem to get a lot for your money.

Almost a bonus to what is already a great place.

We return to Stoke-on-Trent to see how Ian's house has blossomed.

Got rid of all that flowery paper, got rid of the flowery carpets.

But first, I'm off to Wales

to see how that brother-in-law partnership is going.

Can't get rid of him. He's family.

Just outside Maesteg in Mid Glamorgan

is the old mining village of Caerau.

It was here I found this old Baptist chapel.

It was once the venue of weddings, baptisms, christenings

and many other precious moments.

MUSIC: "Precious Moments" by the Three Degrees

Now, sadly neglected and in a sorry state,

this once important community space was in desperate need of salvation.

It was bought for just £30,000 by brothers-in-law Paul and Ceri.

As they both run a builders' merchant's and a building firm,

they seemed the perfect pair to save this old chapel

and give it a new beginning.

# Is this my beginning

# Or is this the end? #

We'll knock this down, develop it, put four houses here for rent.

We've got another project after this, another 13 houses to do,

which will be the same thing, build to rent again.

Right. Er... why are you knocking it down?

Well, have you seen it? It's not in the best shape.

There are some serious structural issues here as well.

If we didn't do something about it, we'd have to spend a lot of money to keep it.

It did indeed look like there was no hope for the chapel

and its end was nigh.

But for Paul and Ceri to carry out the build, they needed planning permission.

So, 15 months on,

had the time come to wave a fond farewell to the chapel?

Well, yes.

Paul and Ceri have successfully carried out their plan

for four two-bedroom houses.

Planning went smoothly.

The plans went in and got approved quite quickly.

The council were glad to see the church come down because of its state.

In the end, it was felt the building just wasn't worth saving

and Paul and Ceri could start a new build.

How long did it all take?

To get through planning and to demolish the site,

probably around the three-month mark.

And then construction started immediately after that.

So, 15 months after our first visit, this is the final result.

As you can see, we're in the kitchen at the moment.

The work surfaces and all the machines are behind you

and the dining area is here at the bottom.

We always tend to put a toilet, a WC, into this part of the house.

Very convenient. Good to have one downstairs as well as up.

Through the back door we've got a little patio area

which leads down to the garden, which has been turfed.

This size of property makes it an ideal starter home

or is perfect for the local rental market.

As you can see, upstairs we've got a bathroom

at the back of the house,

a small bedroom next to it and a large double bedroom at the front of the house.

We stuck to a two-bedroom design because we felt that would suit the rental market in this area,

and that has proved to be the case.

Yes, because, as all the furniture and possessions show,

they've already successfully rented this house out.

And it's not just this one.

When they were completed, we put them to our agent. She was able to let them fairly quickly.

All four are occupied now. So, yeah, a very good project.

FEIST: # One, two, three, four

# Tell me that you love me more...#

What a result! Two months after completing the build,

all four houses are rented out and bringing in revenue.

That will help offset the build costs.

We spent just under £120,000 for the four,

so they all came in under budget.

With a purchase price of £30,000 and build costs of around £120,000,

Paul and Ceri have about £150,000 invested in the four houses.

Was that money well spent?

What do two local state agents think?

I think they've done a very good job.

I think it fits in with the area. The architecture's not supermodern,

so it does tie in with the original terraced properties.

They're quite small, and they haven't gone to town on finishes,

but I think they'll let very well.

I think what they've done here is really different

because obviously, predominantly,

they're just terraced cottages, the old miners' terraced cottages.

What they've done is different and unique. I think it goes down really well. I like what they've done.

The only problem I can see at the back, to be honest with you,

is the fact that haven't actually privatised the garden.

I do think that they could put up some sort of boundary fencing

just so that you can outline the individual properties' gardens.

As we know, they've already rented out the properties.

But did they make a good long-term investment of around 150 grand,

or just under £40,000 per house?

I would value this property at approximately £70,000 to achieve in excess of £65,000.

If I was going to market this property, I would be looking at an asking price of £74,950,

and I would expect offers in the region of £70,000-£72,000.

It's probably a fair price for the properties at the moment.

When the recession turns round, hopefully then we'll get a bit more for them,

which is somewhere around the £80,000 mark, £85,000.

At the end of the day, we've got no intention to sell the properties.

The plan is to rent them long term.

But even at £65,000 to £70,000,

the four houses could net £260,000 to £280,000.

That would mean a pre-tax profit of over £100,000. Not bad!

But for now, it's the rental market they're most interested in.

I'd expect to achieve between £350 and £375 per calendar month.

Today's market, you're looking at £400 to £425 per calendar month.

Erm... yeah, that's probably about where it should be.

We're getting about £400 a month, so we're happy with that.

£400 a month on each of the four properties

means a total of £1600 a month, or £19,200 a year,

which is an impressive 12 per cent yield.

So presumably they're happy to continue working together.

-Can't get rid of him. He's family.

-Yeah.

-I guess we're stuck with each other.

-Aye, for the long term.

You have to praise them for what they've achieved here.

Turning one house of God into four homes is pretty impressive.

I'm in the green-belt suburb of Liberton,

around four miles from Edinburgh city centre.

It's a popular area for families

and, with this beautiful landscape, you can see why.

I'm here to see a property that had a guide price of 150,000 quid

and was described as "an upper villa flat".

What does that actually mean?

It's a first-floor flat with an attic which spans the lower-floor flat.

But the good news is it's got its own front door.

We're certainly off to a good start.

I wonder if it will be as impressive

when I get to the top of the stairs.

So what have we got?

Actually, at first glance it looks pretty good.

Nice and tidy condition. A little corridor here.

Reception room there, but I think that could be a third bedroom.

If you're thinking about taking in a lodger,

why not have that as a bedroom and bring in a bit of extra income?

Large lounge there. Lots of light pouring in. I like the bay window.

In fact, the whole flat has this feeling of, well, the opposite of being cramped. It's lovely.

Kitchen there. That could do with a bit of money spent on it,

but apart from that...

First of the two official bedrooms there, and then it continues.

Great flat.

So, both bedrooms are a good size

and one of them has an en-suite.

The main bathroom is in pretty good condition.

Can this place get any better?

MUSIC: "Amazing" by George Michael

# I think it's amazing

# I think it's amazing...#

Huh! You open a door expecting to find a cupboard

and there's a set of stairs.

I can see straightaway that whatever is up here can't be classed as habitable space

because these stairs are far too steep.

They don't pass current Building Regulations,

and I doubt there's things like fire escapes or soundproofing,

that you'd need if you were to use this as, say, a bedroom.

But somebody put floorboards down, they put in roof lights,

and they've turned it into a pretty sophisticated storage area.

For a flat like this, it's a nice additional thing to have.

But don't you dare say there's an extra bedroom up here. There isn't.

# It's not true...#

You could spend money on doing a proper attic bedroom conversion,

but that won't come cheap.

It would also involve architects and satisfying Building Regulations.

But think what you could end up with -

a four- or even five-bedroom flat.

The rewards could make it well worth doing.

This flat just goes on and on.

It's even got its own back garden. And that's not all.

A real bonus to the flat is that it comes with this garage.

It's detached from the property itself, but it's not too far away.

So what would you do with it? You could keep it with the flat.

Or why not think about selling it on?

A garage around here would sell for around 20,000 quid.

That's a nice bit of cash back.

Or rent it out. Again, parking is at a premium.

So, what do you reckon? 25, 30 quid a week?

Either way, it's a money-making thing.

It's almost a bonus to what is already a great place.

Well, I've yet to find fault with this place,

apart from sorting out that attic space.

So I asked a local property expert for his thoughts on it.

I was quite impressed by this property.

It's nice and bright, there's an open aspect, it's got a garden.

You've got four good, usable rooms

on the first floor.

The attic floor is an illegal conversion.

So that needs sorting out in quite some detail.

Whoever buys this should, as the first step,

get an architect and an engineer

to check the upper floor.

To make the attic legal

would probably cost between £10,000 and £12,000.

But it would certainly add, in my view,

at least £20,000 to the final value of the property.

Remember, the guide price here was £150,000.

How much could an investor hope to sell this place for

if they sorted out the attic rooms and renovated the flat?

If the shower room/WC is replaced and the kitchen is replaced

and the whole thing's in good order and the attic conversion legal,

I would expect the property to be worth £260,000.

And that includes the garage.

And there's the option to get £240,000 for the property

and another £20,000 for the garage.

You might even get an extra £5,000 for the flat

if the flat and the garage were sold separately.

It doesn't take a genius to see there's some money to be made here.

Also, as it's so handy for Edinburgh city centre,

it would be ideal for the rental market.

After renovation, and with the attic having been made legal,

I would expect this property to rent for £875 per calendar month.

There really is not a lot to dislike with this flat.

It's in great condition, good location,

and you've got the benefit of both the garage and the garden.

Let's see who fancied it when it went under the hammer.

I'm looking for an opening bid here.

Where do we start? I'm in your hands.

£130,000?

£130,000, straight in front of me. Thank you, sir. Bid of £130,000.

£140,000 on the telephone.

£150,000.

New place, £155,000. Thank you at the back of the room.

£160,000. £165,000.

£170,000.

£175,000.

£180,000 it is.

£180,000, in front of me.

At £180,000. £181,000, back in.

New place, £182,000.

£183,000.

£184,000, sir?

£184,000. £185,000.

Shake of the head. £185,000. It's still your bid.

At £185,000. I'll give you the chance of 500. Sir?

£185,500.

£186,000? £186,000. He's back in.

Definitely not this time?

£186,000, then. Are we all done?

Last chance.

-HE BANGS THE GAVEL

-Sold at £186,000. Congratulations, sir.

That successful bid of £186,000 came from Arthur,

who was bidding on behalf of his daughter, Amy.

She's a department manager at a supermarket.

So was this a bargain buy?

She paid £36,000 over the guide price for this flat.

But something tells me she's got a good deal.

-Amy, lovely to meet you. Congratulations.

-Thank you.

-Tell me why you wanted to buy the house.

-OK.

My brother lives round the corner from the property so I know the area quite well,

and I was visiting him one day and noticed the house was up for sale.

When I looked closer it actually said it was up for auction.

So I came and viewed it

and then got excited about the prospect of owning it.

Right. So what did you think when you walked in?

I didn't know what to expect with an auction property

because you see horror stories on the telly.

Then, when we came and looked round, it was quite a surprise

in terms of the condition and the size of it.

So, yeah, pleasantly surprised.

I can see Amy's already fallen in love with this flat.

But she was surprised to come away from the auction as its new owner.

At the auction, I went with my dad.

I'd set a limit of what I could basically afford.

-Which was what?

-£181,000.

I gave my dad the "You need to bid" because I would be too nervous

and get scared of spending that amount of money.

I gave him it, and it started creeping up.

I thought I had it at about £181,000,

and then somebody else new started bidding and he kept going.

I thought, "What is he doing? I've not got any more money."

Got it for £5,000 more than what I was thinking I'd pay for it.

-HE BANGS THE GAVEL

-Sold at £186,000. Congratulations, sir.

But we've sorted that out between us.

-That must have been an interesting conversation post auction.

-It kind of was.

But he'd come to look at the property with me

and he thought it would be worth the extra £5,000 in the long term.

Tell me a bit more about you.

I'm currently living in Edinburgh.

I have a flat round the corner that I've sold to enable me to buy this.

So I'm looking to move into it by myself. May get a flatmate.

Not quite sure yet what's going to happen.

-What do you do?

-I work in a supermarket.

-Great. OK.

-So you're doing this up as a place to live in.

-For myself to move into.

My plan is to move back to my parents' for a couple of months,

do it up, and then move back into it.

So Amy has shopped wisely.

But how does she feel about paying £36,000 over the guide price?

I actually think it's worth it because of the size,

and there's potential in terms of converting the attic,

which has been done, but I don't think it's been done through the formal channels,

getting Building Control on it.

So that potentially would put added value on later down the line if I choose to do that.

The flat's in pretty good condition as it is.

As Amy overspent at the auction,

she really doesn't have much left to do it up.

Short term, what will you do?

I'll probably do a lot of cleaning to start with,

see what I can keep in terms of carpets, that type of thing,

and then it's going to be just decoration.

I've got furniture that I'll probably bring with me

and start from there.

The bathroom and kitchen,

when I get a chunk of money, I'll probably do them up.

A garage comes with this property. What do you know about that?

Actually, at the auction I was approached as I bought the property

by a lady that has a flat or a property in this street,

and she wanted to purchase the garage separately from me.

So I've got her details.

I'm weighing it up to see what I want to do with that,

if I want to sell it off

or whether I'm going to just keep it.

Well, congratulations. We look forward to seeing how you get on.

-Lovely to meet you.

-You too. Cheers.

Amy seems delighted with her new home,

and quite rightly so.

Not too much work to be done.

The question is: is she going to sell that garage?

My experience is you always regret those kind of things in the future,

so I hope she holds on to it.

What will she decide? You can find out later in the show.

Well, time has flown by.

But have the new owners had much success with their properties?

Let's go back and check out what's been happening.

Stoke-on-Trent is a collection of six older towns in the West Midlands.

This three-bed semi in the suburbs of one of them, Bucknall,

wasn't just a house and garden.

It was a house, garden

and potential building plot.

MUSIC: "Good Thing" by Fine Young Cannibals

But it was also situated next to the local electricity substation.

However, for surveyor and construction firm manager Ian,

the potential was too great to resist.

What are you going to do with it?

The house is going to be renovated and rented.

The building plot it looks like I've sold already.

-How much money have you been offered to sell that?

-£35,000 for the plot.

-Wow!

So, having bought this auction lot for £95,000,

armed with a 10 grand budget,

Ian set about sparking the house back to life,

while maximising the capacity of the garden plot.

Now, three months later, we're back to see how he's got on.

Well, it's a case of new doors and windows for the exterior...

while inside, patterned carpets and textured wallpaper have given way

to a more neutral, calmer look.

Erm...

We've taken the carpets up,

levelled the floor because it was slightly out of level,

redecorated, taken the lovely stone cladding off,

together with the gas fire.

But all that went fine in here.

So it's out with the rough and in with the smooth.

And that rather dated kitchen is now a thing of the past.

We've taken out all the existing units,

made good the plaster, retiled it,

and we've discreetly hidden the meters in the cupboard

because they were on show before.

Oh, a new door, and obviously new windows throughout.

The full refurbishment continues upstairs,

as they've prepared the house for the rental market.

The decoration, we just painted the walls.

Got rid of all that flowery paper, got rid of the flowery carpets.

Ian had originally thought about keeping those carpets.

But, luckily for all of us, he was overruled by his wife Claire.

He worked on the finish and the look of the place.

I got involved with the kitchen and the bathroom,

choosing the tiles, the vinyl, the carpets and things like that.

Apart from the help of some joiners,

most of the work was carried out by Ian and Claire.

Presumably, with Ian being managing director of a construction company,

he calls all the shots.

No, I'm the boss.

Well, whoever's top dog, between them they've managed

to create a house ready for the rental market,

with a new kitchen,

refurbished bedrooms

and contemporary bathroom suite.

Of course, the auction lot came with more than just this house.

MUSIC: "More Than This" by Roxy Music

The land is sold. I got an offer the first time you came.

It is sold now and planning has gone through for a detached house.

Three bedrooms. It'll be slightly larger than this one.

And there's a condition of the new building going in.

A driveway's got to be put to this building as well.

Ian bought the plot and house for £95,000,

so, having sold the land for £35,000,

in effect he's only paid 60 grand for the three-bed property.

How much did he then have to spend to prepare it for rental?

£8,670 approximately.

So I'm under budget as well.

There's quite a lot of bargains - windows, doors, that sort of thing.

So one or two more savings than I thought we'd get.

Ian may have spent £8,670

on the property,

but, as he's already got £35,000 back for the plot,

he now has around 70 grand invested in the house.

So was it a good purchase?

What do two local estate agents think?

I think the changes have been very good.

It's all neutral, clean, fresh, all the way through.

Obviously, new windows, new kitchen, new bathroom,

basically everything that needs to be done.

The house is really well presented.

They've done a nice job on the finishes.

Quite basic, but it will appeal to a wide range of buyers.

There is three good-size usable bedrooms for the property.

For this budget and price range it's definitely a selling point,

because very often you get two bedrooms and a very small box room.

Having the building plot next door

will cause a bit of disturbance to the existing tenants.

But if it's managed properly I don't see it being a problem.

There may be some disruption, and the proximity of the new house

may lower the value of Ian's £70,000 investment.

But is there still a potential return?

I would place this on the open market for sale purposes

in the region of £90,000.

At the moment I think this property would achieve around £85,000

if he were to sell it.

Quite happy with that. £85,000 to £90,000, with the market as it is.

I would settle for that, and hopefully in the future

prices will rise.

But I will be renting and get a tenant as soon as possible.

With a possible 15 to 20 grand resale profit

it's pretty encouraging.

But this purchase was all about putting it on the rental market.

The demand for letting this property would be very high.

It's ready to move into, done to a good standard.

The income would be in the region of £450 to £500 per calendar month.

If they were to rent this property, they would achieve in the region of £400 per calendar month.

I was expecting about £425,

so I suppose I'm in between.

Even £400 a month is £4,800 a year

or a steady seven per cent yield.

So it will certainly pay its way and has allowed Ian to move on.

Very pleased with the outcome of the whole scheme, really.

And I would have thought,

if something similar came up in the future,

I would certainly buy something like this again.

We're back to leafy Liberton in Edinburgh now

to catch up with supermarket department manager Amy.

She bought this two-bed flat for £186,000 at auction,

although no-one was more surprised than she was.

I'd set a limit of what I could basically afford.

-Which was what?

-£181,000.

I gave my dad the "You need to bid" because I would be too nervous

and it started creeping up,

and he kept going.

I thought, "What is he doing? I've not got any more money."

Got it for £5,000 more than what I was thinking I'd pay for it.

But we've sorted that out between us.

The place was in pretty good condition.

It had the bonuses of a garage,

an overgrown garden

and two potential extra bedrooms up in the attic,

although the conversion wasn't done to Building Regulations standards.

Amy's been in the flat for four months now,

so let's see how she's settling in.

The work Amy's done so far has been mainly cosmetic.

But she's obviously been busy creating her dream home.

So, in this room here

what I've done is kept the colour scheme quite neutral.

Got some new sofas.

Because of the size of the room, they had to be that bit bigger.

There was also a wooden surround on the fireplace,

so what I've had to do is paint that white,

cleaned up the marble that was there as well

and got the fire gas-tested.

Because she overspent at the auction, Amy's budget is limited.

She decided to make up for her lack of cash

with creativity, elbow grease and some lip-smacking interior design.

# Kiss # SMOOCHY SOUND

I went online and looked at wall stickers.

And when I found them, there was a wide variety of things.

I found things that were a bit quirky but sort of my taste, a bit modern,

and could put them on the walls.

And it's not just the decorating that Amy's lent her hand to.

The garden was suffering from years of neglect,

so she got stuck right in.

The garden had severely overgrown.

Trees had to be cut down.

There was bramble and raspberry bushes that had overgrown so much

that it wasn't even worth keeping anything that was in the garden.

So I've put a membrane down and I had to put chips onto it

so it'll be minimal in terms of having to do any gardening,

because I've not got a lot of time out with work.

And I'm on to the next part of the garden, this part here.

I've taken the turf off, I'm going to put new turf down

and some flower borders, that type of thing.

Until she started the work, Amy didn't realise

she was disturbing some of the existing residents.

MUSIC: # Foxy Foxy" by Mott the Hoople

There were foxes living in the shed, and fox cubs as well, so I had to do quite a lot of work.

I had to wait quite late, until the end of August, to do that

because the cubs had to be old enough to be able to move on naturally.

As well as being at the auction,

Amy's dad also helped out with a lot of work in the flat.

There's still plenty of work to do, but Amy's making the best of things

until her budget allows her to spice it up some more.

I've still got to do the bathroom, the kitchen and the hall.

I'm planning to do the hall in the new year

and the bathroom and kitchen when I've got money

to be able to do them as a one-off hit.

But again, Amy's been very creative with her limited resources

and has transformed the bathroom with tile paint

for a low-cost, short-term option.

She was actually offered £20,000 for her garage on the day of the auction

but has decided to keep it for the time being.

She's still mulling over plans for the second-floor rooms,

that don't comply with Building Regulations.

At the moment I've not done anything with the attic.

It's as it was when I moved in.

I just lock the door to the attic and pretend it's not there.

It's a long-term project so I just forget what's up there.

How much has she spent doing up her flat so far?

Initial budget I thought was going to be about £5,000,

and I'm a bit over that, I'm about £5,400.

And that was basically for redecoration and buying some furnishings for the house.

I haven't costed for the bathroom and the kitchen,

but I knew they would come at a later stage.

Along with the purchase price of £186,000,

that means Amy has so far spent a total of £191,400.

But has she added value?

We invited two local experts along to find out.

It's clearly a very manageable property,

an extremely well-presented property.

It's surprisingly spacious.

Cleverly, the main living accommodation is at the rear of the house

where it's quieter and has a green outlook over gardens.

A noticeable improvement, which is still a work in progress, I have to say, is the garden.

The owner has started but not completed

what looks like an interesting and exciting garden project

that should greatly add to the appeal of the property

in time to come.

So far so good.

But let's talk figures.

If we were to sell the property as currently arranged,

we'd hope to achieve something in the region of £215,000.

In the current market, I would estimate its worth to be

in the region of £220,000 to £225,000.

So, in the four months that Amy's been here,

she could make a pre-tax profit of up to £33,500,

minus the usual selling expenses.

That's a nice surprise, considering the current market.

I wasn't sure if anything would happen or if it might stay the same.

So I'm pleased with that.

What if Amy chose to become a landlord and rent out her flat?

The difficulty is it's arranged as two bedrooms

and, even though there's the ability to have another two sleeping quarters,

it can't be offered as a four-bedroom prospect.

As a result, that would limit the rental

to somewhere around £800 per calendar month, in our view.

In my view, it should be possible to achieve £750 per calendar month,

perhaps slightly more.

Amy always intended to make this flat her home,

and, looking to the future, she could increase its value even more.

The lady has gone probably about 70 per cent of the way

to transforming the property.

There are obvious areas for further improvement,

notably the kitchen and potentially the attic rooms upstairs.

I would estimate that, once the works had been done,

you could probably achieve £240,000 for the whole property,

with the attic converted to comply with current Building Regulations.

Amy's done a great job with her flat so far.

Judging by the work she's done here,

she might have just what it takes to be a property developer,

and I reckon she might have caught the property bug herself.

I quite enjoyed learning how to do things.

Every time I've had to get a tradesman in to do something,

I've asked, "How do you do that? How do you fix it?"

But also, my dad's an electrician, so he's changed numerous lights

and had to do things in the house for me, so he's quite handy,

and I've been pestering him to show me what to do.

Well, whether it's a bungalow, a mansion or a plot of land,

we'll be there to see what happens to it on Homes Under The Hammer.

So make sure you join us next time.

-Goodbye for now.

-Goodbye.

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