Episode 27 Homes Under the Hammer

Hello, and welcome.

Buying at auction can give you the chance to get hold of properties

that are in need of a bit of work.

Now, people like to put their own stamp and style on their purchases,

and hopefully make a bit of a profit along the way.

And you might be able to do that buying your home under the hammer.

We love the buzz and the excitement of an auction room -

you can really sense the hope and frustration in the air.

Yes, and you never know what's going to happen until the final seconds.

So, what's tempted the buyers on today's show?

Fulham in London has always been somewhere to pick up a hot property,

but this one beats them all.

Industrial strength heating, phwoar!

I first saw this Southampton property in 2008

and warmed to it straightaway.

I love it, let's hope there's loads of character inside.

And this Derby house might have come with a cool £52,000 guide price,

but I'd tread carefully...

FLOORBOARDS CREAK

Oh, dear.

These properties are being sold at auction and we'll find out

-who bought them and what they paid for them when they went under the hammer.

-It's yours.

I'm in the affluent area of Fulham in southwest London.

It's home to two Premiership football clubs - Fulham and Chelsea -

who, over the years,

have had a few Derby Day pitch battles, and I'm sure the lot

I'm here to see would be in the Premiership of auction properties.

It's huge, so it's going to be attacking you on all fronts.

This auction lot is in fact two separate houses, which have been subdivided into six flats.

They may look elegant from the outside,

but were until recently a council hostel.

The properties are leasehold with 50 years remaining,

and the guide price was a whopping £525,000.

So through the front door and the entrance foyer into the first flat,

and, well, not a bad-sized space.

Actually, it's a bedsit,

but high ceilings, which is always a good thing.

Clearly kitchen - ha! - in need of a bit of tender loving care.

Thankfully the bathroom is slightly better and it's a good size.

But as starting points go, not bad.

So onwards and upwards to the first floor where there are

another two flats, one on either side of the stairs.

So, a similar layout on the left-hand side of the top floor,

but on the right-hand side of the top floor it kind of gets a bit complicated.

Another good-sized flat, but the issue here is this is actually

a flying freehold - that could introduce a few complications.

This flat sits above an office which belongs to

the next-door property -

that's a flying freehold, when part of one property extends over another.

It can make a mortgage difficult to obtain,

so the leaseholder will want to speak to the freeholder to make sure there are no complications here.

And we're not done yet - down in the basement there's yet another flat, making four in total.

Well, all good so far, but in case you'd forgotten, there's a whole extra house to see yet.

Next door there's more of the same - a flat on the first floor and another one in the basement.

On the ground floor though, things start hotting up.

In a place like this, one of the big considerations is going to be the central heating

and hot water supply, very expensive to replace,

but in this case, not a problem - it's all been done and look at this.

Industrial strength heating, phwoar!

# It's getting hot in here

-# So take off all your clothes

-I am getting so hot... #

And if that's not enough to get you hot under the collar,

there's also some office space on the ground floor that could be turned into one more flat.

At the moment the room feels rather drab and dreary, but since we're in

one of London's most sought-after areas, transforming these dingy hostel bedsits

into stunning studio apartments might well be worth the challenge.

They also have planning permission already guaranteed to be turned into two houses.

The guide price for this place was £525,000.

I invited a local estate agent to give his opinion.

First impressions are, wow - a lot of work,

but also a huge amount of potential in terms of the location.

It's just getting it right for what your own purpose is.

If I had bought this, I'd be looking at keeping them all as studios, rent

them out, possibly make them one-bedrooms and do the same.

They're in the right layout, they just need a little bit of TLC and

then obviously people with the location would be delighted to live here.

With a top quality refurbishment, how well could the flats do on the rental market?

I don't think you'd have any problems getting these at £750 per month per unit.

So six flats at £750 a month is a total monthly income of £4,500.

What about sell-on values?

I think you'd be looking at £175,000 up to the £200,000.

Those figures could mean a combined resale value of as much as £1.2 million.

Well, a real double bonus for this place, two properties and the chance

to double your money, but don't underestimate the amount of work

it's going to take, so it's probably going to be a developer that took it on, when it went to the auction.

600 on this, where do you wish to start, I think it's worth six?

Standing up 500, 505 anywhere?

505, 510, 515...

520, 520...525.

At 525, madam. 530.

Despite the slow start, this hot property was off and running.

Eventually, the bidding was between two determined parties.

683. 684, 685...

686, 687...

688, 689... 690?

690, you can't stop on 89!

689 with the gent on my right...

690? Must be worth it, if not it's going at 689. Anyone else?

That's 690... 691, 692...

693, 694... 695, 696...

697, 698, 699, 700...

701, 702... 703?

702 with you, first time, second time, third and last time if you're all done...

Sold, 702, well done.

After a titanic struggle, the triumphant bidder was Stephanie with her bid of £702,000.

Stephanie actually works next door

from where she runs her marketing company.

She's had her eye on these properties for some time.

# We can do it, we can do it

# We can do it even better with broken heels. #

Stephanie, congratulations.

-Thank you, Martin.

-So tell me why you wanted to buy it.

I bought the building next door 13 years ago,

and for the last 13 years I've been trying to persuade the council to sell me the lease.

So when it went up for auction with residential planning permission it was a no-brainer.

After 13 years it would have been sad not to get this building, really sad,

and I would have had to sit next door to it every day

watching the building works unfold, so yes, good.

You would have gone mad, basically.

I think I would've had to move offices!

The day you got it then, how did you feel?

Scared, elated, and I was approached immediately after

the auction with an incremental bid to sell it on, so very happy.

-Tell me more.

-For a significant amount of money more.

-How much?

-I can't tell you that.

-Why can't you tell me?

More than £150,000 more than I paid.

What, the day after?

The day of - two minutes after I bought it.

Well, why didn't you take the £150,000 there and then?

Because there's more value in developing this as it is, obviously.

-Money in the bank though.

-Mmm, speculation, yes.

Obviously it's leasehold, does that affect you?

I own the freehold so I'll marry the freehold and leasehold.

-You own the freehold of the whole building?

-Exactly.

-Wow.

The flying freehold is of no concern now, as Stephanie owns the buildings

and the land they're built on.

So what are her plans - to keep them as flats or return them to houses?

Why are you so excited about this then, what are you going to do to it?

It's a prime position, it's a great building, I love the building,

and I think it could be very useful either as houses,

for which it already has planning permission, or even better for apartments,

which I'm going to apply for planning permission.

And perhaps in the future I will marry the buildings I own next door and make a terrace

-of two-bedroom apartments, which becomes a nice development deal.

-Wow, absolutely.

With a view to doing what, renting or selling them?

Probably selling them in the long term, perhaps renting in the short term.

So talk me through exactly what you're going to do then.

I applied for planning permission for two-bedroom apartments.

-How many?

-Seven, with a couple of studios included, so seven units in total.

Apply for planning permission for the building next door, my offices, to residential.

Subject to that, I've also got permission to put an upper floor on the top, and then see what happens.

-Wow.

-Yes.

-So this turns it into a huge, huge, huge...

-Quite a substantial building, yes.

In terms of doing this project, let's assume you get

the planning permission, any idea how much it's going to cost, how long it will take?

Probably about £300,000 to refurbish the two buildings and I would guess six months maximum,

taking it at a fairly slow pace.

So who's going to actually manage the project?

I've got a project manager who will do it all for me,

from the planning permission to managing a workforce, but I'll be next door

as a sort of uber project manager to just make sure the project manager manages the project!

They are beautiful buildings, I'd like to restore them to something of their previous glory,

they've been somewhat battered over the years, so it would be interesting to see them come back.

Stephanie has secured her mortgage and is using savings

to finance her grand plans for this elegant building.

Now listen, we haven't talked about one thing, which is the boiler.

-It is a work of art, is it not?

-Yes.

-Something to behold.

The first time I came in here I was amazed by it,

I thought it might actually be a nuclear force of some kind,

but we're going to have to put individual central heating units in it anyway.

-Ah, who wants the boiler?

-Well, up to you, make me an offer!

I'll be round here with my transit van.

That's an offer I might take you up on, thank you very much, Stephanie.

-You're very welcome.

-Good luck with it all.

-Nice to meet you.

-Thank you very much.

Well, a bit of a dream result for Stephanie but she's been a long time waiting for it -

to have the freehold and now the leasehold of the whole building,

and development potential? Boy, oh, boy,

it could make her a lot of money.

But it all hinges on getting that all important planning permission.

How is she going to get on? Find out later in the show.

Back in October 2008, I took a trip to Southampton to look not at the sea

or the boats but at an auction lot that had seen better days.

This is what I'm here to see, this rather grand-looking property. It's a Georgian mid-terrace

and it went to auction for a guide of £245,000.

And I love it. Let's hope there's loads of character inside.

There's certainly plenty of it outside. This four-storey property is

Grade 2 listed so it's protected by law and you'd be restricted in what you can do to change inside and out.

This whole building has been subdivided into two flats, so you

walk in the front door and up this flight of stairs with this gorgeous original staircase to the top flat.

Now through here is the sitting room.

In a Georgian house you'd expect to see panels doors, deep cornicing,

big feature fireplaces, a ceiling rose, shutters on the windows,

nine-inch timber floorboards...

not dusty pink bobbly carpet, woodchip wallpaper, storage heaters.

I mean, I do love the location, the windows are just beautiful,

it's got an amazing facade, but what a disappointment inside, there's just no character at all.

Such a shame, but if you went to town on this place,

put some features back in the two large bedrooms at the top...

..and transformed the pokey bathroom and that drab kitchen,

you could turn it into something really special.

Even better than that, you could reinstate both flats as one magnificent house.

Time to check out flat two now.

Sadly the entrance isn't as imposing, it's at the rear of the property,

however you do get off-street parking.

I wonder what the inside has to offer.

Well, a much bigger kitchen in this flat,

you could have a table over there.

You can see it's all been neutrally decorated although there's a bit of

a strange arrangement where you have to walk past this blocked in staircase to get to the lounge.

It is a good size, again you've got this beautiful feature window,

but it's all just a bit bland, bland, bland.

Down in the basement there's a double bedroom...

..one single bedroom...

and a small bathroom.

Those small windows make them all a bit dingy

and they're in need of a full refurbishment.

But there is one big issue with this property.

The whole property, ie both flats, are under one title on the Land Registry.

So as far as they're concerned this is still one house.

Because of this, it would be hard to get a mortgage.

Now, if you wanted to keep it as flats, you could apply for retrospective planning consent,

if you can prove it was divided into two separate dwellings sometime ago,

and then separate titles can be created and the property changed from freehold to leasehold.

But you would need legal advice and that would cost you.

Finding proof of division shouldn't be a problem -

you could probably get that from the council tax records,

but drawing up separate plans and creating leaseholds is going to be more expensive.

But it certainly could be worth doing when two-bedroom flats in this area fetch around £175,000.

This is a lovely period property in a prime location.

It is rather unfortunate that the flats inside

lack character, but you can always put back those period features,

although it can be a pricey exercise.

There's also the title issue to sort out but I think I've fallen a little

in love with this one. Will the new owner feel the same?

Let's find out who bought it at auction.

Lot number 10, £215,000 is what I'm looking for.

Somebody start the bidding at 215...

Gentleman in the back left-hand corner thank you. 217, thank you,

directly in front of me. 219, I have got. 221.

223 I have, 225... 227, 229.

231, 231 I've got.

233... 235, 237? 237.

238, 238 now bid against you. 239, 240...

241, left-hand corner. 242 here in the front.

243, 244... 245, 246...

247, he's made that bid. 248 here.

£249,000, is what I now need. 249 - he's nodding. 250?

250 is here. £250,000... 251?

Shake of the head.

Anywhere else in the room? Last chance, sir? £250,000 here.

£250,000 for the first, £250,000 for the second...

£250,000 for the third and final time.

Your property, sir, well done. Your number, please.

Robin made that successful bid of £250,000.

He was just on the right side of that 3 per cent stamp duty threshold -

one penny more and he'd have ended up having to pay an extra 5,000.

He was at the auction with his wife Sue.

In the last 20 years they've been buying and developing property,

and now their son Chris, who's a trained cabinetmaker, has joined the business.

Guys, congratulations, you must be so pleased you got this at auction day.

Extremely pleased. We are very enthusiastic about character properties like this

and keen to try and restore it to its former glory.

As you can see, most of that's been taken away.

With 20 years' property experience,

Robin's taking full advantage of the depressed market at the moment.

He's bought almost a flat a month for the last seven to

eight months and has now acquired this imposing Georgian house,

but what are they going to do with it?

It can either be two fabulous flats or a fabulous house.

It would be nice to get it really traditionally back

as a house and they're very scarce, obviously, Georgian townhouses now.

It depends on the finances,

I think initially we'll have it as two flats

and try and get some rental income to cover the loan interest.

We'll do a makeover on the upstairs flat so we can let that as soon as possible,

not necessarily do the full restoration,

but the downstairs flat we'll focus on here,

we'll fit a new kitchen in here, all the floorings,

probably put gas central heating and the fireplaces back in, and suchlike.

The family may still decide to reinstate this as one house.

For that reason, they're not planning to change the title deeds just yet.

Instead, they want to spend around £5,000

on a quick makeover upstairs and get that rented out within about a month.

They'll spend a further £15,000 and three months on the downstairs to get

some character features back into the place.

It's Mum's job to sort out the design.

I just want to put it back as it was.

It seems such a shame that a lovely building, a period listed building,

has been left to end up like this in such an awful state.

So your gut instinct when you first walked into this property,

did you think, "I would love to turn this into a family house"

or "This would be a great rental return, two flats"?

No, my first instinct was I'd love to live here.

-Really?

-That was my first thought.

I just love the building and put it back to a family home, but then

I get brought back to earth by Rob, and he says,

"No, we've got to finance this so we have to bring it down,

"rent one flat, we can do one up, we've got to finance this,

"you know, it's not that straightforward."

What do you know about the period building, have you done any research at all?

I've been to the city archives department and looked through all the old Kelly's Directories

and things like that. It's been lots of different things over the years,

it started out life as a single home with servants living in the basement

and originally it was set out by somebody called Laishley, who was a developer in the area.

This was sold as lots at auction.

Which is incredible, it's done the full circle!

Here you are buying it as a house at auction.

It was fascinating to find that, and actually see the plot marked on here

and it actually had a huge garden.

-Sue, good luck, I can see how passionate you are. Well done.

-Thank you.

That was in October 2008, and at that time they planned a quick

refurbishment on the top floor flat for a budget of about £5,000.

But when we first returned 10 months later, their plans had

changed and the speedy refresh had turned into a full-scale renovation.

After all the effort of stripping all that wallpaper, discovered there

was some plaster that was damaged that really needed re-plastering,

and thought this is crazy, we might just as well do the whole thing,

just go for it and do it properly.

Sue and Robin were determined to restore some character to this listed building,

so the top floor flat had been transformed with new flooring, coving, and period-style details.

The kitchen and bathroom had been given a luxury refit.

But there was still plenty more to do. Having set the standard with the upstairs flat, the challenge

was to restore and revive the rest of the building. We'll see how all their hard work paid off later in the show.

Coming up, on a trip to Derby, I found a house that will take a bit of straightening out.

That's not very good, is it?

It's been over two years since we last saw this Southampton property,

and it's been a real labour of love.

We've tried to bring back some of the life to the place.

But first, back in Fulham, is Stephanie counting the cost

of taking on such a large flat conversion?

Seven figures spent very happily.

Let's return to Fulham in London, and this elegant late Victorian building.

The exterior was stunning, but, after years as a council hostel,

the interior was tired and tatty.

The auction lot consisted of two houses subdivided into six flats.

It was sold for £702,000 to Stephanie,

who runs her own marketing company from the building she owns next door.

She'd had her sights set on the property for some time.

I bought the building next door 13 years ago,

so when it went up for auction with residential planning permission it was a no-brainer.

Stephanie was intending to turn these shabby bedsits into seven super chic apartments,

so we returned 20 months later to see if this development is progressing according to plan.

It might look a mess, but Stephanie's been thinking big.

She has come up with a much larger scheme for this building,

which has meant ripping out the interior and starting from scratch -

even the lovely industrial boiler's gone.

The building has pretty much been gutted,

all the walls have been taken out, a lot of the ceilings have

been taken out and all of the utilities have gone, so it pretty much is a shell.

Stephanie's been working closely with her architects to apply for

planning permission, but it's taken a lot longer than she'd first hoped.

We bought the property with planning permission for two family-sized houses,

we then applied to put on an extra floor

and changed the planning permission to nine one-bedroomed apartments,

which took us a while, but we got that about a year ago.

So Stephanie and her architects have got planning permission for two one-bedroom flats

on the basement level. At the back, extensions will be built

for the kitchens, which give access to private patio areas.

On the ground floor there will be a further two one-bedroom

apartments with open plan living and kitchen areas.

At the back will be the bedrooms, which will have access to balconies.

On the first floor, Stephanie will have a further three one-bedroom apartments.

The two apartments on the basement floor will have fantastic gardens,

which are going to be glassed over with conservatories

so they'll look really lovely, and then the balconies,

a lot of them have balconies on the outside

where you can place a barbecue, catch a few rays in the summer,

and then the bathrooms are going to be particularly lovely.

We've spec'd some really high quality beautiful white Italian sanitary ware.

Stephanie's got an eye for detail

and plans to appeal to the trendsetters of this fashionable area with a high spec finish.

Her upmarket tastes have taken her plans through the roof.

The new extension in the attic space will create

two extra one-bedroom apartments, so will maximise her return

on what will surely be a lofty investment.

In terms of the overall budget, it's going to be into seven figures,

which is a really exciting and slightly scary figure.

However, we anticipate that we're going to make quite a good return on that figure as well.

So seven figures spent very happily.

So Stephanie's spending more than £1 million on renovating her purchase.

To ensure she is getting a premium price for her prestige development,

she's been involved every step of the way.

Although progress has been slow, her belief and her vision has been unwavering.

# Don't stop believing... #

It's been a real labour of love.

I worked very closely with the architect and the planners and have

personally spec'd every single item in the apartments,

from socket covers to window architraves to balconies.

So I have a real good working knowledge of all the apartments, and a real love for them.

But this property is full of surprises.

Remember that flat with the flying freehold?

Well, whilst waiting for planning permission for the rest of the building,

Stephanie decided to try her wings on the rental market.

She gave the overhanging flat a quick refurbishment and has been letting it out for a year.

The flat is currently empty and, I must say, if this is Stephanie's

idea of a temporary makeover, I can't wait to see the real thing.

She's appointing her building contractors very soon and expects the work to take nine months.

I'm really looking forward to getting towards the finishing stages

and just to see how a building which is really iconic in my view can be

restored to its former glory, and then obviously just seeing some very happy people living here I hope.

We've invited the estate agent who viewed the property previously

to give us his opinion on the work so far.

Second time in the property, you can see they've made a lot of changes.

It's really opened up and you can get a good sense of the space, it's very good.

Having perused the plans, what does he make of the layout here now?

I like what they're doing, in them all being one-bedrooms, I think it

will work very well for the location and for the area.

And what about extending up into the mansard roof?

Any option that you get to extend going up into the mansard will obviously add value.

It's a great way to increase your internal space and if you can get

two extra units out of it then it will definitely increase value.

That could be good news for Stephanie -

remember, she bought the building for £702,000

and her budget for the work has shot past the £1 million mark.

But if she sells on, what price does the estate agent think each property could achieve?

Looking at an average for all the flats in the building,

I will be working at an average of £300,000 for each unit,

which brings the total building up at a value of £2.7 million.

That's an impressive figure, but Stephanie's done her research, so does she agree with that valuation?

I think that's a little low as a valuation. We've obviously

done our research and taken some other valuations

and we'd be looking at a significantly larger sum than that.

Stephanie seems to have set her sights high.

She's an impressive lady running her own busy marketing company

whilst also managing this ambitious development.

I'm hoping that once we appoint the contractors,

I'll have some downtime, but I expect it to be full on thereafter for the next year or so.

While Stephanie looks forward to a little downtime,

I look forward to coming back and seeing the finished properties.

I'm in Ulverston, a large residential suburb of Derby in the East Midlands.

One-and-a-half miles from the city centre and I'm here to see a three-bed mid-terrace

at a going price of £52,000, and this is it.

Good news - it's got double glazing. I noticed something else as well,

these plastic plugs. That indicates some kind

of an injection damp-proof course has been put in.

That's good, hopefully the damp didn't cause too many problems inside.

There's only one way to find out.

There's also apparently a relatively new roof too, a bonus,

so let's hope any issues the house may have had with damp are now behind it.

Oooh!

Oh, dear, straightaway it feels to me like...

CREAKING

..the floor in that corner of the room here is, er,

well, as you can see, terribly unstable.

That damp looks like it might have caused a problem

and more indications of damp there, and it's still quite damp.

Oh, dear, that as well.

There's a crack all the way up the wall there, as you can see,

somebody's tried to fill it in with, basically, simple filler

and, over time, it's actually cracking more,

which is quite worrying because it's obviously continuing and getting worse.

But trying to sum up a positive thing to say, good size for a lounge.

Well, try as I might to like this property,

I'm really struggling to get into the swing of what's going on here.

DOOR STICKS

Well, that's not very good, is it?

That's the door from the rear sitting room into the kitchen

but as you can see, that doesn't really shut.

That is a classic indication that there is some settlement in the doorframe or whatever, not good.

But continuing through the property into the kitchen,

it's not a bad size, although as you can see the units are fairly tacky.

OK, need to replace the kitchen. It's the settlement...

In fact, if you look at that doorframe you can see it's all over the place.

Let's see if we can see anything outside.

Oh, hang on a minute.

Even that doorframe doesn't shut properly. It's not good.

Here at the rear of the property, a pretty decent-sized garden.

It needs a bit of tender loving care, some new fence there.

Largely paved, which is good news, low maintenance if you're going to rent this place out,

which is a big tick in the box.

While we're here, you can see the rear of the property,

largely rendered, so I can't actually see if there are any cracks on the outside as well,

but there do seem to be lots of places where these various bits of piping have been leaking.

You can see the staining.

So maybe that's had a bad effect inside.

There's also a lot of drains out here, maybe they need investigating.

It's all pointing to my mind... to getting a surveyor round.

Upstairs there are two decent sized double bedrooms at the front

and at the back is bedroom number three.

Well, it is the third bedroom but it's not really that usable,

because the main toilet and bathroom is accessed through it, so not ideal.

Your solution here is probably put some kind of corridor in, I don't think you can do that.

I think you going to end up losing this bedroom or just accepting it like it is.

While I'm up here, more examples...

..that the house isn't in that good a state.

This place really does trouble me, there are layout issues,

some cracking doors, wonky doorframes, and some signs of damp.

To be honest, at present, it's only that £52,000 guide price

which makes it tempting at all.

But does the auctioneer who sold it think there's anything structural

to worry a buyer here?

As you glance round, it's evident there's a few cracks in the place.

I don't think it's anything

that's not routine there - an older property that's been here for a long time.

It's not going anywhere. It's just a question of filling them in and redecorating.

I'm still a little concerned,

but what about the other negatives like the bedroom/bathroom access issue?

I don't think this house is really ever going to be anything more than a two-bedroomed house.

The third bedroom you walk through to the bathroom

is never really going to be a bedroom unless it was a nursery.

You could put a computer in there, it's usable space, but I think it's only ever going to be two bedrooms.

Would this make a better buy to let or to sell, what are rental and resale values like in this area?

There's a lot of investment property around here, simply because it's relatively low cost to buy.

So there is a rental market, yes, and I would say its value would be around £475 per calendar month.

If this was done up and for sale, I would say the asking price would probably be around £85,000

and you'd hope get 80.

There's a finite value to a property round here and they don't sell that readily,

that's why many of them are bought for rental purposes.

Well, that guide price of £52,000, certainly offers scope for a good yield on this one

as a rental opportunity.

But I am a little bit concerned about what a surveyor would find if he checked this place out.

Let's hope whoever bought it had a survey before they did so. Let's go to the auction.

Tidy little house, ladies and gentlemen,

good investment material, lot number seven, guide of 52 plus.

Where do you want to be on this one, 48,000? 48 is bid here, thank you, that's £48,000.

48,500, at 48,500.

49, 495. £50,000.

51, 51, 52 is bid.

At 52, 53? 53? 52 I have here. I'll take 500?

At £52,000 it's going to get sold, at 52,000 for the first time,

52,000 for the second time, third and last opportunity, any higher bid?

Sold at £52,000, thank you.

The final bid of £52,000, spot on the guide price, was made by Leicester-based businessman, Ramnik.

He's director of his own babywear company, he and his wife, Veena,

also have a number of rental properties, so they're no strangers to property purchasing.

-Veena, Ramnik, lovely to meet you both, congratulations.

-Thank you.

So have you bought some investment property like this before?

Not the old ones, we bought a house in new build, this is our first old property that we have bought.

Why have you avoided older properties up until now?

Never got round to it, actually, we just started with new properties and it was working.

So I just kept at it really.

But in the current climate, Ramnik has decided that renovating older properties

would give him a better return on his investment.

So this house is something of a trial run, a new sensation, if you like.

It was the £52,000 guide price that attracted them,

as they felt, financially at the least, that it wasn't a massive risk.

But there's a big difference between buying a new build

which comes with guarantees and compliance with regulations,

and an old property with no such reassurance.

So this house particularly, what are you going to do to it?

Well, when we had it, I didn't think that we might have to do that much to it

but, since then, I think we might be replacing a few items,

probably doing the kitchen, to do as much as I can within the budget that we have in mind.

Right, what is that budget?

-I was thinking of about eight grand.

-OK.

-£8,000.

There do seem to be some structural problems, don't there?

-There's a few cracks here and there, have you noticed those?

-No.

I didn't realise they were that bad, I thought they were just minor problems that could be handled.

We've seen a bit of dampness in one of the bedrooms but, other than that,

we didn't think it was that bad.

-Right.

-The cracks were there but obviously we thought it might be superficial.

It might be fine but it's worth getting an expert in to check it out.

I hope I haven't alarmed Ramnik and Veena too much

but it makes sense to get a property like this checked over by an expert,

especially when you're not familiar with the problems common to older buildings.

The couple have only allocated themselves two to three months to get it ready for tenants

so they need to be certain there is nothing major to be done

before starting on the new kitchen and redecoration.

So after this, then, what's the next project on the horizon?

Well, if it does work out the way we are planning

and it lets out, then we'll be thinking of a couple more

in the area because it seems to be all right.

Congratulations, good luck with this, and I look forward to seeing how you get on.

-All the best.

-Thank you very much.

Well, I hate to be the bearer of bad news

but I think it is really important that Ramnik and Veena know

that there might be a few more issues with this property than they are expecting.

How are they going to get on? You can see later in the show.

Well, finding good trades people is a key to getting a property done up well and on time

but sometimes people choose to do the work themselves to maximise profit.

So have today's buyers being getting stuck in or just getting stuck?

It was back in the autumn of 2008 when I first visited a large Georgian town house in Southampton.

I say "town house", but it's been converted to two two-bedroomed flats.

It was not only in need of refurbishment but also crying out for its original features to be restored.

Step forward Robin, Sue, and their son Chris.

They bought the building at auction for £250,000

and hoped they might be the right people to bring it back to life.

It seems such a shame that a lovely building,

a period listed building has been left to end up like this

in such an awful state.

I'd just love to put it back to a family home but then I get brought back to earth by Rob and he says...

I think initially we'll have it as two flats

and try and get some rental income to cover the loan interest.

We'll do a makeover on the upstairs flat so we can let that as soon as possible,

not necessarily do the full restoration.

Initially Robin took the pragmatic approach,

aiming to get the property earning some return as soon as possible.

When we first returned 10 months later,

they had nearly finished the top-floor flat

and it seemed that Sue may have got her wish after all.

It was once we started working on it

and decided that we could make it reasonable to let

but then we got a bit carried away, interest rates dropped,

and after all the effort of stripping all that wallpaper and thought, "This is crazy.

"We might just as well do the whole thing, just go for it and do it properly."

So the top-floor flat got a full renovation,

putting back some of those special qualities that make this kind of property shine.

After that, they pushed on and finished the rest of the flat.

Now over two years since we first saw it, we're back.

Have they managed to finish off that downstairs flat

and restore this old building's original character and create stylish modern open spaces?

Well, if the quality of the kitchen is anything to go by, it's not half bad.

There's been rather a drastic change in here.

The original kitchen was just running along there and then just a huge space,

so now we've got everything all built in here with a large breakfast bar,

granite worktops, all the appliances.

It'll be a large social kitchen rather than dead space in the middle now.

Son Chris is a cabinetmaker by trade and has used his skills not only to produce the bespoke kitchen

but to put some character features back into this flat's sitting room.

We've completely changed everything in here.

It was pretty awful, replaced the ceilings, all the coving is brand new.

There was no fireplace there, but one interesting thing we did find

was a piece of the original skirting board when we actually dismantled all the fireplace.

So Chris has managed to reproduce that.

We've actually now got the new high skirting boards, managed

to run wiring through inside the skirting board as we were doing it.

Overall I'm really, really pleased with the finish.

Well, this room might hide some of its modern attributes, but there is no such modesty in the bathroom.

In this room we've travertine tiles throughout,

this towel rail and radiator is an auction site bargain,

the showerhead there, the LEDs there go blue

when the water is too cold and red when it's too hot,

it looks really nice.

Hi-tech might be the order of the day in the bathroom

but there's still some work needed to finish off the two bedrooms,

but overall they really are nearly there.

How did they approach mixing old and new?

There's a responsibility to some extent with older property.

There are so many that have been knocked down, demolished, abused, and it's actually been satisfying.

I think the nicest thing about what we've done here is the fact that we've tried to bring back

some of the life to the place rather than being just a bland, boring house with no features.

This blend of old and new is particularly apparent in the two-bedroom top floor flat.

Here fireplaces were reinstalled along with the appropriate architraving and skirting boards.

In addition, for the time being at least,

it's become a home for son Chris while the work was carried out downstairs.

How did the family delegate the tasks that were needed for this renovation?

Chris is naturally a carpenter and cabinetmaker and suchlike, he's done the majority of that.

Permanently been on site doing a lot of the work, from coving, doors, kitchen.

I've done more general things, mainly a bit of plumbing, most of the electrical work.

I'm sourcing everything, finding all the stuff and general dogsbody cleaning up, tidying.

-General site manager.

-Everything, and site manager.

There are some jobs outstanding, including separate leases for the two flats,

but as their double renovation comes to an end, even with the amount of work they've put in themselves,

there's always a cost to pay.

Probably the total spend is around £60,000 now.

Partially that's obviously interest over two years with the bank.

Robin and Sue bought the whole building for £250,000,

so with £60,000 spent, their total investment on the two flats

will be about £310,000.

Has their patience, dedication, and persistence in getting it done well paid off?

What do to local estate agents reckon?

I think the changes are great.

From looking at the property, it's totally unrecognisable.

The lower ground floor part reno is fine, I like it very, very much.

The added benefit is off-road parking.

Both flats are finished to a high standard,

particularly the kitchen in the ground floor flat.

A first-time buyer or young professional would love that.

The upper flat obviously has got a great feeling of space, the high ceilings, that sort of thing.

Every room is a good size.

The attention to detail and finish is very good indeed.

The only issue is lack of parking.

Ideally the family would sell both properties,

but if they could just sell one and rent out the other

that wouldn't be a bad option either.

I think both flats would probably rent at similar sorts of values,

one having parking, one not having parking, that particular value would be around £750 per calendar month.

I think they'll rent very well.

I believe you're probably talking about £850 per calendar month to £875 per calendar month.

-Slightly on the low side.

-Yes, I would have thought nearer £1,000

because the rental market is very strong.

Two years ago I thought they rated about £1,000, as I recall.

So maybe the rental figures are slightly lower than hoped for

but with a total investment of around £310,000, could they see any profit if they sold?

When we returned 14 months ago, a local estate agent gave the top flat

a value of around £220,000 and estimated the lower flat

would be worth at least £200,000 when complete, but the market has changed considerably since then.

The upper floor flat is currently on the market at £209,950,

which would be my recommended asking price at this moment in time, and try and wait out for a sale.

This flat, whilst being slightly smaller and on the basement level,

I'd look to go to market at around £175,000, the plus on this one being that it has got parking.

Recommends would be... upstairs flat, the bigger property, being about £210,000-£215,000,

and the smaller property but with the garden and the parking

I would say we're talking about £185,000-£190,000.

Upstairs I think that's probably about right, downstairs I think they've probably underestimated,

knowing exactly what's on the market at the moment.

I think it was valued about 200 last time, I'm not sure that it would go any lower than that now.

Well, again they may be slightly disappointed by the valuation,

but even at the lower values, that could be a profit of 75,000.

However, over the two years it's taken to do the building

there has been a significant change in the market.

So knowing what they know now, would they still have taken on such a considerable challenge?

I still would have done it, definitely.

Better than staying at home.

In the Ulverston district of Derby, a two-cum-three bedroomed terraced house came up for auction.

Although guided at just £52,000, it did have a few issues -

cracks, springy floorboards, and possible damp problems.

For company director Ramnik and his wife Veena this was a step into the unknown.

So have you bought some investment property like this before?

Not old ones, we bought a house in new build. This is our first old property that we have bought.

Sold for £52,000, thank you.

They paid spot on the guide price of £52,000,

and armed with an £8,000 budget, contracted the work out to a local firm.

The Leicester-based couple had their fingers crossed that the cracks and damp weren't major concerns.

Now, three months later, we're back.

Not surprisingly, from the street,

the house hasn't changed much because it was in reasonable condition before

but what's going on behind that front door?

They've certainly created a much more welcoming reception room...

..a warm and inviting dining area...

..and a terrific new kitchen.

Looks like Ramnik and Veena have really got into the swing of renovating old properties.

-Quite enjoyed it actually, didn't we?

-Yes, yes.

We thought we would have more hassle than we had, but it worked out smoothly, didn't it?

So quite pleased with it, that's why we are excited to try for another one.

They say a change is as good as a rest and it certainly seems to be the case here.

Upstairs the two main bedrooms are finished with fresh new fittings and curtains.

That troublesome third bedroom-cum-study looks much brighter

and the bathroom has been refurbished, complete with brand-new flooring, toilet and shower.

But what about the garden?

Well, when I first saw it, it was in a right mess

so we cleared the garden and all this fencing,

it was all damaged and rotten,

so we've replaced that, including the gate, and really it looks nice.

So after seeing it, we went further, painted all the walls as well,

looks a bit better now, that's brilliant. I'm happy with the job.

It's all looking good

and luckily it does seem that my worries about some of the structural issues were unfounded.

There was a major crack on the wall

so that was a bit of a concern,

but we found that it turned out all right

and a new skim and new paint did the job.

There was nothing major wrong with it.

Apart from that, we had some problem on the floorboards

because the floor had sunk down.

On opening up and taking the floorboards out, we found the joists were all rotten there

so replaced with new joists and covered with the new flooring there.

So it was all fine, and something Ramnik's builders could sort

without too much trouble.

How much involvement has he had himself here?

We worked once every other week or something like that.

Yes, it was once a fortnight

and I used to follow it up every other day, sort of,

just to see the progress.

So a little bit of checking up, a few visits and with Veena sorting out the interior design,

all Ramnik had to do was provide the money.

The total we spent, £8,500,

so £60,500 was, I think, with the legals as well.

Ramnik and Veena planned to spend around £8,000

on top of their purchase price of £52,000,

and it looks like they've pretty much stuck to their budget.

But have they invested wisely on this, their first renovation project?

What do two local estate agents think of the work that's been carried out here?

The work that's been done is very sensible,

all the boxes have been ticked -

new kitchen, flooring.

I think it's the right type of refurbishment for this type of property.

I think the standard of work has been done to a good standard.

The kitchen has been fitted to a good level, the bathroom,

and generally the property has been finished well throughout.

Although bought as a rental property,

it's still important for the couple to know

whether this type of house is a good investment of £60,500.

I think if the property went on to the market at £79,950, it would sell pretty quickly.

For property of this type and finish in this area, we would value the property at £80,000.

Which I feel would be achievable,

so it's about where I would have expected it.

I think 80 should be all right.

So before tax, that could be a healthy resale profit of almost £20,000.

How would it fare on the all-important rental market?

The rental market is very strong at the moment, especially in this area,

I would expect the property would let almost overnight at £450 per calendar month.

For a rental value for this property in this area I would recommend

an asking price of £450 per calendar month.

Dead on, that's exactly what I anticipated.

We are quite happy with 450.

£450 a calendar month would generate a very decent yield of nearly 9% per annum

and certainly makes this new departure worthwhile.

Now that the kids have grown up, I think we've got a bit of time

and I think this is quite relaxing

and we'll take our time in doing what we are

and hopefully go for a few more.

With time on their hands and their new-found enthusiasm for renovation,

it seems this Derby house is likely to be the first of many.

Well, that's it for now, make sure you join us next time for more Homes Under The Hammer.

-Looking forward to seeing you then, goodbye.

-Goodbye.

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