Episode 40 Homes Under the Hammer

Have you thought about a change of career

and trying something completely different?

Property developing appeals to many, offering a different lifestyle.

Yes. But it's not as easy as it might seem.

One good way to start could be by visiting a local property auction.

The lure of the auction room is very strong,

but what should you spend your money on?

Even if you have your mind set on a place, you may get outbid.

Yes. So you have to do your research on several properties

and keep your options open.

So here's what inspired the buyers on today's show.

This three-bedroom semi in Stoke certainly brings a splash of colour to proceedings.

Well, this hallway is what you call true blue.

In Plymouth, whichever way you look at it,

you'll need to watch your step here.

But at the moment it's kind of a work in progress, so tread lightly.

And in Central London, you're in for some surprises in this flat.

This is the kitchen.

Yes, it is the kitchen. It's absolutely tiny!

All these properties went to auction and we'll find who bought them

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

-Sir.

Stoke-on-Trent is famous for its industrial past.

It's also the birthplace of the one and only Robbie Williams.

# Let me entertain you... #

I'm just outside the city centre, in the suburb of Meir.

There is some of the most affordable housing in the country here,

but will today's auction lot entertain me? Let's find out.

I'm here to see a three-bedroom semi-detached house

that had a guide of £49,000.

The extremely pretty garden at the front makes up for

the crumbling paint on the exterior. First impressions are off to a blooming good start.

Well, this hallway is what you call true blue.

Let's have a look at this lounge.

Well, it's a really good space, great proportions in here

and this lovely bay window, you've got double glazing,

and nice views onto that well-kept front garden. I like to see that.

No central heating, just storage heaters,

I would upgrade to some gas, but a big space.

Let's have a look and see what's through here.

Oh, it's a bit of a stark contrast in this kitchen.

Not as bright and airy, but again, what I do like is the space.

You've got a lot to work with in here.

Of course, it all needs ripping out and modernising,

but there's enough room to put a big table over there,

you've got lots of extra space out there -

you could have a utility - you've got a downstairs toilet.

So, really, for the £49,000 guide price

I think you've got a lot for your money here.

Yes, you do, but it's going to require a lot of money

to put this back into tip-top shape.

At the moment, it's feeling rather sorry for itself.

# Such a crying, crying, crying shame

# It's such a crying, crying, crying shame

# Shame... #

Upstairs, there are two well-proportioned bedrooms

and one boxy one.

The bathroom is up here, too, which is good news,

as is the lovely garden outside.

The bad news, however, is lurking in the sitting room.

There's something about this house that could make it difficult to secure a mortgage

and in these economic climes, well,

you literally can not afford to jeopardise that.

Now, the problem here is this - used as fill material in house construction,

it first became common in the mid-1940s

and in the immediate post-war period,

when construction materials were in short supply.

Solid floors like these, comprising of concrete floor slab, overfill material proved popular.

Also, waste material, such as red ash, were promoted by the government

as being appropriate material for use.

So the result - bowed floors and cracked tiles.

It's the red ash reacting with the concrete

and it requires total removal.

So that is not going to be cheap.

So a potential banana skin for any prospective buyer.

What financial impact could this have on the renovation?

We asked a local estate agent for her assessment.

'This needs to be tested, because essentially it can cause problems with the construction.'

A typical test will cost about £140.

The results will be back with you within a week or so,

and you can then assess as to whether the floors need to be replaced.

Costs can be £7-£8,000, if this is necessary.

That will be quite a chunk out of anyone's budget,

so something to be particularly aware of when taking this on.

Aside from that, what about the property as a whole?

I noticed there's no off-street parking,

which would enhance the property and add to its value.

So if the future owners could in fact get approval from the local authority

to get a dropped curve in, that would be great.

This could add as much as £5,000 to the end value,

so I would advise anyone taking this house on to do that.

But once it's been brought up to scratch, how much could it be worth?

Once renovated, I'd put this property on the market at about £75,000.

What about the rental market?

As far as the rental market is concerned,

this property could achieve £400 per month, once it's been refurbished.

A nice enough property, but if it does have red ash flooring,

then it will be a costly house

and it will be harder to find a mortgage.

Somebody ran the risk.

Let's find out who that was as we go to auction.

Lot 27, a three-bedroomed ex-local authority semi-detached house,

needs a bit of updating.

35, then. Start me at 35.

35, I'm bid, thank you. At £35,000.

40, it is.

At £40,000. 45, now.

Take one if it helps. 41, on the front now.

At 41, on the front. 42, is it?

42, 43, 44, 45.

At 45,000, bid's on the front, against you, standing.

45, then, for the first time.

45, for the second time.

Third and final time, at £45,000.

You bought it. Well done, sir.

That successful bid of 45,000 came from Arthur, here on the left,

who was accompanied at the auction by his friend Ken.

Arthur's a full-time carer for his daughter, who has cerebral palsy,

and Ken's a self-employed electrician.

They plan to work together on this project.

So I met the two pals back at the property to find out more.

-Ken and Arthur, congratulations.

-Thanks.

It's very unusual and quite rare that you'd get a house under the guide price.

It is. It is, but I think we're just quite lucky with it, really.

Yeah, on the night, the way the prices were going, we didn't think

we'd get anything at all, but we dropped in lucky, I think.

-So who has financed this property?

-I have.

-Ken, what are you doing?

I'm just going to help Arthur. He's my friend, so just going to help him out with this one, really.

So, is this your first project?

Jumped in with two feet, didn't do a lot research but,

um...just jumped in there.

Got some premium bonds that I cashed in and I've got this house.

-Did you have any idea that it was a red-ash floor prior to auction?

-No.

So you did jump in with feet first!

I did jump in and then just prior...

before the auction on the night,

we were told that it might have a red-ash problem. So, um...

So you knew there could be a little problem.

There could be a little problem,

but now we've also found out that there's also no actual mains gas into the property,

so we've actually got to put a new line into the house, as well, which is more expense.

Have you thought about how to tackle this floor?

Are you going to rip it all up? Get guys in to do it?

Well, we don't know what we're going to do with it.

I think, obviously, we're going to have to have it dug up.

So, cost-wise, we probably will do a lot of it ourselves.

If we need help, we'll have to get help, but if we don't do it ourselves,

Arthur might find himself on the bad end of a deal.

And out of pocket.

That's something we don't want,

so we will be looking at this more than likely to do ourselves, really.

We have had a word with the neighbours

and, apparently, the one next to this, he's on wooden floors

and he says he's got a massive gap underneath his

and the one two up, he says has already been done.

They had to dig their floor up and do it.

So it is a problem in this area.

And a problem Arthur needs to put right

if he's to have any hope of selling this on.

His current budget is £10,000-£15,000,

so it's going to be tight if he's going to make a profit.

# Straight back down

# Come back down

# Straight back down, y'all

# Straight back down to earth... #

How long do they think it will take them to do the work?

We estimate three/four months to get it done.

So are you going to be working as a team?

-Not always we won't be, no.

-I'll probably be on it more than Arthur.

Ken will be on it more. I've got other commitments at home.

-I am my daughter's carer.

-OK.

So that takes up a lot of the time,

especially as the summer holidays are coming...

perhaps the odd day I might squeeze in,

but most of the time I'll be at home with my daughter.

And you'll be overseeing or actually doing the work.

Well, doing some of it - as much as I can really.

Anything to help Arthur out and just to try and get it sorted,

get the first one under your belt, isn't it?

How do you feel, helping your friend?

I'm more than happy to help Arthur out. It's no problem.

We've been friends for a long time

and we seem to be on the same wavelength

and this is the sort of thing Arthur wants to do and I like doing this, anyway,

so it's just a bit of bonus for me. So we're more than happy to do it.

So how did this come about? Over a pint or something?

Well, to be honest, I'm not quite sure how it came about.

I think we were talking about auctions and then we were on the auction site

and before we knew it, we were sat in the auction at Stoke-on-Trent

and Arthur was raising his hand.

# Cos I made my mind up you're going to be mine... #

Now, that's not a local accent, Arthur, where are you from?

I'm from the Shropshire-Welsh border.

So what brings you here to Stoke?

The auction, I suppose. The auction was local in Stoke,

so I bought the house and we're here.

It takes about an hour and a quarter, so it's not too bad.

I wonder if he'll still be saying that at the end of the renovation.

Ken and Arthur both live in Shrewsbury,

commuting two and a half hours every day

will really tot up over the duration of the project.

What is Arthur's long-term plan for this property?

Sell it on and get something a bit nearer home,

something a bit.. doesn't want so much doing to it,

but I'll do more research next time.

Guys, good luck with this. I hope the floor comes up OK.

-Great meeting you both.

-Thank you very much.

-Thank you.

-Ta.

You see, viewers, research is key when buying your property at auction.

Poor Arthur has found out the hard way,

but his nice friend Ken is on hand to help him out.

I hope he makes a return on his investment.

You can find out if he does later on in the programme.

Plymouth is on the south coast of Devon.

The city is at the head of one of the world's largest and most spectacular natural harbours,

so will today's property float my boat or sink without trace?

Well, the property I'm here to see is in Mount Gould,

a suburb of Plymouth, and this is it.

Three-bedroomed semi-detached, had a guide price of 90,000 quid.

Internally, lots of stuff, but externally, straight away,

what I'm seeing is, it needs a bit of kerb appeal.

The property is on a path leading from a cul de sac,

which stops about 50 metres away.

Unfortunately, it looks as though residents

have been using the path to drive on anyway.

The house itself could benefit from a bit of TLC,

although those windows do appear to be pretty new.

And so, what's in store behind the door?

Well, actually, not too bad.

Fairly standard, through the door, stairs up to the bedrooms,

you've got a lounge over this side here

and over this side, another lounge.

Actually, it's quite a nice, um, well, an attempt at being modern.

We've got one of those fireplaces with a fake log-effect fire.

I'd like to see something more traditional in there.

But it's not a bad-sized space, lots of light through the windows,

and patio doors out onto the garden.

And then through here to the kitchen

and it doesn't look to be in too bad condition, although, um, well...

No, I think if you just put a laminate floor down in here,

maybe spruce the units up, it would be serviceable.

The people who bought this house at auction

have wasted no time in getting stuck in.

They've already been in and removed the wall

between the kitchen and the lounge,

but it's left a whopping hole in the ceiling upstairs, as well.

I mean, I like what they've done, but at the moment,

it's kind of work in progress, so tread lightly.

Opening up this space is a great idea

and will help unify and modernise the lower floor.

Apart from finishing the removal,

the only work that really needs to be down here is cosmetic.

A good start, but what about upstairs?

So, a reasonable size double bedroom there,

a separate loo and bathroom.

Unfortunately, both quite small. I'm not sure how to improve that.

And then it starts to get a bit interesting,

because you've got two more bedrooms. This is kind of a box room

and then a second double bedroom on the front there.

Again, it has been improved by this bit of work that's been going on.

Still, it's not as big as I'd like it to be.

However, I think there may be a solution down there.

So there's scope to change room sizes up here

and move that bathroom. There's further potential, too.

The house benefits by being on a corner plot

and not only does that mean you've got a nice big garden,

but when it comes to increasing that internal space,

you've got room for an extension, either on the back here

or going out to the side of the property.

Now, that not only gives you the chance to turn this into a really big family house

but, in terms of rental potential,

it really puts it in a different league.

Lack of kerb appeal aside,

this is a decent-size property for that guide price of just 90,000.

There's plenty of scope to develop here.

We invited an agent from the auction house to give us his opinion.

'The property, typical ex-local authority. Good-sized rooms.

'Three bedrooms on the first floor, obviously, with the bathroom.'

'Downstairs, an open-plan kitchen, living/dining room.'

The property itself needs refurbishment from top to bottom,

so it will all need refurbishing completely

to make it a great family home.

How much could be expected if the house was rented out?

As far as rental goes, once renovated, somewhere in the region of £500 per calendar month.

And if sold on?

The property value is likely to be worth somewhere in the region of £135,000,

obviously once completed to a reasonable standard.

So work to be done to sort this place out,

but 90 grand, as a guide price,

is getting you a lot of house in a decent area,

so a good one to go for.

Let's see who fancied it when it went to the auction.

Lot 63, good size, three-bed, semi-detached house.

80,000, straight in.

80, for 63.

80...and a half.

81...and a half,

82...and a half. 83...half.

84, 84 and a half.

85, 85 and a half, 86...

..and a half. 87,

and a half.

88. 88 and a half.

89. 89 and a half.

90. At 90. A half, collectively.

91. 91 and a half.

92, half.

93 and a half. 94 and a half.

94 and a half.

95. 95. At 95.

At 95, a little one? 95 and a half.

96, at 96 and a half.

97 and a half.

98 and a half.

99 and a half. One. At one and a half. 101.

101 and a half. 102.

At 102, once.

At 102 twice, bid's on my left.

At 102, all done, at 102 and out.

Sir, yours.

With their bid of 102,000,

the new owners are husband-and-wife, Danny and Laura.

Danny's a self-employed window cleaner and painter-decorator,

while Laura's a support worker for adults with learning difficulties.

They have a two-year-old son, Max,

and have bought this as their family home.

-Laura, Danny, lovely to meet you.

-Thank you.

-Hiya.

-Congratulations.

-Thank you.

Tell me why you wanted the house.

We've sort of lived in this area, so we know it, it's local to us.

-You know the area very well.

-Yeah.

-It's a nice little part of Plymouth.

-Yeah, it's lovely.

What was it that appealed to the house? Was it just the size?

It was the area more than anything, because of the budget that we had,

we were looking at sort of areas that we possibly didn't really want to live in,

but that was all we could afford, whereas this one was ideal price and ideal location.

-Great. In a bit of a state...

-Yeah.

-But with something you can potentially...

-Work with.

-Work with.

-We weren't sure it was an ideal price.

-No.

-Because...

We had a budget of what we could go up to, you know.

If it exceeded, then we wouldn't have it.

-So what was your budget?

-115.

-Oh, right.

-So you got it within your budget.

-Yeah.

-Is this going to be your home for a while?

-Yeah, definitely.

-Yeah. Hopefully for life.

-Forever.

We wanted to buy a place that we could not move again, that's it.

-Oh, great!

-So hopefully this will be it.

-This will be it.

-OK.

Well, you've got a child, any thoughts of expanding the family?

-Yeah.

-Right.

-I'd like to, he's a bit unsure.

-Yeah, no, we will. We will.

So it seems as though the renovations the couple do

will be geared towards making this a real family home.

They've been quick off the mark, as they've started some demolition work already.

But what are their plans for the rest of the house?

We're going to put in a new kitchen, new bathroom,

obviously a damp-proof course.

We're going to re-render everything, new skirtings, door liners.

-Just everything new.

-Everything new.

-Right.

-To create the house that you want.

-Yeah.

-Yes, definitely.

Apart from this, which you've made open-plan,

which is fantastic, any other major plans for internal modifications?

The bathroom upstairs is small, so we'll move that to where the single toilet is

and make one of the bedrooms smaller. Well, just knock out the built-in wardrobe.

-Yeah.

-So you'll have the bathroom at the end there?

And the bathroom will be a wet room, or a shower cubicle room.

-So who is going to do the work?

-Me.

-Oh, really?

-The majority of it, yes.

-Right. Anything you can't tackle?

-Plumbing, electrics.

My brother-in-law is a plasterer and my uncle is going to fit my kitchen.

The rest of the it I can pretty much do myself.

OK, and have you got somebody in the family who can do the electrics and the plumbing?

-I think I have, if I ask them nicely. Yeah, my granddad.

-Oh, great!

So hopefully he can come in.

How much are you planning to spend?

-About £20,000.

-Oh, OK. Quite a healthy budget then.

Because it's going to be a family home, it'll probably be ongoing forever.

There'll always be something that I want doing!

You can't say that at the start of the project!

-No, I can.

-Break that to him afterwards.

-He knows me.

Yeah, don't I just!

And what's your involvement going to be?

I get to choose the nice pretty things to go inside.

-So the decoration and...

-But not too pretty.

-Not too girly, not a girly house.

-Not too girly.

-We're very good at compromising, aren't we? If you don't like something...

-It's my way or no way!

MUSIC: "Under My Thumb" by The Rolling Stones

So how quickly will it be sorted out?

I think in three or four months.

Well, listen, good luck with it.

-Congratulations.

-Thank you.

-I look forward to seeing how you get on.

-Thank you.

Well, how lovely that Danny, Laura and little Max

have got their first family home

and it will be a wonderful one for sure,

although I think there might be some fireworks

when it comes to exactly what they are going to do with the place,

although something tells me who will win any arguments!

You can find out how they all get on later in the show.

Coming up - if you're looking to downsize,

this London flat could be a good choice.

But it definitely needs a bit of a juggle.

We're going back to Plymouth.

Would Danny and Laura do it all again?

Maybe not on the scale of things,

not knocking down all the walls everywhere, but I would renovate another property.

But first we return to Stoke. How have the boys got on there?

It's been very good. The only thing that's been wrong is his singing.

When we were last in Stoke-on-Trent, Arthur, here on the left,

and his friend Ken were about to start work

on this three-bedroom semi-detached, which they planned to sell.

Arthur had bought it for 45,000 but they were going to split any profit.

Arthur is a carer for his daughter.

So his friend Ken, who is an electrician, and also lives near Shrewsbury,

was going to do a lot of the work.

There was a potential problem with the material used as filler for the floor,

which would possibly mean extra hassle and cost.

Now, have you really thought about how you are going to tackle this floor?

Are you going to just rip it all up?

Are you going to get guys in to do it for you?

Well, we don't know exactly.

I think we're going to have to have it dug up.

So we'll probably do a lot ourselves.

If we don't do it ourselves,

-Arthur might find himself on the bad end of a deal here.

-Out of pocket.

Well, nine months have passed

and we meet up again with Arthur and Ken back at the property.

The front garden has been changed considerably to accommodate off-road parking.

It's a shame to have lost the shrubs but it's a practical solution.

The doorway into the living room was right by the front door,

but now that's been moved further along the wall.

It's made the room feel much bigger.

Behind the living room, they've created a spacious open-plan kitchen diner.

They've moved the dividing wall at the far end a bit further along

and added a utility room,

putting a window where the door to the coal store was, as Ken explains.

Generally, with this room, we've actually took the two walls out

that used to have the larder and the coal house.

We put the new wall in to accommodate the kitchen,

we measured up the kitchen to suit,

and we're very happy with the outcome.

As you can see, it's come out quite well.

They've also retained the downstairs loo.

Upstairs, the neutral colour scheme continues in the three bedrooms.

The house has been re-wired and new central heating has been installed.

Arthur and Ken have been very busy.

Upstairs, walls have been stripped, the doors have been stripped, we've got new skirting boards

and the bathroom has been completely redone.

The bath is now where the toilet was and the toilet is where the bath was.

New shower, all re-tiled and everything.

So the place has been done up and is now ready to sell.

But what about that red-ash flooring? How was that resolved?

Yeah, well, we had a red-ash test

and from those findings, obviously, we did have red ash,

so what we did with that, we actually had to have it all dug up.

We got three quotes for that work. One was £8,000, one was £6,000,

one was £3,800, but in the end, we did it ourselves.

Not much has been done in the back garden. It's been tidied up, but still needs finishing off.

But the front has been completely changed and whilst it won't win at the Chelsea Flower Show,

the practical benefit should add real value here.

Well, what we've done out here, we've created, as you can see,

a parking space, cos there wasn't one here when we first moved in.

So we actually got Stoke City Council round,

so they actually dropped the kerb for us at a price of £616

and then we just excavated the garden ourselves,

which before there was quite a lot of plants.

So we moved them out of the way while we did it

and then we put five or six ton of stones down

and, as you can see, we've moved some of the plants around and it is as it is.

The water pipe into the house needed replacing and there was no gas supply,

so they've had that plumbed in, as well.

What effect has the extra expense had on the budget that Arthur had set - between £10,000 and £15,000?

We've spent, actually, just over 15,000,

but we have managed to do everything.

That's the dropped kerb, that's the new gas line that's gone in,

new water line that's gone in, and the floors.

Arthur's not been able to spend as much time as he would have liked here.

Remember, he cares full time for his daughter, who has cerebral palsy.

But the plan was always for Ken, a self-employed electrician,

to do the bulk of the work.

Has the partnership worked well?

We've got on all right, haven't we?

It's been very good, actually. The only thing that's been wrong is his singing.

Time now to see what two local property experts think of the house.

I think they've done a good job with it. They've stripped the property

right back to bare brick

and they've actually done quite a decent refit.

I think the property looks really great.

They've obviously paid a lot of attention to the detail and finished it very nicely.

The kitchen is very large, they've made sensible use of the space,

and it's more of a kitchen diner, and having a utility room attached to it is very useful.

With having the parking to the front of the property that's really going to help

with saleability and probably help to add some value as well.

Arthur and Ken have no intention of renting it out.

Their plan is to sell and hopefully make a profit, which they'll split.

Remember, Arthur paid £45,000 at the auction

and their budget has reached £15,000,

so that's £60,000 invested in total.

What is the property now worth?

My opinion of the re-sale value of the property is £89,950.

I'd put the property on the market for £84,950.

That valuation range of 85 to 90,000 would generate a pre-tax profit

between 25 and 30,000 before the usual selling expenses.

What do they think of that?

The way the market is at the moment I suppose between 85 and 90

is a fair value, I suppose.

It's a fair figure. I think we would definitely need to get the 85,000 mark to make it worthwhile.

For the effort we put in,

I definitely think we're worth that mark so we're looking at that.

This was the first property development for these two friends,

and it sounds as though there will be some profit in it in the end.

So what now for Ken and Arthur?

Well, a bigger picture for me is I obviously get back to work.

Arthur's a carer for his daughter,

so whatever he does now, it's up to him. But it all depends on the sale of this property, I suppose, really.

Yeah. It's the sale of this property and then I will be buying another one, all being well.

Would Ken be tempted to team up again with his mate?

Yeah, I will possibly think about getting involved with Arthur again.

We've done all right on this.

If Arthur wants me back. I don't think there's a problem with that.

Next up, we're in central London, and the postcode is W1.

You can't get much more slap-bang in the city than that.

We're in Marylebone, an area of London which is sandwiched between Mayfair and Regent's Park.

Now, it's home to that famous tourist attraction Madame Tussauds,

and also doctors, dentists and plastic surgeons from Harley Street.

Basically, it's a desirable place to be and no wonder, over the years

many a celeb has settled here

including Noel Gallagher and Madonna.

# The feeling is mine and I'm higher than the sky... #

And they're not the only star attractions in this exclusive area of London.

It's full of designer shops,

cafes and restaurants,

as well as great transport links.

# London Town... #

So, excitingly, what am I here to see today?

Well, it's a flat in this purpose-built 1930s apartment block.

It's just a short walk from the park, and, of course, Great Portland Street tube station is around the corner.

It went to auction at a guide price of £110,000.

Now, similar flats around here can go for three times that amount, so there must be a catch.

What is it? I'm going to go inside and take a look around.

The apartment block does have a rather grand facade -

let's hope the second-floor flat can match up to the frontage.

So this is the flat.

You've got a little kitchen, a little bathroom in here,

and this, a little room. So quite frankly, that's it.

But I don't care because this is in Marylebone, it's such an amazing part of London.

There is a lot of work to do. Straight away I'm thinking, right, where's the bed going to go?

Probably here. I'd like to think it could be a foldaway bed to leave you with the rest of this space.

But you've got lots of storage space here so anybody can put all their bits and pieces in here.

But it is quite small.

I think you'd need to think about how you could really improve this room

but you are looking at a sort of hotel room-pied a terre.

But for the right person, this could be a cracking buy.

# It's a small world after all

# It's a small world after all... #

Yes, it certainly is. But in central London every square inch is valuable.

The key to maximising profit here is to make the most

of the limited floor area, starting with the kitchen.

Now, I am laughing, because believe it or not, this is the kitchen.

Yes, it is the kitchen. It's absolutely tiny.

In fact, I'm not even sure whether you would get a cooker, a fridge, a washing machine in there. Hmm.

My wardrobe at home is bigger than that.

Now, the bathroom.

Not a bad size. In actual fact you could think about putting the kitchen in the bathroom but then

you've got to move all the pipe work, you've got a lot of plumbing going on, would it be financially worth it?

Probably not. And then I was thinking how about having this space as a beautiful walk-in wardrobe, lots of

mirrors in there, somewhere to store all your shoes, handbags, you know, the London market would like that.

You could then think about putting a bit of a kitchen area in the one main room.

So lots to think about with this flat but it definitely needs a juggle.

This is a leasehold property, so any major changes to the layout,

especially anything structural, have to be OK'd by the freeholder of the building first.

But even with its size, £110,000 was a low guide price for around here.

So what was the catch? So the flat is small but I have seen smaller.

It needs a refurbishment, but that's not unusual with an auction property.

Now the major pitfall with this apartment is that it comes with a very, very short lease.

It's just 17 years that's left so at the moment,

this property is unmortgagable, and it's for cash buyers only.

Now you can, however, re-negotiate a new lease with the freeholder

after you have owned the property for two years but the shorter the term left on the lease,

the greater the cost of renewal, so that is something to bear in mind.

Not extending the lease means that in 17 years the keys would have to be returned to the freeholder,

so despite its location this property could become a diminishing asset.

So it's a small flat with a big drawback.

The guide price was a very reasonable 110,000,

so we asked along a local estate agent to see what he thought of it.

It shows great potential. It needs some modernisation,

but flats in this building are quite sought-after,

and with the right work, it could prove a good sort of investment.

So the potential is there, but as that short lease is a major drawback,

how much could the buyer expect to pay to extend the 17-year lease?

I would estimate that you'd be looking at a ballpark figure

in the region of £150,000-200,000, to extend this lease.

Add that maximum figure to the £110,000 guide price,

and the buyer is already looking at a possible outlay of 310 grand,

and that's before any work is done.

Would a re-sale make it all worthwhile?

If you'd extended the lease and refurbished this to a good standard,

I'd estimate you would get in the region of 350,000.

If the wind is behind you, you might be 365, £375,000.

That would leave room to make some profit, but what about the rental figures?

Obviously, once the work has been done I'd estimate

you'd get £1,500 per calendar month.

Buy this property and you are buying a prime piece of London real estate.

Yes, it's small, yes, it needs work, but it's in Marylebone.

As with anywhere, it's the location that really counts.

However that very, very short lease is still a worry to me.

But did it put the bidders off? Let's find out when we head to auction.

So, lot 69. Who wants to start me off on this? 100?

Yeah, 100. Start there. 100 I've got.

Anybody else for lot 69?

How much? 102. OK, 102. 103, 104 at the back, come to you, 104.

105 at the front, sir. 105,

106, 107...

108, 109,

110 at the back.

111,

112, 113,

114 at the back.

No, it's with you, £113,000 at the front, it's against you at the back.

Anybody else? 114, new place.

Come to you, 115 at the front.

This prime piece of London real estate was being keenly contested,

so we rejoined the auction later when the bidding had reached 135,000.

It's with the lady. Bid's £135,000 for lot 69.

135 for the first,

135 for the second, 136, new place,

more competition.

137. 137,

138, 139.

139, 140, 141. No?

141? Cheap going at 150,

I would have thought. 141? 141.

142. Yes? No?

With you. It's £141,000 against the lady on my right.

141 for the first,

141 for the second, 141 for the third and final time.

Are we all done? Sold 141, well bought.

The successful bid of £141,000 was made by Susan.

She's a part-time property developer and full-time mum to four daughters.

She's originally from Dublin, but now lives in Surrey.

I met up with her at the flat to find out more.

-Susan, it's lovely to meet you today. Congratulations.

-Thank you.

-Why did you want to buy this flat?

I really like the street actually,

that was one of the things I think captured me when I arrived here.

And in a cul-de-sac, so you've got no passing traffic, so it's very quiet and it's just the area.

I like Marylebone, I think it's great.

Now, Susan, you paid £141,000 for this.

Yes. It was a little bit more than I had intended to spend.

So come on, be honest with me, how much had you intended to pay on the day?

Oh, um, 131 was actually my limit.

Oh. So you got really sucked in on auction day.

I did. I did, I'm afraid, yes. It's the excitement, and somebody else is bidding against you,

and you think, well, if you go away and you haven't made that last bid,

and I thought, overall, have a look at it and see how much it needs spending on it.

If I can maybe make some cuts on the amount that needs to be spent

on the refurbishment, then I'll hopefully recoup the money that way.

Now, the lease is incredibly short, you know, which means it's kind of really only cash buyers need apply.

That's right. I'd actually got finance from another property and then so had the money set aside.

So it obviously didn't put you off, the fact it does have an incredibly short lease.

It would have put a lot of other buyers off. How much research did you do in finding out

how much it would cost you to renew this lease, because that is something you are going to have to do.

I think even if I'm renting it out in the short term I'll get my money

back with the length of time that I've still got left on the lease.

And then obviously between that, between now and a couple of years, I'm in a position then,

with income coming in, to look at extending the lease and negotiating the best deal that we possibly can.

Susan has calculated that even if she doesn't extend the 17-year lease,

the rental income over that time could still mean a healthy profit.

# Time is on my side... #

Sounds like a canny move but then Susan has 15 years of experience

of investing in properties and building up her small portfolio.

I'm a full-time mum and I've got four children

and so I do this as a job

that I can fit in around my kids and buying property, doing it up,

maybe selling it or holding onto it and renting it out.

What do your kids say, because I suppose you are always rushing off

here and there, and coming into London, and choosing wallpapers and fabrics?

Well, they think it's always a bit mad but they quite like me testing things out on their bedrooms -

I change their bedroom colours quite a bit, so they quite enjoy it from that point of view.

And my oldest daughter is very keen, she's got her eye on this place and I think she'd quite like to have

a little pied a terre in London, but I'm afraid she won't pay the rent so that's not an option.

Because Susan went a bit over budget on auction day, she has limited

her refurbishment costs to 15,000 or less, if she can manage it.

She needs to get tenants in paying rent as soon as possible.

So to enable a fast turnaround, she doesn't plan any major layout changes.

How long do you think it's going to take you to get this place sorted?

I think that it's going to take probably about six weeks once I start getting people in doing

the estimates, measuring up and then obviously, you know, you're in a cycle then of waiting for people

to schedule in your work so I'm hoping within the next two months to have it ready for rental.

-Susan, good luck with this, I'm really excited to see how you do it.

-Thank you.

-I'm sure it's going to be stunning.

-Thank you.

-Lovely to meet you.

-Thanks.

-Thank you. Well, Susan seems pretty happy with her new property,

and although she's a self-styled part-time developer, she does have plenty of experience.

But will she really be able to achieve the high-end finish she wants in just a couple of months?

And will she use the space wisely?

We'll be back later on in the programme to find out how she does.

We hope our buyers have been working away on their investment and making themselves a nice profit.

Yes. Have they been busy, or has it all gone a bit quiet?

Well, it's the moment of truth. Let's go back and find out.

Back now to Plymouth, where earlier in the programme,

local couple Danny and his wife Laura bought this three-bedroom semi for 102,000.

It was to be their family home once they had refurbished it.

Laura would project manage, and as Danny's a painter and decorator,

he didn't waste any time in getting started.

He's already knocked down two walls and had grand plans for the rest of the house.

We're going to put a new kitchen, new bathroom, obviously a damp-proof course, re-render everything,

new skirtings, door frames, door liners.

-Just everything new.

-Everything new.

Well, it's now 13 months later,

and we meet up again with Danny, Laura and Max.

the property has undergone a massive overhaul.

On the ground floor the kitchen diner is absolutely stunning.

It has a real impact as soon as you see it with quality units, lighting and decoration.

Having removed a wall at one end of the kitchen,

Danny decided to build a replacement at the other.

We blocked up the doorway coming from the lounge into the kitchen,

so we could have units right the way round, put in plinth lights,

we added a French door so the entrance to the garden didn't have to come into the lounge,

and we think we've got a really good finish here.

The living room on the other side isn't quite as advanced,

but, as elsewhere, the walls and the ceiling have been re-plastered.

Upstairs, the layout has seen major alterations.

The toilet is now the main family bathroom.

To fit the bath in, they needed extra space,

so how did Danny change the layout?

Well, originally, this was just a cubicle toilet and we had a small bathroom so we knocked through

into the bedroom to make a bigger family-size bathroom

and then the original bathroom, we turned into a wet room.

We went for quite a modern look and contemporary look but the tiles were a bit more expensive than we

wanted to pay but, you know, we got the look we wanted at the end so we're very pleased.

Although the second bedroom has lost its wardrobe,

it's still a good sized room for their son Max.

Although be careful of your new bed, Max.

MAX: I just heard it crack.

The finish in the master bedroom is again superb.

So who has been responsible for the design?

The bedroom was my area,

so I chose the wallpaper and...

Well, I had to agree. If I didn't like it then we wouldn't have had it.

They still have some decorating to do in the third bedroom,

but since we last saw Danny and Laura, they've had some very exciting news.

The spare room is no longer spare, as it is now our next baby's room.

With a new arrival on the way,

everything is really taking shape in their new family home.

But achieving this high quality finish has taken a little longer than planned

thanks to some unwanted wildlife and vegetation in the dining room.

We had woodworm in the dining room so we had to replace the joists, the base plates in the floor,

and then when the floor was up, we realised we had mushrooms growing out the wall,

so we had to take half of the walls off again and redo all the plaster.

Outside, the garden still needs to be tackled,

but the inside is almost finished.

It has taken a long time, but as Danny's a professional decorator,

he's done a lot of the work here himself.

He's done a really good job,

but how much have they had to spend?

So far we've spent about 30. 30,000.

I think it's going to be about another 5,000 to finish,

so a total of 35,000.

That's 15,000 more than they had originally planned.

The property has been re-wired, a new boiler had been fitted and the plumbing has been replaced.

In future the roof will need to be replaced but right now,

Danny is concentrating on getting the inside finished,

so they can move in. So how close are they?

-A couple of weeks.

-Yeah, I think, two weeks.

Two to three weeks and we'll be in.

We kept giving ourselves a date and then it got further away again,

and something else happened so eventually when we do move in,

I'm never moving out.

Time to get the opinions of two local property experts.

What will they think of the transformation of this three-bed semi?

He has made a massive transformation of the accommodation,

made the living room and the kitchen-breakfast room separate,

and he's really gone to town on the standard of the kitchen itself.

The principal thing I think will sell the property is the kitchen.

Just walk in, and it's a buy-me house, really.

Wonderful size and the quality finish is fantastic.

The master bedroom has been done to a lovely high spec with built-in wardrobes across one of the walls,

and I think that's going to work really, really well for the family.

Three bedrooms upstairs and he's managed to squeeze in a shower room

as well as a bathroom, which is handy obviously for an older family.

So has the property risen in value?

Remember they paid £102,000 at the auction and their outlay has been 35,000,

making a total of £137,000. What's the house now worth?

Re-sale value, in the current market, we'll be looking at around the 135 to £140,000 mark.

Because of the high standard and quality of the work so far, if he continues to do this throughout,

you could market the property in the region of £150,000.

That valuation range from 135 to 150,000 would produce

either a small loss, or up to a £13,000 gross profit

before the usual selling expenses.

I like the 150.

-Yeah. Yeah, definitely.

-Yeah, that was really good.

At least we know all the money we spent has all been worthwhile.

-And the profit on the end.

-Yeah.

-If we were selling but we're not selling.

-Yeah.

The project has taken a little longer than expected,

but the end result is fantastic, so would Danny tackle something similar in future?

I think I would. Maybe not on the scale of things, not knocking down all the walls everywhere,

but I think I would renovate another property.

It's been a long time, but we will definitely be in

in the next few weeks. Great location, great house.

We now head back to the fashionable London area of Marylebone.

You pay a very high premium for properties

in this neck of the woods with tiny studio flats in this building going for as much as 300,000.

But this one was bought by part-time developer Susan

for less than half that price.

She paid £141,000. The reason for this was that it was

a leasehold flat, with only 17 years left to run.

How much research did you do in finding out how much it will cost you to renew this lease?

I think even if I'm renting it out in the short term,

I'll get my money back with the length of time that I've still got left with the lease.

I'm in a position then with income coming in

to look at extending the lease and negotiating the best deal that we possibly can.

Susan's got a canny business head,

and her aim is to overhaul the place and get it rented in two months.

But despite its small size, it was eight months later that the flat was ready to be unveiled.

So will it be worth the wait?

The main room has been given a complete makeover.

It has been redecorated in soft neutral colours and carpeted throughout

with accessories and furniture to make it more appealing.

But what has happened to that unappealing bathroom?

In the bathroom there was originally the bath on this side here.

That has been removed. There was a small kickback in the wall.

The wall has been filled out so that it's flat so that all the controls

for the shower and the pipework are concealed behind the wall.

The washbasin has been replaced,

in the same place as it was before.

The WC has been rotated round, so it's on this wall now,

to give a bit more space round it,

and instead of putting in another bath I replaced it with a nice walk-in shower,

which makes it look really nice and luxurious.

I agree. And it definitely sets the right contemporary tone to attract young professionals.

But that still leaves the tiny kitchen.

I've managed to just about squeeze in a combination microwave oven.

I've got a two-ring hob with an extractor above,

a fridge with an ice box,

and a nice sink with a nice little designer tap over it as well.

It's certainly a clever use of the small space here.

The storage solutions are ingenious,

but in a flat this size, there's bound to be a compromise,

and you'll find that in one of the main room's cupboards,

used as a home for the washing machine.

Meanwhile, apparently it wasn't only Susan's flat that underwent some changes.

We did find that the walls are quite thin between the flats,

so we did have a little accident where we went into one of the neighbour's rooms,

and made a small little hole but the upside is

the guy next door is having his room redecorated!

In general, Susan and her builder had a smooth renovation.

The flat is now fit and ready for the rental market.

But for such a small space, surely it can't have taken eight months

to get it up to scratch?

But as it happened I had also started another project

and that took four to six months to get from start to finish,

and this wasn't such a priority as the other one was a bigger job.

In the meantime, I'd had all the tiles, the bathroom, the kitchen, everything had been delivered here

so as soon as the builder was ready to start, we got started and he finished within four weeks.

That's more like it, short and sweet.

But it seems Susan's two-year wait

to extend her lease might also be shorter and sweeter.

It's been a stroke of luck really,

because quite a few other leases in the building are in exactly the same situation where they have them

for a very short period to run, and so a group of tenants got together,

and the managing agents have instructed surveyors to come in

and have a look at the flats, and they are working through the process now of extending all the leases,

-so it has saved me having to wait for the two years.

-Great news.

As yet, there's no indication about the cost of extending the lease but it does mean that,

finances permitting, Susan can consider selling the flat much sooner than anticipated.

And when it came to finances,

she managed to come slightly under her budget by spending just £12,000.

Add that to the purchase price of 141,000

and Susan's overall outlay is 153 grand.

Time for two local estate agents to tell us what they think.

My first impression on coming back is it's a really big improvement.

You know, it's a lot brighter for one, the kitchen's been done,

the bathroom's been done, it's got a really nice feel to it.

What I like about this property

is the fact that it's got space enough for a pied a terre.

It's not big, it's not small,

it's perfect for someone who wants to come to town for weekends.

It's a nice spacious studio, we've got good storage,

we've got separate kitchen which is always nice in a studio flat, and the bathroom is great.

You know, a nice big walk-in shower.

With the flat ready to let out, what could Susan earn in rental income?

If I was putting the property on the rental market today I'd want to put it on the market at £1,500 a month.

I would be happy to market this property,

for rental purposes, around £1,500, per calendar month.

I was looking at around about 1,200,

so I thought that was a realistic value on the rental market, but

I haven't seen the inside of many of the properties at that value,

so it depends what the finish is on the property and what standard

it's at as to what you are going to get on your rental return.

-But yeah, I'm really pleased.

-Without an extended lease, the flat is only worth 140 to 150,000,

so no profit at the moment on Susan's 153,000 outlay,

but how would the resale value look with the lease?

With an extended lease I would put the value of this property at approximately £325,000.

On extended lease I would be happy to market this property

at £350,000 to £375,000.

I think a value of around about 350 will probably be about right,

but obviously the real value is with the extension of the lease.

Once the new lease in place that's really where there's value,

from from my point of view, where I increase the value of the property.

So depending on the cost of extending that lease, there could be a healthy profit here.

But even without it, Susan can look forward to healthy returns in the near future.

At a level of 1,500 per calendar month even if I just ran it for the remaining term of the lease,

I'll still cover my costs and potentially make a profit as well.

But obviously I want to hang onto it for long term.

My kids would like it long-term, so I think from that point of view,

the lease extension is something I really have to do.

Well, that's it for now. We'll have more properties

and more enthusiastic buyers for you next time.

So make sure you join us then, for more Homes Under The Hammer.

-We'll see you then.

-Goodbye.

-Goodbye.

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