Episode 91 Homes Under the Hammer

Hello. Like you, we're interested in property.

That means every aspect of it. Martin, you know what we're like.

We're always on the lookout for a bargain.

One way you might be able to get one is to go down to your local auction.

Well, there are property auctions held all over the country

throughout the year, so you really are spoilt for choice.

Let's take a look at the properties that made our buyers

want to part with their cash on today's programme.

In Greater Manchester,

this two-bed mid-terrace opens up a world of possibilities.

Good, good size space to be getting on with.

This ground-floor flat in Balham, south-west London

ticks all the right boxes.

This flat could look fantastic once you've spent some cash on it.

And in South Wales,

upgrading this former bakery might cost too much bread.

I'd be talking about knocking the whole thing down

because by the time you've repaired these walls,

you're into a big amount of money.

All these properties have been sold at auction

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

-when they went under the hammer.

-Yours, sir, thank you very much.

I'm in Denton, just a few miles from Manchester city centre

and a mile or so from the M60 and M67.

It's a popular spot for commuters so it's a busy place

with the almost constant hustle and bustle of traffic making its way through the town.

The property I'm here to see is on this street,

made up of largely turn-of-the-century terraced houses on one side

and semi-detached properties on the other.

The house, though, that was up for auction is this one.

It's a mid-terrace, two bedrooms, guided at £40-45,000.

Looks like it might need a bit of work.

Always a bit nervous when there's boarded-up windows

but actually, at first glance, not too bad.

Having said that, you can see the damp coming through there.

My guess is it's either some guttering problem or possibly

penetrating through the joints in the bricks.

That needs checking out.

A good-sized room though and actually with glass in the window

as opposed to wood, it would actually be nice and light and airy.

Gas fire, wallpaper that clearly needs to be removed.

The thing which really hits you when you come in here is this.

I haven't seen this kind of layout before.

I've seen a staircase dividing rooms before

but not this dividing wall which is between them.

I say between them, as in between the front room and this, the kitchen.

It's got a bit of Perspex in it but it really doesn't work like that.

Either block it up completely or take it away.

Actually, I think blocking that up, keeping the door,

would be the way to go, because you've got a really nice-sized kitchen space here.

Enough room for a table there.

And a nice addition,

what I guess is an extension at the back where the boiler is or whatever.

Lots of space to play with.

Clearly all the units need replaced, the flooring needs to be redone,

but good, good size space to be getting on with.

Despite the odd stairwell,

I really do like the space this property has to offer downstairs.

Once that wall's reinstated, there are two decent-sized rooms here.

There's always the potential to move those stairs but you need to

work out how the extra effort and cost would impact on your return.

And talking of stairs, what's up there?

So, upstairs, a small bedroom towards the rear of your property.

You've got your bathroom and loo which is good news and then

a half-decent sized bedroom towards the front of the property.

Lots of light coming through the windows, it's nice to see the cupboards,

but what I'm really interested in is what's going on on this front wall.

This is a continuation of the damp that I found downstairs.

As you can see, it stretches all the way up and as you can see, it is very, very slimy.

So, obviously very current. Water pouring down here.

It's leading me to think it's either guttering or the roof

that's the problem so that needs to be sorted out.

It won't cost much to repair it but the damage it's doing,

that is going to cause you... Who knows?

Fixing both the problem with the damp

and the damage caused by it should be the top priority here.

It must be dealt with before starting renovation anywhere else in the property

or your hard work could literally get washed away.

Back to the positives though, out the back.

So, at the rear of the property, that extension I mentioned.

You've also got this little courtyard area which is quite useful

but by far the most interesting thing for me

is out the back gate here where you've got an alley.

A few years ago, this would have had these alley gates put on it.

That creates two things.

One, it means it's much safer in terms of unwanted visitors,

but also, as a place for kids to play, a real nice area too.

So, two bonuses. Good stuff.

Despite the damp,

this place is getting the thumbs-up from me so far,

especially with that £40-45,000 guide price.

We invited the auctioneer who sold it to tell us if he felt the same.

Obviously, it needs some modernisation,

but a fairly standard two bedroom terraced property and I like it.

It's got quite a nice feel.

Once the work's been done to modernise it,

what would he expect the house to be worth if sold?

Once fully renovated, I think the property

would go on the market for somewhere between £80-85,000.

How would it stack up in the rental stakes?

From a rental point of view, if this property was coming

on the market done to a good standard,

I would say somewhere in the region of £475-495 per calendar month.

With properties, it's always the simplest things which cause problems.

As you can see, the gutter at the front here has got a problem

that caused water to come down the front of the house.

You can see there is even mould sticking out.

That's what's caused the damp but what we don't know is how much damage is done.

For that reason, a little bit of caution, but still a good property for a good price.

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

It's late in the day so many bidders have left but

there's still interest in this property.

30,000 straight in on my right. 32 here, 34, 36, 38.

New bidder stood right at the very back. At £40,000. 42 here. 44 then.

46, yes. 48. 50, sir, yes. 52.

51? Yes, I'll take it. 51, 52 I need.

Got it, 53. 53, sir. 54. 54 I've got. 55.

You're out? 55.

A half. 55 and a half, I'll take it. 56 I've got. Another half I need.

57. And a half, yes? 57 and a half.

58,000 with you, 58 and a half, I need.

59. On my right, 59 and a half stood up. 60,000.

60 and a half I've got. 61? Nope.

60,500, for the first time. 60,500 for the second time.

Third and final time. Well done. Sold to you, sir. Well done.

Your paddle number, please. 634, well done.

That successful bid of 60,500 was made by Sean

on behalf of himself and brother Fergal, who are both full-time property developers.

But they're not from round these parts. They're from Dublin.

I met them back at their new Denton property to find out more.

Sean, Fergal, lovely to meet you both. Congratulations.

Tell me why you wanted to buy this place in Manchester.

Well, we've been over here for a number of years developing property.

We own the house next door as well. We bought it at auction

a few weeks previous so when this came up we went with it.

So, I can tell from the accent you're not from Manchester.

-That's correct. We're both from Dublin.

-OK.

-I'm based over here.

-Come over every Sunday evening, go back on the Thursday.

-And do what?

-Source the properties.

-OK.

-We buy a lot of stuff at auction.

I'll obviously do the homeworking and Sean comes and looks at the properties.

-Right, and so are you a builder?

-I don't actually build myself.

We've got a couple of builders that work for us, that are employed.

-We employ them full-time.

-Right, but it's a partnership between you two?

-It's a family business, yeah.

-Really? Family business.

-Sean, myself and my wife, Jane. We're all together.

-Great.

Sounds like a great partnership to me.

They've been investing together for the last 16 years

so it must be working for them.

But it does still beg the question of why they're doing it

so far from home?

So, why Manchester? Why not Dublin for instance?

Property prices, as you probably were aware,

went out of control in Ireland. We've had a property crash there.

Property was always affordable here.

We gave just over 60,000 for this property.

The equivalent property in Ireland still would be at least twice that.

Right.

It's a good city, a big population, good infrastructure.

-That's why we concentrate mainly on the north-west.

-The practicalities.

You are obviously over in Ireland and the properties are over in Manchester.

-What kind of problems does that bring?

-Very few.

With modern transport now, it's 30 minutes on a flight.

Again, if we get a ferry over, it's two hours up from Holyhead.

Same language. One of the major attractions for ourselves

is the weakness in sterling.

There's a lot of international money coming into the UK

because sterling has weakened so much and the euro's so strong.

There's a double hit.

Property prices have dropped and also the currency helps as well.

You're buying in the equivalent of euros.

We get more for our euro than we did maybe five or six years ago.

But of course, any rents coming back to you will be in pounds.

It goes back in pounds but again, if you have a mortgage,

you're paying a sterling mortgage so it's all...

-It all works.

-It all works.

-Good.

Fergal and Sean are trying to do the best they can with their finances in the current market,

even though that means commuting between two countries.

With its boarded-up windows and rather sorry exterior,

they think this is the worst house in the street.

If all goes to plan,

that won't be the case by the time they've finished with it.

So, tell me what you will do to sort it out.

Basically, we'll just come in, we'll just literally empty everything

that's in here, bring it back to the bare bones and we start then.

We do the floors, skim the walls, new windows, new doors,

there's a bit of dampness coming in the walls and it's all from the gutter.

Right. It's that usual thing of

a simple thing but causes a bit of damage.

-That's it.

-What about the internal layout?

Because you've got this very unusual layout.

We had our architect out and he said really,

we have to leave the stairs as it is.

We are going to block up the wall there,

make it two separate rooms, but just leave the layout as it is.

-Right. So keep just the door there.

-A door there into the kitchen, yeah.

What kind of cost have you got in mind for doing it?

-Budget probably about 8-9,000.

-And then?

Rent it out. Keep it long term. There's a massive rental demand at the moment

so don't see too much problem renting.

-What's the kind of timescale for getting it sorted?

-5-6 weeks.

Easily, yeah.

In that time, they also plan to install a new bathroom,

lay carpet and redecorate upstairs.

It sounds like they've got the whole thing perfectly planned out.

Well, brothers Sean and Fergal clearly have a very successful

property developing partnership going on here

and no reason to think they'll be any less successful with this place.

However, I am a little bit concerned about that budget.

It seems a bit tight, especially when you don't know

what damage that damp in the front corner has done.

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

Today, I have journeyed to Balham in south London.

Fabulous transport links, shops aplenty and it's also

the birthplace of the celebrity chef, wait for it, Ainsley Harriott.

Being a seasoned property buyer,

I know that location is key to any successful purchase

and the lot I'm here to see, well, it couldn't be better placed,

because there is Balham tube station and this,

well, this is the road where today's auction lot is.

A great starter. Let's get down there and see the main attraction.

The question is, will we get our just deserts?

If location is anything to go by, I think this auction lot

could be setting itself up for a very sweet review.

Buying a property that's within walking distance from shops,

tubes and train lines, well,

that will always get a massive thumbs up for me.

It's not just the location that's attractive. The auction lot is too.

It's a two-bedroom ground-floor flat.

It had a guide price of 190,000. Here it is.

The windows could do with some attention

but it's a nice double-fronted flat in a great location.

Now, the really exciting thing about this property is you get

the whole of the ground floor so you get the two windows to the front.

It's double-fronted and it makes this property feel huge.

It's got a really nice big space in there.

You could have a bedroom or a lounge.

A second reception room here, again, it could be a bedroom a lounge.

Bit of a tatty kitchen.

In fact, the whole flat is very shabby indeed but look, it goes on.

You've got lots of rooms back there. This flat quite excites me.

It could look fantastic once you've spent some cash on it.

You're going to need to lavish some love on this place

and it probably requires some serious expenditure.

The bathroom and toilet will have to be upgraded

and could be combined into one.

That bedroom/rear reception room needs to be completely refurbished, as do the other two front rooms.

But there's a good deal of space here.

There's even the bonus of a cellar.

For London, that £190,000 guide price was pretty reasonable,

but there's a catch.

This flat comes with a 99 year lease and ordinarily, that would be fine,

but it was issued in 1975.

That means there's only 63 years left on it.

Some mortgage companies will be put off by that and it could mean

whoever buys this will have to be a cash buyer.

It's also tricky when it comes to extending the lease.

The freeholder may be open to negotiation but if they're not,

you'll have to wait two years before you can apply again.

After this time, they are legally obligated to extend the lease,

but the cost of doing so, well, it can run into thousands.

This will have implications for the new owner.

So, I hope whoever took this on read that legal pack first.

Leasehold properties really do need to be checked.

There's ground rent to pay. Luckily, in this case, just £25 per year.

There's a shared garden to consider

but it's not just the short lease that gives me cause for concern.

This flat is very close to the train station which is great

but I'm not sure I'd like to be this close.

The noise from the trains will undoubtedly have

an impact on the sales market.

Local agents predict a 6% drop in achievable figures,

yet another thing to think about when you're doing your sums here.

A drop of 6% means having that rail track so close

will knock at least 12-15 grand off the flat's resell value.

Unfortunately, the trains aren't the only unwanted neighbours.

Just a little concern of mine,

slap bang next to the property is this sort of scruffy, derelict plot.

I would make my inquiries as soon as possible.

Find out who owns this because as it is, it's a bit of an eyesore.

This doesn't help the flat's all-important kerb appeal.

With the trains and the short lease, there's a lot to consider here,

but I still think that at what was a £190,000 guide price,

this flat could be a good buy.

What does the local estate agent think?

Do the positives outweigh the negatives?

Incredibly pretty on the outside and the rooms inside are very good sizes.

Very well proportioned, good high ceilings.

The short lease is clearly a potential sticking point

but if the lease was extended and the flat fully refurbished,

what sort of return could you expect?

You'd be able to rent this out per calendar month for about £1,600.

-I would recommend putting this on the market at £395,000.

-Yes!

You did hear that right.

A potential 395 resale and £1,600 a month rent.

So for all its faults, this flat could be one mighty fine investment.

That short lease will undoubtedly put some buyers off but for me,

there is nothing here that's insurmountable.

You will be able to extend the lease for a price

and once that's all in order and the work's complete,

I think this is a great little investment.

Let's see who agreed with me as we go to auction.

Lot 17. Two-bed ground-floor flat, handy location. 200.

Yes, standing up, 200.

201. 201, 202, 203, 204, 205.

206, 207, 208, 209.

210.

211, 212, 213,

214, 215, 216.

217, 218, 219, 220.

Have a think. 219 with you, first time,

second time, third and last time

if you're all done.

Sold, 219.

For 219,000, the successful bidders were David and his wife Debbie.

David owns a chain of bars.

They had their first child, Madeleine, just 12 weeks ago,

so his wife Debbie's on maternity leave from her job

as an accounts assistant.

While Debbie attends to the baby, I caught up with David.

David, congratulations. What was it about this flat

you liked enough to want to bid for it on auction day?

The location, mainly. Balham's a great area, I live in Balham.

-I've had a local business here for 7-8 years.

-What do you do?

I own a bar-restaurant.

A couple of bar-restaurants, one in Balham, one in Clapham

-and one in the City.

-How's business going?

-It's OK.

Obviously hard times at the moment but it's the same for everyone, so maybe a bit of diversifying.

The bars are great and I enjoy doing them

but in the longer term, with Maddie, the new baby coming along,

I don't particularly want to be working so much in the evenings.

Maybe try and do some property instead.

David's hoping that property development may be the way forward

for a more conducive family life,

but with this flat, there are a few issues to be resolved.

Let's talk about a few of the negatives with this property.

Straightaway, the low lease. Would that not put you off?

It did a bit but leases can always be extended.

The upstairs flat has been negotiating with the freehold

at the moment and I think he's been quoted 15,000 for the new lease.

It's good to hear that David has already made some enquiries

with the neighbour about the lease

and has got a rough idea of how much it would cost to extend,

but there's that other potential thorn in their side.

David, what do you know about that plot next door, that bit of derelict land?

I know a local chap owns it

and I believe he wants to get planning permission to build

a live-work dwelling on the land.

I know he's tried unsuccessfully to get planning permission a few times.

In fact, I think we find out in a couple of days whether

he's going to get the planning appeal rejected or accepted.

I'd prefer him to build something there or if he doesn't build it,

maybe we can buy it off him and turn it into car parking space or a garden.

There's two flats in this building so a rear garden and a side garden, we could have one each and there you go.

I think that would be a great solution and the good thing is, there's no rush.

David can sort these issues out

while still renting out the flat to earn income.

What about the positives? Let's have a look, you have a fantastic house here.

It's double fronted, lots of light coming in.

-Lovely big square rooms. It does need a lot of work.

-It does.

I think strip it back to the brickwork and start again.

It all needs rewiring, new kitchen, new bathroom. The works, basically.

Maybe knock a wall down between the kitchen and the lounge.

-What's your budget for the work?

-I'm hoping to do it for 15,000.

It will probably end up being 20 knowing me.

I plan on doing quite a lot of the work myself

so I will use some local builders as well who I do know.

You've just mentioned to me

that you don't want to be working in the evenings as much because you've got beautiful baby Madeleine,

but you've just taken on a property and you need to do lots of work,

and you're going to be here a lot. You're going to be

-quite busy for the next few months, aren't you?

-Yeah.

It's funny, actually, after I bought it, I thought, I'm not going

to be at home as much as I thought I was going to be, am I?

I think the penny's dropped.

This flat needs a lot of work to turn it around,

which probably means David will be away from his wife Debbie

and his baby daughter quite a bit. How do they feel about that?

Debbie, you really have got so much going on at the moment.

How are you going to manage it all with little baby Madeleine?

Well, Daddy will be doing a lot of the work, thankfully for me.

We'll probably will be doing bits and bobs at home on the internet, making calls.

Come see Daddy at lunch for sandwich

and exit sharply before we get roped into some more work.

Now, Debbie, Daddy did tell me that he planned on having a nice

relaxing time, wanted to spend more time with you and the family.

Didn't want to be at the bar late at night working

and then you go and buy this flat, so why?

Bit of an investment.

Obviously, I'm off with this one on maternity so help pay the bills.

Listen, good luck with the project.

Don't work too hard,

make sure you enjoy lots of time with this gorgeous little girl.

Bye-bye. Bye, Madeleine.

How will David and Debbie get on extending the lease

and will they be able to buy the other half of that garden?

Lots of negotiating required here. How are the couple going to get on?

And little baby Madeleine, will she affect things?

Will the sleepless nights take their toll on this project?

You can find out what happens later on in the programme.

Coming up - the ground floor of this former bakery

in Mid Glamorgan is in a right state.

In terms of up there, you know what, I don't even think I'm going to go up there.

In Balham, south London,

just how time-consuming has the renovation been for David?

I've been here quite a lot actually and my work's probably suffered a little bit for it.

But first, in Greater Manchester,

Fergal's getting a buzz from his work.

Satisfaction seeing the property taken from a shell condition to finished condition.

Back to Denton, Greater Manchester now where brothers

and full-time property developers Fergal and Sean

bought this terraced house at auction for £60,500.

Born, bred and based in Dublin they may be,

but there was good reason to be here.

Tell me why you wanted to buy this little place in Manchester?

We've been over here for a number of years developing property

and we actually own the house next door. We bought it at auction

a few weeks previous so when this came up, we went with it.

First things first, this house needed a complete overhaul

and the brothers reckoned they could do it all in five to six weeks.

So we've come back eight weeks after we first met them

to see if they've hit their target.

Looks to me like they have and how! It's no slapdash job either.

From fixtures to fittings, the standard of finish here is high.

I'm glad to see that they've reinstated the wall

next to the stairs, to make the new kitchen diner

a much better space as Fergal explains.

Well, the condition of the kitchen as you can see has totally changed.

We've replaced all the units, brand-new kitchen,

a new oven hob, washing machine, new boiler.

It's brought the units up to here.

I think they were previously just before the cooker.

New tiling, new extractor fan, new lighting.

Basically, a whole new kitchen.

To get it looking like this, first the entire house was gutted.

Then they had to deal with the issues caused by those gutters.

There was a damp problem so we had to replace the gutters, front and back.

That got rid of all the water coming into the house.

It was totally plumbed the house, totally plumbed. We got plastering done.

Once it was done, we installed the kitchen, replaced the bathroom suite

and we started decorating the house.

And they have given it a top-notch finish

for very solid commercial reasons.

We like to keep all our houses at the same standard.

Obviously, if you're housed to a high standard,

you're going to get a pretty good tenant.

They are going to take care of the house, they tend to stay longer,

so we get better yields, higher rents.

Sean's absolutely right.

The better the standard of finish, the more likely the new tenants are

to look after it, and you'll come out a winner in the long term.

This renovation didn't take long either.

From start to finish, about six weeks. Six weeks in total.

The only surprise problem Fergal and Sean faced during the renovation

was that the whole house had to be rewired.

This had a slight impact on their budget.

They originally estimated between £8 and 9,000

and ended up spending 10,200, but there were certainly

no problems with working together thanks to the geography.

The way we managed, Sean is based in Manchester.

I live in Ireland so it works well.

Sean project manages everything from start to finish

and I have my uses also.

Now that this property is ready to let out,

they are going to start on the one they already own next door.

Since we last met them, they've bought the house on the other side too.

Something tells me they're aiming for the whole street.

They clearly seem to have found a job that they love doing.

Obviously, satisfaction seeing the property

taken from a shell condition to finished condition.

It's an interesting lifestyle, interesting business.

They bought this property for 60,500

and spent 10,200 on the renovations,

making their total outlay 70,700.

We invited two local property experts

to the newly refurbished house to see if they were impressed

with the work Sean and Fergal had done.

First impressions are wow!

It's just a major transformation, we see a lot

but this has been done really well.

They've gone that extra mile in terms of the finish

and it just looks really good, very pleased to see it.

I think they've done an amazing job. It was done to

a very high standard, as you can see from the plastering.

It's not a cheap job, impressed with it.

But will the financial returns be impressive?

If the property were to be put on the market to sell,

what price would the experts recommend?

Remember, their total spend is not far off 71,000.

The current market conditions, I think this property's worth

somewhere in the region of 85, possibly £90,000.

I would put this property on the market

at offers over £85,000 to achieve £90,000.

Happy with those figures.

Again, we're going to keep it long-term but it's nice to know

if we ever need to sell, we should make a profit.

Long-term or not, it still goes to show that in just a few weeks,

the brothers have the potential to make a pre-tax profit

of between around 14 and £19,000, not too shabby at all.

But the crux of the matter is all in the rental yield.

So, give us those please, experts.

I thought we could rent this property out at £500 per calendar month.

The standard of the property would make it comfortably

£500 per calendar month, possibly more.

-The rental figures, nearly spot on. We got 525.

-Yes, you heard right.

Sean and Fergal have already rented the property out

for £525 per calendar month.

That gives them a fantastic rental yield of just under 9%

and it's not the only thing they're happy about.

We finished relatively easy, didn't hit any snags.

Not every job's going to be as smooth as this

-but we take the rough with the smooth.

-You certainly do.

I'm in Pontypridd in Wales.

This area has a rather mystical and magical history

because apparently, the famous wizard Merlin was helped

across a river here so blessed the area with good fortune.

Now that's what I like to hear when it comes to looking for property.

Pontypridd got its name from the Welsh for bridge of earth

since people took advantage of the shallowness of the River Taff here

to cross from one side to the other.

Let's hope that today's property is not for someone wet behind the ears.

The property I'm here to see is a former bakery.

It's a real shame it's a former one

because it would have been lovely if it had been operational.

You'd have that smell of freshly baking bread in the air.

Given that the property has been unused for several years,

something tells me that that beautiful aroma

that you sometimes have in houses when trying to sell them

will be replaced by something slightly less pleasant.

Oh well, here goes nothing.

Yes, the run-down dilapidated state isn't encouraging either.

But with a guide price of only £10,000,

it's got to be worth a look, hasn't it?

OK, sticky door there. So what have we got?

Basically, one big downstairs room with more upstairs

which I'll explore in a minute.

Obviously, it's in a right old state.

Quite disappointingly, no indication of its life as a bakery in the past.

Just this fairly rough walls. I also want to investigate what's on the other side of this wall

because you might have issues with party walls.

A reasonable-sized space and in terms of converting old industrial premises like this

into residential units, they do make quite characterful properties,

but you've got to know what you're taking on.

As you can see, it's in a right old state

and in terms of up there, you know what,

I don't even think I'm going to go up there.

But climb a few of those steps, stick your head up

and you can see that again, there's a huge space to work with,

offering plenty of potential.

Remember, the guide price was only £10,000 but still,

all the joists, woodwork and wiring should be consigned to the past

and put in a skip. That's not all.

Unfortunately, outside, one of the walls is definitely showing signs of decay.

There are two ominous cracks that really should be checked out

by a structural engineer.

If there's a serious problem, then I can see that costing big bucks to fix.

With all these negatives,

maybe it would take old Merlin back in the town to sort them.

So why on Earth would you want to take on a place that requires this much work?

The good news is that in 2009, planning permission was granted

to convert this old bakery into a dwelling.

One bedroom house. Interesting design though.

If I start downstairs, a huge great double garage which takes up

virtually half of the size, then you've got a kitchen,

dining room and a downstairs loo.

Moving upstairs, you've got one bedroom and a living room.

Have to say though, if it was me,

I'd be talking about knocking the whole thing down because

by the time you've repaired these walls, you're into a big amount of money.

In the end, the question is,

will the rewards be high enough after an expensive renovation?

For a second opinion on this building guided at £10,000,

we asked along a local estate agent

to hear her thoughts on the old bakery.

I think this property is absolutely brilliant.

It's a blank canvas and it could be something really special.

Potential-wise, it depends what the owner wants to do with it

and if it's for rental, then you can go one way.

If it's for themselves, they could really push the boat out

and do something special.

How much would it cost to get this place up and running?

I think to get this particular property up to a saleable condition,

the minimum would be 25 to 30,000.

Anything over that would be luxurious.

With a guide price of 10,000,

that would mean a possible outlay of £40,000 plus.

How would the returns look, first, if sold?

I think the resale value on the property as a one-bedroom property

could be between 40 and 55, even up to £60,000.

And rental?

I think the property, even as a one-bedroom property,

would get between 250 and 350 per calendar month.

So did this old bakery rise to the occasion

when it went to the auction rooms or fall completely flat?

At YEAST it had that planning permission

although it is going to KNEAD a lot of work to sort it out!

Let's see who had the bread to buy it when it went under the hammer.

Lot number three. Bid me 14 to start, surely.

Got to be worth more than that. 12 if you like, let's get on.

12, put it in. Eight, I'm bid then. Thank you.

8,000 is all I'm bid. Nine I'm bid and 10, is it? 10 I'm bid.

At £10,000, all right, make it 500. This is no money for it.

At 10,000, 11. Thank you, sir. 11 I'm bid.

Make it another half. 11 and a half and 12 if you like, sir.

12, I'm bid there, standing. Half at the back. At 12 and a half.

I thought you'd got it, sir. At 13 and again half is bid.

13 and a half standing. 14, please, 14, I'm bid.

You're out, sir.

Half, at 14 and a half. 15, is it? 15 is bid.

15 and a half I'm bid. 15 and a half, 16, will you?

Don't shake your head, you'll go home and think, I should have bought that! Try one more.

16, is it? Thank you, sir. At 16.

You're not going to lose it for 500 as well, surely? Have you done?

There is my bid at 16. At £16,000. Yours, sir. Thank you very much.

The bidder who snapped up this lot for £16,000 was Norman.

Norman's a local man who has been a builder for 40 years.

Along with his son, Neil,

they aim to bring the old bakery back to life as a new house.

I met them to find out more.

-Neil, Norman. Good to meet you both. Congratulations.

-Thank you.

Tell me why you wanted to buy the building.

We were looking for a property to do up between me

and my father and my brother-in-law.

It's local and the price.

Is this threesome you've got

something that works together quite a lot?

Me and my father are in business together anyway.

My brother-in-law, Steve, has done some work with my father

so it's my father's idea to get the three of us working together.

Great, OK. What prompted that, Norman?

I've done this type of thing in the past on my own.

Steve has worked with me then just as a help and I thought

just get these two together and start doing it as a joint thing, like.

It's been more you doing it on your own?

I've always done it on my own.

This is the first time as a joint venture.

-What are the advantages of bringing other people on board?

-I'm getting old!

So you're going to bring in younger blood to help you out.

Norman has spent his working life restoring and renovating properties.

In fact, Neil manages two convenience stores

which the pair have renovated together.

And with son-in-law Steve, who's a trained carpenter,

Norman hopes the team will make a success of this project

despite its run-down state.

-I knew the building because we live local.

-You knew it?

-We knew the building. The first time we'd been inside was today.

-OK.

Any great surprises?

No. We can see that the one end is falling down

-so this is how we expected it to be.

-Right.

The fact that you've got a bit of experience, Norman, does that make

you comfortable about not having a look inside before you bought it?

Imagining the worst so whatever I see is better.

Tell me exactly what you're going to do to this place.

Are you pretty much going to stick to the plans as they are?

At the moment, I haven't even spoke to the building officer yet.

If there's a possibility of turning it into a two-bedroom dwelling,

I'm mostly looking to do that. I don't think there is.

Reading the literature, because the plans have been refused

so many times, the final plans have been amended and passed.

I'm going to ask but I don't think we'll get past

the one bedroom dwelling that's been passed.

Well, you don't know if you don't ask

and a two bed would certainly add more value to a finished product.

Also ideally, Norman would like to take the building down to the ground

and start from scratch, though he'll

obviously have to get planning permission to go that far.

Talk me through the numbers on that,

how it stacks up in terms of a profitable venture.

We've laid down at the moment about £17,000.

We've got a budget excluding labour, because we do the labour,

of about 13,000.

-13?!

-Yes.

-Whoa!

-HE LAUGHS

That can stretch to 20 if it needs to be but in my experience,

I know it won't.

-Wow! So how are you going to build it for 13?

-No labour.

-No labour, it's just material.

-Right.

-That's just material.

-Just material.

The labour we put in free, for a better word,

and we'd be taking labour costs out of the profit at the end.

How are you going to divide out the labour between you?

The labour will be done mainly myself and my son-in-law, Steve.

-Right. You were laughing then.

-I've got no building skills whatsoever.

-Right.

-My father could build the house on his own,

I've got no building skills,

so I'll just do whatever he tells me to do.

Go and fetch materials, get the materials in,

do some labouring for them.

-Right.

-All the skilled work will be my father and Steve.

-Are you looking forward to learning a few things? You're bound to pick up stuff.

-No!

I've worked with them before and I've never learnt anything

so I won't be learning anything here either. I just do as I'm told.

I won't be learning anything.

Because Neil will be managing the shops during the day

and Steve working full-time on other jobs, the trio will do

the renovation in their spare time during evenings and weekends.

They've given themselves six months to get it all done.

The three of you working together, if that's a success,

you'll repeat that?

Oh yes. It's really to get them started. I'm getting too old now.

Get them started and hopefully do a few more of these.

-Are you up for that?

-He will still be doing them when he's 85.

-He's never going to retire.

-Listen, congratulations anyway.

We look forward to seeing how you get on.

Hope you can fit it in with everything else you're doing.

So, Neil and dad Norman taking on a big project here,

but Norman for one having the experience to make it happen

and Neil, well, maybe he can look after the shop

while Dad finishes the job off!

Lots of work to do, will they make any dough out of it?

You can find out later in the show.

There's been plenty of time for our buyers to start work on their properties.

But have they actually done anything or have they been beset by problems?

Time is money. Have they made any or have they lost any?

Let's go back and find out.

In the south-west London area of Balham,

this two bed ground floor flat went to auction.

Close inspection revealed a property that despite its slightly sorry condition,

had a lot of hidden charm, but take a few steps and the view was less encouraging.

There were trains passing close by and I saw a bit of empty land

next door, a shared garden and issues on the length of the lease,

so not one for the faint-hearted.

But to bar owner David, the positives outweighed the negatives.

With his wife Debbie on maternity leave, since the arrival of their first child Madeleine,

he saw this as an opportunity to venture into a new business.

The bars are great. I enjoy doing them.

In the longer term, with the new baby coming along, I don't want to be working in the evenings

and try and do some property instead.

It may have sounded like a good idea,

but with David planning to do a lot of the work himself,

I'm not sure how much free time he really was going to get.

He paid 219,000 at auction and hoped to do it all for 15-20,000.

Now, four-and-a-half months later, we're back.

The outside shows signs of improvement with new windows and fresh paintwork.

But what about inside?

The front bedroom has been revamped and modernised with solid wood floors,

a new central heating system, re-plastered walls and fresh decoration throughout.

The front reception room's also been completely refurbished.

But it's been turned into another bedroom.

So what's happened to the back bedroom?

Well, that's now a fabulous open plan lounge-cum-kitchen diner.

We've ripped out the old kitchen, put in a new fitted kitchen.

This wall's come down to open it all up between kitchen,

dining and lounge and then we've just moved the old kitchen door,

so we've got patio doors onto the garden. It makes a nice big integrated space.

Wow! What a difference that makes!

With the bathroom and toilet also refurbished to a good standard,

David seems to have made the most of what he had to work with.

But turning this around must have taken some doing.

Down here quite a lot actually, my work's probably suffered a bit for it, my other job, and my little baby

and wife, but I've been down here most days, five or six days a week.

In the end, David hasn't had as much free time as he originally hoped for.

He's done a top job here, but it wasn't just the fixtures

and fittings that needed sorting out, there was the small issue

of the short 63 year lease that was affecting the flat's value.

Myself and the chap upstairs are in the process of buying the freehold.

We've had it valued and it's come back in at £40,000.

It's going to be significant, 20,000 plus costs per flat,

but in the long run it'll be well worth it

and we'll have control of the house, which is the main issue.

It might be another 20,000, but it would be worth every penny to get the freehold

because with the current short lease,

the flat would be very difficult to sell on and to extend the lease would have cost thousands anyway.

Not only will buying the freehold increase its market value,

issues such as the shared garden could be more easily resolved.

With the garden, it sort of depends on the freehold.

If we get the freehold, we'll probably end up splitting it or I'll buy it off the neighbour upstairs.

There's also a possibility we'll get more land on the side of the house,

which then he can have a bit on the side and we'll all be happy then.

Yes, it looks like the freehold includes the messy plot at the side.

What a fantastic bonus! David really has rolled up his sleeves

and turned each potential challenge into a positive

and not only has he finished the refurb, he's also got a tenant.

At the moment, I have my cousin, who's moved in,

just to keep the place warm.

I might move in, I'm not sure, with my wife, we'll see. But yeah.

With most boxes ticked, the only other issue was expenditure.

Did he stick to his tight budget of 15-20,000?

I've ended up about 25, in all.

So I've put some nice flooring down and some extra bits

which are a bit better than for the rental market.

£25,000's still pretty good. With the purchase price of £219,000

he's spent to date before the usual costs and fees

and without the cost of buying the freehold would be around 244,000.

So has this new venture into property paid off?

What do two local estate agents think?

My first impressions are that they've done a very good job.

A high standard finish,

and transformed what was a sorry-looking flat.

The flat's fantastic. It's been done to a high standard.

It's ideal for professional sharers.

This area is high end and the finish matches that.

It definitely gets the stamp of approval,

but in order to make this viable for the resale market,

David will need to pay around £20,000 for the freehold.

That would take his total spend to around £264,000, so would that investment be worth it?

If they put the property up for sale,

I'd expect to achieve in the region of 375-385,000.

This property on the sales market at the moment would achieve between £370,000 and £380,000.

Wow! Even with the cost of buying a freehold,

those kind of values could net a whopping pre-tax profit

of between £106,000 and £121,000, minus the usual selling expenses.

It's good, given the market's still not that great at the moment.

It's in line with what we hoped when we bought it.

Just need to sort out the lease and a few other issues. It'll be good.

Despite those healthy resale values,

for the moment the plan is to rent the flat out.

If we were to put this up for rent, we'd achieve in the region of 1,600-1,650 per calendar month.

This property on the rental market would achieve £1,600-£1,700 per calendar month.

It's really good. Excellent.

A bit of income for while this little one's growing up.

With a rental yield of between 7 and 8%,

this investment stacks up on all fronts.

Now with it finished, is Debbie looking forward to having David home a bit more?

# I want you back, I want you back, I want you back for good... #

Yes. Have some help with the little one, definitely. I think she's missed him as well.

Have a little break and move on to the next project.

Well, with his bars, property and daughter Madeleine,

it looks like David's got his hands full for some time to come.

Earlier, we were in Pontypridd in Wales where experienced builder Norman

purchased this rundown ex-bakery at auction for £16,000.

He planned to turn it into a one or two bedroom dwelling with the help of son Neil and son-in-law Steve.

-So in the past it's been you on your own.

-I've always done it on my own.

This is the first time we've done it as a joint venture.

-What are the advantages of bringing in other people?

-I'm getting old!

You're bringing in younger blood to help you out.

# I must be getting older

# Cos I've never been smarter than I am. #

The building already had planning permission to be made into a one bedroom house.

Norman, Steve and Neil plan to do the work within six months, carrying out the labour themselves

and to keep down their renovation budget of between 13 and 20 grand.

But boy oh boy, was there a lot of work to do!

Bare brick walls, rotten joists and antiquated wiring were just the tip of the iceberg.

I also noticed some large cracks in one of the walls, which needed serious attention.

So not six but nearly 20 months later,

we're back in Pontypridd and...

Ah! This is all looking much the same now as it was back then.

In fact, the only change I can see is what's growing out

of the side of the building, rather than what's going on inside.

Time for Neil and his dad Norman to spill the beans.

I had a meeting with the council. I proposed to take two-thirds of it down and rebuild the walls

in block work, which that constitutes a new planning permission.

In order to start the work, Norman first wanted to rebuild that dilapidated rear wall,

but the planning permission in place states the structure of the building must stay the same.

To rebuild the wall requires a new planning application, which may or may not be approved.

One thing for sure though, that wall needs fixing.

This elevation of the property is in the worst state.

I propose now to take this portion of the property down.

It's only the outside section of the wall is collapsing, so the outside section will be taken down

and rebuilt in the existing material.

But the planning office have already indicated to Norman

that any amendments to the original approved plans are likely to be knocked back,

which leaves him with one option.

The only way forward is to repair the building as it stands

and convert it to the original plans, just take the front

of the building down and convert it into a garage and a flat above.

Although not what he ideally wanted, as it was the only way forward,

why hasn't Norman gone ahead with the work?

In the meantime, I have sold my property and bought a bungalow directly opposite.

So this has been very convenient to use as a building store and as a store for that project.

At least the building's not sitting doing absolutely nothing.

But a £16,000 store cupboard seems a tad excessive to me.

I hope Norman's still glad he bought it.

Yes, but with the climate, it is a burden but I will get over it

and convert it eventually.

So the bakery will be converted at some stage. You've got to love Norman's attitude.

# Que sera sera

# Whatever will be will be

# The future's not ours to see

# Que sera sera. #

Despite no work being done to the property so far, the frustrations around the planning issues

and the amount of time that's passed, Norman's undeterred

and is quite happy to do the renovation as and when.

We invited two local property experts

to have a look at the building and give their assessment.

I don't see the problem with the planners wanting the walls

to remain as are being a problem.

Particularly as the building's not listed.

I'm sure a compromise could be reached where the walls could be taken down

and rebuilt in similar stone to match the existing area.

The project is still a good idea.

However, the timing with the market, it won't hurt him to sit on it.

Norman purchased the property for £16,000 and if he manages to stay

within his proposed £20,000 budget, his total spend will be £36,000.

Once the property's complete, he plans to use the garage as a store for his building materials

and let the one bedroom flat out. So what kind of rent might the flat achieve?

Once the property is converted,

we could achieve £395 per calendar month.

I would expect it to achieve in the region of £450-475 per calendar month,

provided it is done to a good standard.

Those rental figures could turn the old bakery into a nice little earner. What does Neil think?

That's great. We thought anything over 350, so if you could get 395,

it'd be great, but obviously 450 is better.

And if they repair rather than rebuild the walls and convert the property

according to the existing plans, what could it be worth on the resale market?

Once fully converted, I think the property would probably reach between £59,000 and £65,000.

I would expect the property to be worth in the region of £80,000.

£80,000 is more near the mark, but we've got no intention of selling it.

We're going to rent the flat out and use the building.

I think the 65 is a good value, but the 80 would be brilliant.

So without getting too carried away, given that no work's been done yet,

it does look as if some money can be made here.

Norman's set on letting this one out and despite some of the headaches, he also still wants to build.

I don't think I'll ever stop building. I'll keep building.

That's dedication for you!

# Que sera sera. #

See you next time when we have more auction stories to inspire you.

-Yes, more stories from Homes Under The Hammer.

-See you then. Goodbye.

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