Episode 96 Homes Under the Hammer


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Episode 96

Martin Roberts and Lucy Alexander visit a cottage in Devon, a basement flat in London and a property in Sunderland, and find out who bought them at auction.


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With the property market more uncertain than before, everybody has to make their own decisions -

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-do your research and trust your instincts.

-One way to gauge the market is to see for yourself

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and one way to do that is to visit your local auction.

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There's a huge amount of property up for auction. Thousands of lots go up for sale every month

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-all around the country.

-So why not nip down to your local auction house and see what is on offer.

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Meanwhile, here are our properties today.

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I'm in scenic Devon where this tired timber cottage sits on a site to die for.

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Your eye is drawn straight away to that!

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This basement flat in London makes me look on the bright side.

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It's not dark, it's not dingy. I think it's going to be a good one.

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And in Sunderland, sometimes words fail me about the potential of a property, but not this time.

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It's a whoopy-do, dog-tail-wagging, ker-ching investment!

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All three went to auction. We found out who bought them and for how much

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-when they went under the hammer.

-Sir, yours. Best of luck.

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I'm in the beautiful county of Devon on the edge of Dartmoor National Park in an area called Lee Moor.

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There are wonderful views down to Plymouth Sound. This area is also known for its china clay industry,

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a material used in ceramics and paper.

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So you never know, part of your bathroom suite or even your walls could have started down here.

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I'm in a village with a rather unusual name. It's called Wotter.

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I suppose you expect I'll get some cheap jokes out of that,

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such as Wotter lot of property for the money or Wotter we going to see, but of course I'm not.

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I'm here to see a property, which by virtue of its description in the auction catalogue

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has me intrigued already.

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'The catalogue described this lot as appealing to people who want to build a grand design replacement

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'to take full advantage of the location and outlook.

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'It has a guide price of £90,000-£110,000.'

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Well, not the best of first impressions. Through the front door and what was the original kitchen,

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that's all been removed. You've got a loo and a separate bathroom.

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And through into the main living area. Open fire, that's good.

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But the moment you walk in, your eye is drawn straight away to that.

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And I mean - wow! What an incredible view.

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All the way out to Plymouth Sound.

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All the time I've been doing the show, I have never seen a house

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with such a spectacular, spectacular view.

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# Wow, wow, wow, wow You got it

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# Wow, wow, wow, wow... #

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The scenery takes your breath away and so does the rest of the house, but not in such a good way.

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Clearly, the stripping back has begun, but it looks like whoever started has thrown in the towel,

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probably overwhelmed by the scale of the task.

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Seeing the property in this state really does help you appreciate the size of the job.

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Outside, with the sun glinting on the sea, you could easily be distracted,

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but there's no getting away from the fact that it needs serious repair work and you won't get a mortgage

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on a house of this construction. However, it's in a prime spot,

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and I think the real potential lies not in the house itself, but in the plot and its surroundings.

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Let's be honest. The likelihood is you are going to knock that down.

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The good news is that the lot comes with a quarter of an acre, approximately, of land.

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This is it here. It slopes up somewhat,

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but I'm thinking why don't we use this land to build an entirely new property here?

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Obviously, you need planning permission, but I don't think restoring that is a starter.

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And the potential may be to dig in to this bit of ground here and put your house of dreams with that view.

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Oh, no, it's getting great!

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# Wow, wow, wow You got it... #

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It certainly is a great opportunity. To find out more,

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we invited the auctioneer who sold it to give us his opinion on this house and its guide price

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of £90,000-£110,000.

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The potential for the plot and it is a plot

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is to create something that takes advantage of the view. It's a dream sheet of white paper.

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As far as planning is concerned,

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Dartmoor National Park is, happily, just over there.

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They have tighter controls,

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quite rightly, for the Park.

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Here is a slightly better local authority as far as giving you a chance of a dream, special home.

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Bearing in mind the local market, what does he think a dream home built here might be worth?

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A high-quality contemporary bungalow built on this spot could fetch as much as £400,000.

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Let's face it, on a scale of 0 to 10, the property itself wouldn't score very highly.

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But the location, well, from my point of view that gets an 11 and all it needs

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is an adventurous soul to come along here and build a property fitting of this incredible spot.

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Let's find out who bought it when it went under the hammer.

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It is a single-storey, three-bedroom bungalow. A wonderful opportunity.

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Lovely view. I'll risk the top of the guide

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and say I'm not starting at less than 110. Thank you.

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At...112. 112.

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114. 116.

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118.

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120. 122.

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124. 126. 128.

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130. 132. Would you go to 133?

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Are you sure? OK. At 132...

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Four in the background. 134. 134. You're in?

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134. Five if it will help you. 134 stood at the back. And 134 and a half there.

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135, straight back. 135 and a half. 136.

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At 136...and a half. 137.

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At 137 and a half. 138.

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138 and a half. 139.

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139 and a half. 140. 140.

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140, once. 140, twice. Good sign. They're leaving the room.

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OK! At 140, once. 140, twice.

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Here we go. At 140. Gentleman in the back of the room has got it at 140. Congratulations.

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Eager for the hammer to fall on that bid for £140,000 was electrician Ryan.

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He lives in nearby Plymouth with his wife Sarah and their three children.

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This purchase represents something of a homecoming for him. I met Ryan to find out his plans.

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Good to meet you. Congratulations. I'm very jealous. Amazing location.

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It is. It's a lovely plot and we're really pleased with our purchase.

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-So why did you want to buy it?

-Basically, we needed a project.

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I finished the house I live in. I've converted the loft and various things and got itchy feet now.

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-I needed a bigger project. This is it.

-Do you know the area?

-Yeah. I actually come from this village.

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I lived in a cottage just up the road, so I know it very well.

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I had a bit of local knowledge that it was a good plot.

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So for Ryan it's a case of going back to his roots to build a brand-new home for his family.

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# Going back to my roots Yeah... #

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-What would you like to build?

-I think only a bungalow. There's restrictions on planning.

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So a bungalow of some description.

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Do you have any ideas at this stage for preliminary plans?

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My wife's a building surveyor so she'll do all the drawings.

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She's onto that. Not really my department. She's doing all that.

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We'll hopefully move the house back slightly to keep the gardens on the south side.

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This is pretty much to the front of the plot and that will enable us to live in this while we build it.

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-Ah!

-It'd be a nice little rent saver.

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-So, in fact, the new property wouldn't share the footprint of this one at all?

-Hopefully not.

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This one's really in the wrong part of the plot. We'd like to move it back and have the garden and patios

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-on this side.

-Right. They might be funny about that.

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They might well not let us, in which case we'll knock it down and build on.

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-How will you maximise the views?

-Because of the height restrictions, because of the bungalow,

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we're not going to be able to elevate. We'll hopefully go into the loft space,

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but I don't think they'll permit dormer construction so it'll just be Velux windows.

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Hopefully, it'll be a nice view. But the view is one of the pulling points. It's just stunning.

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-What about down on the ground floor?

-We'll have a lot of glass on the back, bi-fold doors,

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going right through the back of it out onto patio areas.

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-And the idea is to live in it?

-If we can get permission to build something really nice,

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we'll stay for sure. If we don't, then maybe we will build it and move on. Not 100% sure yet.

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# I'm homeward bound Got my head turned around... #

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Extending the existing footprint to the property will be less straightforward from a planning view

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but it could be well worth the hassle for the views

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and Ryan certainly brings some handy skills to the table.

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Tell me a bit more about you.

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-I'm an electrician.

-Oh, great.

-I've got my own business. Even in the recession, I'm busy.

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So you could do all the electrics on the new place.

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Yeah, most things, plastering. As soon as it's up and watertight,

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I'll be on my own then to do the rest of the project,

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but I've got good friends - builders, carpenters. They'll all muck in and give me a hand.

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What about this existing bungalow, then?

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What'll you do with this? Are you just going to make it habitable?

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Temporarily, I'll make it habitable. I'm going to locate a kitchen in a back bedroom.

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Just generally paint right through. New carpets, put a shower in, tile that,

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and just get it liveable.

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Even if they make us knock it down, what we save in rent - to rent a house is £800 a month -

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so what I spend I'll get back while the planning goes through.

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So what's the best case and worst case scenario for the time?

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Worst case, I would say 18 months to build it. I'll do a lot myself. But it could be done in 12 months.

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-What budget have you got?

-We're hoping to build the property for under 100.

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£100,000, somewhere around there.

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That's with me doing a lot of the labour. That's basically the budget.

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If you do get to build something you're proud of, is that it? Are you going to stay here?

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I think we might. If we adjust to living in the country and the wife likes living up here,

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then we'll probably stay for the right property.

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-Good luck with it all. Congratulations. You've got a great plot. Amazing.

-Thanks a lot.

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Well, what a great result for Ryan.

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Not only has he got a superb bit of land and a usable building,

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but it's in the village where he grew up. I'm sure his family will be delighted to return here.

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Still, there is a year to a year and a half's worth of work to get this place sorted out

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or to get rid of this place and put something suitable in its place.

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Find out how he gets on with the planning and everything else later.

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This is vibrant Hackney in East London. Hackney has had its fair share of ups and downs,

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but right now there's a lot going on here in the run up to the Olympics

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with much promise of better transport links, job opportunities and a boost for arts and culture.

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It really is a one-off opportunity for this borough to shine for sure.

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# I got a souvenir in London... #

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One of the major boosts to this ever-popular part of London

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will be that it is properly linked to the Tube network for the first time by the East London Line.

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That's being extended to carry passengers to the Olympics just up the road.

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With all these developments, Hackney's got it, or is getting it.

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I'm here to see this lower ground floor flat. It's got a guide price of £210,000.

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It's got its own entrance, which I love, and is part of this four-storey mid-terrace.

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Unusually, it's got its own back garden. Possibly with potential for an extension? Let's take a look.

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The flat's on quite a busy road, which will not appeal to everyone,

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but the promise of a garden and a fair amount of space for a London flat does appeal.

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Well, THIS is a hallway! I love it! Huge amounts of space,

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although it is covered in woodchip wallpaper. There's just a vast area here that is wasted.

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This is a London property. You could fit another bathroom in!

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You've got a bathroom here, but you could probably change the layout.

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We go into this really big room, probably used as a sitting room.

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Not ideal with the boiler here. I'd stick it in the kitchen.

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But you've got this beautiful bay window. These old shutters, once restored, could look fantastic.

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Something I'm noticing is that I'm sort of falling backwards.

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You can see this floor is definitely on the slant.

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Maybe that's because... that's the culprit.

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A great big crack running right the way through this wall.

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I'd contact a structural engineer and get that checked out.

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Dare I say the word subsidence? Whoever bids for this needs to know that structurally it is sound.

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But with that said,

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I really like this little flat.

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It's not dark, it's not dingy. I think it's going to be a good one.

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It's great. Lots of space, so plenty of potential.

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Assuming there's no subsidence, I'd think about changing round some of these walls to add a bathroom

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and make that bedroom bigger.

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I think it's safe to say that this flat has an awful lot of square footage in its favour.

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A good-sized kitchen space, although this is for the tip!

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And a really nice lounge area. I think it could do with changing it all, rejuggling it,

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but you've got a good space, lots of light from the garden.

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I'm just wondering if you could have an extension out there, some lovely doors leading out to that garden.

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I'm going to go and check it out.

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At the moment, access to the back garden is through what I would call the back bedroom.

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And what do I find there? Well, this garden needs to be attacked by some shears

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and a lawn mower. And then you'll see a pretty little walled garden.

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Get this old thing knocked down. You've got quite a lot of space.

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I think a tiny little extension would really benefit this property.

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You may even get that within permitted development, so you might not need planning permission.

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But it's worth checking out with your local council. But this space is a real golden nugget.

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# In the jungle, the mighty jungle The lion sleeps tonight... #

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Lovely flat, good-sized garden, potential to change it around a bit

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and all for that guide price of £210,000. In Hackney! We asked a local estate agent along

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to hear his opinion on this Hackney hideaway.

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The property's a bit different.

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It needs some refurbishment throughout and some structural attention, by the looks of it.

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But ultimately it's the sort of property that a lot of people would take pleasure in restoring

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-to make a lovely family home.

-Assuming no structural problems,

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what would he expect to get for this flat as a rental?

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We'd be looking at around about £1,300 per calendar month, rental.

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Not bad at all. What about sales figures?

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In my opinion, once this property is renovated, it should be looking at around about £300,000

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to £320,000.

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This flat has space on its side. Even though it's ground floor, it's got light.

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It's in an area that can only go one way and that is up. With some layout changes and an extension,

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you could have a spectacular flat with this enormous garden.

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But I'd still investigate that structural crack. Let's go to auction and see who fancied it.

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So Lot 13, good-sized flat, plus you've got a garden.

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I don't know. 200,000?

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It's worth that all day long. Thank you. 200. 205?

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205 anywhere?

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205. 210.

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210. 215.

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220?

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216. 217.

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-218.

-This lot was proving popular with something of a bidding battle ensuing.

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We rejoin the bidding at £240,000 - 30 grand over the initial guide price.

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240.

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241.

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242. 243.

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244? Yeah? 245.

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246?

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247. 248?

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247, standing up. First time.

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Second time. Third and last time. Have you all done?

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Sold, 247.

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With her successful bid of £247,000, it was a clearly delighted Natalie.

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Well done, congratulations.

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She was at the auction with her friends and property finders, both called Phil.

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I met with Natalie and one of the Phils back at the flat to find out her plans.

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Natalie and Phil, congratulations. Now, Natalie, tell me about auction day.

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I'd never done this before. I had no idea what to expect,

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so the other Phil, who has been working with us on this, offered to bid on my behalf.

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So he was bidding and I was standing tensely next to him. He waited right until the end

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to jump in. I was like, "You're losing it! Get in there!"

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-But it was fine.

-So you were there with Phil and the other Phil.

-Yeah.

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-So what's your relationship?

-They're property finders.

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They found the property for me. Also they'll be project managing the whole development of this property.

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-So you left it all to the other Phil to bid on auction day.

-Yes.

-Were you happy with the price?

-Yes.

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I loved this flat so I was prepared to pay way more than I'd been advised!

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So I was really happy with it. It was the price I'd been given, around about what I should pay.

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-But I was prepared to...

-She was prepared to go significantly over our recommended price!

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# I would give everything I own... #

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So Natalie was determined to get this place and she's clearly enthusiastic about it.

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Huge garden, exactly the area I wanted. I'd say I was over the moon.

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So you've a good idea of what you want. What is your vision for it?

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Em, I'm hoping to move in in a couple of years once it's rented, so it really is my flat.

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So I wanted two beds and we'll extend at the back

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to make the centre area slightly bigger

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with a nice-sized main bathroom.

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-So you'll be doing building work.

-Yeah.

-Have you thought about planning permission

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-or is it permitted development?

-The distance we want to move out will be the permitted distance,

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so the only thing we might need planning permission for is changing to the French doors

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and whether we change materials. Permitted development only works if we use wood.

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If we were to use uPVC, which is slightly more efficient, we'd need planning permission.

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Buying at auction is not for the faint-hearted. Who did the research, read the legal pack...or not?

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-The lawyers read the legal pack and sent the report.

-So have any issues cropped up?

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Em, getting the mortgage has been a bit prolonged, getting all the right bank statements across.

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But it seems to be going well and there's a possibility they'll do some major works, the freeholder,

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which will make the building last a lot longer. It may add some cost.

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The costs of this communal work were unforeseen and will need to be paid upfront by Natalie

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or added to the monthly service charge. Will this impact on the budget?

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What's your budget to do the work for your flat, the internal work?

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-With the extension at the back, it'll be £40,000.

-Can she do it on that, do you think?

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-Comfortably.

-Really?

-We expect to save money on that.

-I did notice a huge crack.

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-Has there been any structural movement? Did you get it surveyed?

-We did.

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He came round with us about a week before the auction.

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He says possibly the end wall wasn't properly built to support the lintel

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but he says put up some props, knock the wall down, rebuild it. A day's work for a builder.

0:23:520:23:58

-We're not talking subsidence?

-No.

-So there's no huge worry?

-Definitely not.

0:23:580:24:04

-How much do you think it'll be worth once you've renovated it?

-We think, without the extension, about 350.

0:24:040:24:10

With the extension, probably up to 420, £400,000.

0:24:100:24:14

How long will it take your guys to get in and knock the work out?

0:24:140:24:19

Building time will be about six weeks. Then maybe six weeks waiting for planning permission first.

0:24:190:24:25

-So 3-4 months.

-Well, I'm very excited to see what happens here and what this will look like.

0:24:250:24:31

I can imagine it will be a fabulous pad. Guys, good luck with the build. Great meeting you both.

0:24:310:24:37

-Thank you very much.

-Pleasure.

-Thank you.

0:24:370:24:41

Phil promises to turn this Hackney flat into something special.

0:24:420:24:46

I am worried about that budget, although Nat seems to be calm and have full faith in their expertise.

0:24:460:24:54

Join us later to find out what happens.

0:24:540:24:57

Coming up: in Sunderland, this two-bed end of terrace is certainly not large.

0:24:580:25:04

It's small, but perfectly formed.

0:25:040:25:07

In Hackney: how much of a learning curve has it been for Natalie?

0:25:070:25:12

I wanted to learn from the project with the intention that perhaps I would do it again.

0:25:120:25:18

But first, in Devon, Ryan's clearly not sentimental about demolishing the old bungalow.

0:25:190:25:25

I wasn't sad. It was blocking my view!

0:25:250:25:28

We're back in the Devon village of Wotter. Electrician Ryan, wife Sarah and their three children

0:25:320:25:39

bought this bungalow at auction for £140,000. It was in a pretty bad state,

0:25:390:25:44

but had spectacular views so it was clear that the land was the best selling point here.

0:25:440:25:51

Demolishing the property to start again looked the best option given Sarah's area of expertise.

0:25:510:25:58

My wife's a building surveyor, so she'll do all the drawings.

0:25:580:26:03

She's onto that already. Not really my department.

0:26:030:26:07

We'll hopefully move the house back slightly, to keep the gardens on the south side.

0:26:070:26:13

This is to the front of the plot. That will enable us, if they let us, to live here while we build it,

0:26:130:26:20

which would be a nice rent saver.

0:26:200:26:23

The plan was to live in the existing bungalow

0:26:230:26:27

whilst they built their new dream family home.

0:26:270:26:31

That would be extra special as Ryan grew up in the village.

0:26:310:26:35

However, a brand new property on a different footprint required planning permission

0:26:350:26:40

which was far from guaranteed.

0:26:400:26:42

Well, we're back two years later to find out how they got on.

0:26:420:26:47

Wow!

0:26:550:26:57

The old green bungalow is a thing of the past and a little further up the hill stands a brand-new house.

0:26:570:27:03

Outside, there's still a bit to do. The exterior is to be rendered and the garden landscaped.

0:27:030:27:09

But inside there's a spectacular family home, which makes the very most of the incredible location.

0:27:090:27:16

So this is our open-plan kitchen.

0:27:180:27:21

We wanted a big island. That was the main thing, with a breakfast bar,

0:27:210:27:26

so the children can sit at it in the mornings.

0:27:260:27:30

We've got solid wood worktops. Really wanted it for a natural feel.

0:27:300:27:35

Through here, I built the bricks just to give it a more country cottage kind of look.

0:27:350:27:42

We haven't quite yet got the oven, but that will be the right size one day.

0:27:420:27:48

Coming around, we've got the solid wood flooring.

0:27:480:27:52

And then on to... the big patio doors,

0:27:520:27:56

which we're really pleased with.

0:27:560:28:00

And, beyond that, the view.

0:28:000:28:03

# You should come back home Back on your own now... #

0:28:030:28:07

Although the old bungalow is now a pile of rubble, it was very useful

0:28:070:28:12

as it allowed the family to live on-site while building took place.

0:28:120:28:17

It seems Sarah became very attached to the old place.

0:28:170:28:22

It was quite an emotional day when that went. It was our home for nearly two years.

0:28:220:28:28

-And, you know, it was the children's home.

-I wasn't sad to see it go! It was blocking my view!

0:28:280:28:35

But it served its purpose. I don't think we'd have been able to achieve what we have

0:28:350:28:41

with the budget if we hadn't lived on-site.

0:28:410:28:44

Living on-site gave Sarah time to design the perfect house for the plot and the family.

0:28:440:28:50

By using the lie of the land, she created an upstairs that doesn't look like one.

0:28:500:28:56

In fact, there are three levels.

0:28:560:28:59

On the ground level, there's the kitchen, diner, sitting room and an office study.

0:28:590:29:05

On the first level, there's the entrance hallway and three good-sized bedrooms.

0:29:050:29:11

Plus a huge family bathroom with a walk-in shower.

0:29:140:29:18

On the top level, there's another sitting room and a spare bedroom.

0:29:180:29:23

Because the site's on a slope, that's where the design comes from.

0:29:230:29:27

We didn't have to dig out so far at the back, so it's split level.

0:29:270:29:32

That was Sarah's idea.

0:29:320:29:34

I've never designed anything on this scale before. I've always dealt with small refurbs,

0:29:340:29:41

extensions, that kind of thing. From a professional point of view, it was quite a challenge for me.

0:29:410:29:47

I knew I had to get it right. We couldn't afford any mistakes.

0:29:470:29:52

By taking their time and working with the layout of the plot,

0:29:520:29:56

Sarah's design and Ryan's building skills have produced an original and extremely successful family home.

0:29:560:30:03

We wanted the rooms to flow. We wanted to keep all the sleeping accommodation at the back.

0:30:030:30:11

We wanted a traditional feel as well, the log burners and stuff.

0:30:110:30:15

We didn't want it ultra modern, too clinical. We have wooden worktops and stuff, to be homely.

0:30:150:30:23

Ryan and Sarah spent £140,000 buying the property and £110,000 getting it to this stage,

0:30:230:30:30

bringing their total outlay to £250,000.

0:30:300:30:34

It's time to find out what two local property experts think of all their hard work.

0:30:340:30:41

I am surprised at the amount of space they have here in the rooms.

0:30:420:30:47

I do like the top bedroom, which has the picture windows overlooking the moors

0:30:470:30:53

towards Plymouth Sound. On a sunny day it'd be stunning.

0:30:530:30:58

I think the standard of craftsmanship is fantastic.

0:30:580:31:02

Often you see properties that are renovated or rebuilt in not such a nice finish. This is superb.

0:31:020:31:09

The care and attention to detail shown by Ryan and Sarah have clearly impressed the experts.

0:31:090:31:15

So what do they think this brand-new house is worth?

0:31:150:31:19

I would put this property up for sale for £400,000-£425,000.

0:31:190:31:23

If I was to put this onto the market in today's market conditions,

0:31:230:31:27

I would hope to achieve around the £450,000 mark.

0:31:270:31:32

Those valuations would give an incredible profit of £150,000-£200,000

0:31:320:31:39

before costs and expenses.

0:31:390:31:42

-Great. Excellent.

-That's about where we thought. It's nice to know there's money in it,

0:31:420:31:49

not that we're selling.

0:31:490:31:51

I'm delighted that Ryan and Sarah have made such a success of this.

0:31:510:31:56

They had the vision to see just what a fabulous location it is

0:31:560:32:01

-and the talent to make the very best of it.

-We sat in the old building and wondered if it would ever be,

0:32:010:32:08

-but now it's here, we're really pleased.

-Like it was always here.

-It's home.

0:32:080:32:13

This is Sunderland in Tyne and Wear.

0:32:170:32:20

Long famed for shipbuilding, now it's car manufacture and new technologies

0:32:200:32:27

that lead the way.

0:32:270:32:30

Looking around, you might think I'm in some remote suburb, but how wrong you would be.

0:32:300:32:37

A 15-minute brisk walk takes you right into the city centre

0:32:370:32:41

and even closer is the Metro station. It connects the whole region from Newcastle Airport,

0:32:410:32:48

down to the coast, to Sunderland itself. You're far from isolated.

0:32:480:32:53

What am I here to see? It's this. An end of terrace. At a guide price of £20,000-£30,000, let's look.

0:32:530:33:00

£20,000-£30,000 doesn't sound much, especially as it looks as though it's in pretty good nick

0:33:000:33:06

as far as I can tell. But what's in store as I gear up to take a look around inside?

0:33:060:33:14

So not a lot of money, but do you get much house for that?

0:33:140:33:19

Well, at first glance, yes, you do. A couple of nice practicalities - a nice entrance porch there

0:33:190:33:25

to keep the noise and the cold out. And an open-plan staircase that definitely gives

0:33:250:33:30

a nice feeling to this living room area. It's not huge, but you have this sort of bay window,

0:33:300:33:36

which adds a little bit more space.

0:33:360:33:39

It needs a lot of refurbishment. It's a small place, but perfectly formed, as they say.

0:33:390:33:46

Through into the kitchen. This has reached the end of its useful life.

0:33:460:33:51

It needs to be replaced, but I'm not seeing anything that worries me so far.

0:33:510:33:57

How big the garden is at the rear is anyone's guess since it's so overgrown,

0:33:570:34:03

but at least it's a proper space, not just a yard.

0:34:030:34:06

Unfortunately, the word space can't be applied upstairs.

0:34:060:34:10

The bathroom's a standard size, but the bedrooms are small.

0:34:100:34:15

Very small.

0:34:150:34:17

Out to the front of the property and round the side and you find a little bit of garden, grass.

0:34:170:34:24

The first thing I'm thinking is is it worth building an extension?

0:34:240:34:29

Well, the answer in short is no. The amount of money it would cost,

0:34:290:34:33

you would never get back in terms of the value or extra money for rent. So don't do it.

0:34:330:34:40

Well, that was straightforward. This petite house is what it is - a petite house.

0:34:420:34:47

But as far as rental goes, maybe good things do come in small packages.

0:34:470:34:55

Just because the purchase price is quite cheap doesn't mean that rental income is similarly so.

0:34:550:35:01

A house like this one in good condition would rent for around £450 a month.

0:35:010:35:07

So let's say you got this for around £30,000, spent £10,000 doing it up. That's £40,000 invested.

0:35:070:35:13

£450 a month in rent is a 13% yield.

0:35:130:35:18

Now you may well have to pay money to a lettings agent and there's tax,

0:35:180:35:23

but either way that's a whoopy-doo, dog-tail-wagging, ker-ching investment!

0:35:230:35:28

This part of Sunderland isn't the most expensive and the waste ground isn't easy on the eye,

0:35:280:35:34

but if you get this for around the guide price of £20,000-£30,000,

0:35:340:35:39

maybe this part of Sunderland could be someone's wonderland.

0:35:390:35:44

We asked along a local estate agent to hear his opinions.

0:35:460:35:50

This area of Sunderland is a popular suburb, situated conveniently for access to the city centre.

0:35:500:35:57

It'll be popular for young professionals, first-time buyers and buy-to-let opportunists.

0:35:570:36:03

How would those figures stack up? First, rental.

0:36:030:36:08

Yes, it would rent very well to young professionals.

0:36:080:36:12

The return would be around the 375 mark, possibly up to 400. Certainly no more than that.

0:36:120:36:18

-And what could a resale achieve?

-If the property was refurbished to a good standard,

0:36:180:36:24

the resale value at the moment would probably be £50,000-£55,000.

0:36:240:36:29

Well, the house is certainly cheap and with those potential rental returns it's also very cheerful,

0:36:290:36:35

but it would also make a lovely home with good transport links and proximity to the city centre.

0:36:350:36:41

What's not to like? Let's see who agreed.

0:36:410:36:45

Lot 37, guided at £20,000 to £30,000

0:36:480:36:51

Put me in at the bottom of the guide 20, to get me away? 20?

0:36:510:36:54

10 then? Put me in at 10,000?

0:36:540:36:57

10 we've got. 12. 12 and 14.

0:36:570:37:00

16 anywhere? 15.

0:37:000:37:03

16? 16. 17?

0:37:030:37:05

17. 18. 19.

0:37:050:37:08

20. 21?

0:37:080:37:10

21 anywhere?

0:37:100:37:12

At 20,000. 21. 22.

0:37:120:37:15

23. 24. 25...

0:37:150:37:17

'The house may be small, but the potential had been spotted by several bidders contesting this lot.

0:37:170:37:24

'We pick it up when the bidding reaches £35,000.'

0:37:240:37:27

At £35,000 then for the first time.. Take a quarter?

0:37:270:37:31

One more? 35 and a quarter. 35 and a half. 35,750.

0:37:310:37:36

36. At 36,000.

0:37:360:37:39

At £36,000... 250? 36,250. 36 and a half?

0:37:390:37:44

At £36,250 for the first time...

0:37:440:37:47

At 36,250 for the second...

0:37:470:37:50

£36,250 for the third and final time...

0:37:500:37:55

Sold. Thank you very much indeed.

0:37:550:37:57

'The successful bidder who secured the lot for 36,250 quid was Graham.'

0:37:570:38:03

# I'm walkin', yes, indeed

0:38:030:38:05

# I'm talkin' about you and me

0:38:050:38:08

# I'm hopin' that you'll come back to me... #

0:38:080:38:12

'Graham is a Sunderland local and for 20 to 30 years has run his own business in home improvements,

0:38:120:38:18

'so he sounds like the man for this job.

0:38:180:38:20

'I met him at the property to find out why he took on this investment.'

0:38:200:38:25

-Graham, good to meet you. Congratulations.

-Thanks.

-Tell me why you wanted to buy this place.

0:38:250:38:31

I came to see it before. I quite lik the area. It is improving.

0:38:310:38:35

I think it's a good starter home. It can appeal to a lot of different people.

0:38:350:38:40

So I think it'll be good for both rental and possibly re-sale

0:38:400:38:44

for a first purchase for perhaps a young couple.

0:38:440:38:47

-Have you done this kind of thing before?

-Yes, it's something I'm getting back into.

0:38:470:38:52

I used to develop houses quite a few years ago, then came out of the marketplace.

0:38:520:38:57

I think now is the time to get back involved, so that's the plan.

0:38:570:39:01

Were you in the financial services industry?

0:39:010:39:05

-No, I was an estate agent.

-OK.

-Quite a few years ago.

0:39:050:39:08

From there, I've been into design, so I design kitchens and bathrooms and interiors.

0:39:080:39:14

I've done that for some time with my own business.

0:39:140:39:17

I've always been involved in property in some shape or form.

0:39:170:39:21

-So why Sunderland then?

-It's an area I know well.

0:39:210:39:25

I'm from here. I think the prices here are very good.

0:39:250:39:29

You can get a very good return on them. It's an up-and-coming area.

0:39:290:39:33

And also, really, I think a bit of local expertise helps a long way

0:39:330:39:37

in knowing what you're doing and how to do it.

0:39:370:39:40

'That's a good point. It's no use just buying a house if you don't know your market,

0:39:400:39:45

'how much it's worth or what you should do with it, but Graham obviously does get results.'

0:39:450:39:51

# It ain't what you do, it's the way that you do it, it ain't what you do, it's the way that you do it

0:39:510:39:56

# It ain't what you do, it's the way that you do it, and that's what gets results... #

0:39:560:40:01

'Why does Graham feel this house will give him a healthy result?'

0:40:010:40:05

It's part of a fairly new estate.

0:40:050:40:07

It's the end of a terrace. It's structurally very sound.

0:40:070:40:11

It needs a fair bit doing to it. But we'll do all that and it'll be a nice, little home.

0:40:110:40:16

Talk me through exactly what you'll do to sort it out.

0:40:160:40:20

Exactly? We'll strip it right the way back,

0:40:200:40:23

so the mock ceilings will come off, all the rubbish, the broken floors will come up.

0:40:230:40:29

The garden we'll machete down and see quite what's there!

0:40:290:40:33

Then we'll start probably on the outside, repair the windows.

0:40:330:40:37

The guttering outside needs to be done straight away.

0:40:370:40:41

-That's created the damp in one of the bedrooms?

-Yes. We'll get that sorted as soon as we can,

0:40:410:40:46

re-plaster, then fit the new kitchen fit the new bathroom, and then see to the flooring and decoration.

0:40:460:40:53

What's the cost for the renovation?

0:40:530:40:56

I've got about £8,000, I think, to play with. I'm hoping to get it done for a bit less than that.

0:40:560:41:02

And the timescale?

0:41:020:41:04

Within six to eight weeks on the outside it'll be ready to put back on the market

0:41:040:41:09

or be available for renting.

0:41:090:41:11

What will make you decide to rent it or sell it on?

0:41:110:41:15

Basically, the valuations we get and the interest we get when the house is done.

0:41:150:41:20

If it generates a lot of interest at first or we have a good potential buyer, it'll probably go

0:41:200:41:25

and we'll take whatever money we can get out of it.

0:41:250:41:28

If the money's not there or there's no interest, rather than have it standing,

0:41:280:41:34

I'll rent it and then look to do something in five years.

0:41:340:41:37

So what would you expect it to maybe re-sell for?

0:41:370:41:41

I would think the mid-60s.

0:41:410:41:43

And rent?

0:41:430:41:45

425, 450.

0:41:450:41:48

'Graham obviously has his business head on

0:41:480:41:51

'and knows the key to making this place work financially is to keep it simple.

0:41:510:41:56

'The sums add up. He knows what needs to be done and there is no holding him back.'

0:41:560:42:01

-What's next for you?

-We're looking for more houses. I bought five in total last month.

0:42:010:42:07

What?!

0:42:070:42:08

We're jumping into it. I have some other people who are interested in me sourcing houses for them,

0:42:080:42:15

so I'll be doing a combination of my own and finding houses for other people

0:42:150:42:20

and really getting into it and just seeing what bargains are available.

0:42:200:42:24

-Good luck and we look forward to seeing how you get on.

-Thank you.

0:42:240:42:28

Graham has got a great little property here and I think the rental route is definitely the way to go

0:42:280:42:34

because onward sales of this place may be difficult in the current market.

0:42:340:42:39

Will he get the yields he's hoping for? Find out later in the show.

0:42:390:42:44

Time and tide wait for no man. The weeks and months have passed.

0:42:470:42:51

How have our buyers got on with their DIY efforts?

0:42:510:42:55

-The work should have been done. Shall we go back and find out?

-Let's do it.

0:42:550:43:00

Back now to Hackney in East London

0:43:060:43:08

where post-graduate student Natalie had bought this two-bedroomed, lower ground flat

0:43:080:43:14

with a good-sized garden at auction for 247,000.

0:43:140:43:19

Under the guidance of her friend and property finder Phil, the plan was to renovate the flat completely

0:43:190:43:25

and add an extension at the back. Despite the state of the place,

0:43:250:43:29

it seemed Natalie's enthusiasm was threatening to get the better of her.

0:43:290:43:34

I love this flat, so I was prepared to pay way more than I'd been advised.

0:43:340:43:40

So I was really happy with it.

0:43:400:43:42

It was the price that I was given, that was around what I should be paying,

0:43:420:43:47

-but I was prepared to...

-She was prepared to go significantly over our recommended top price.

0:43:470:43:53

We're back 12 months later to see if Natalie's passion for this project has paid off.

0:43:530:43:58

Clearly, she's worked very hard as the property has undergone considerable change.

0:44:020:44:08

From the outside, it's clear that Natalie has not done the extension,

0:44:080:44:12

but the exterior door has been moved, so access to the garden is no longer through the bedroom.

0:44:120:44:19

So what was involved to create all these changes?

0:44:220:44:26

We haven't actually altered anything

0:44:270:44:29

It was more undoing it and redoing it,

0:44:290:44:33

so even though it looks exactly the same, everything has had to be replaced.

0:44:330:44:39

# But I think I still feel the same... #

0:44:390:44:42

Despite the layout remaining the same, it's about the only thing that's unchanged.

0:44:440:44:49

The flat's been completely transformed.

0:44:490:44:52

The plan was for property finders Phil and Phil to project-manage the renovation,

0:44:520:44:57

but Natalie decided to take a more hands-on approach.

0:44:570:45:01

I wanted to learn from the project with the intention that perhaps I would do it again

0:45:040:45:09

and in order to do that, I needed to work with a company that allowed me more input and more flexibility,

0:45:090:45:16

so we agreed that it was probably best for me

0:45:160:45:20

to go off and find some builders who could show me the ropes a bit more.

0:45:200:45:24

# Show me, just show me

0:45:240:45:27

# Then shine me the light... #

0:45:270:45:30

Combining studying for a master's degree in psychology

0:45:350:45:39

with a first ever renovation project is no easy task,

0:45:390:45:43

but Natalie has clearly risen to the challenge with ease.

0:45:430:45:46

So before, there was the door over that side which we moved over here

0:45:460:45:51

to gain an extra bedroom and access from the kitchen

0:45:510:45:55

and as you came out, there was a big shed just full of gas canisters

0:45:550:45:59

and kind of big sewage systems.

0:45:590:46:02

This was just covered in weeds and nettles.

0:46:020:46:06

Yes, we cleared it all, turfed it

0:46:080:46:10

and paved the patio area.

0:46:100:46:13

# I see you're right on time... #

0:46:130:46:15

So what about the timescale for the project? Was it completed on time?

0:46:170:46:22

My original timescale was three months and it's taken nearly a year.

0:46:240:46:29

With that considerable overrun,

0:46:310:46:34

how did the original budget of £40,000 fare?

0:46:340:46:37

We ended up spending 45,000...

0:46:370:46:40

..plus an additional 14,000 for the external work which was down to the freeholders.

0:46:410:46:47

We asked along two local estate agents to give us their opinion

0:46:490:46:53

of the flat as it is now.

0:46:530:46:55

The finish is top quality. It's a quality refurb.

0:46:560:46:59

There's a great attention to detail in here.

0:46:590:47:02

I think it's a very nice finish.

0:47:020:47:04

She's complemented a lot of her modern attributes

0:47:040:47:08

with some original features which complement the property well.

0:47:080:47:12

The layout is excellent. They've mad excellent use of the space.

0:47:120:47:16

They've squeezed an en-suite into th front bedroom which is really useful

0:47:160:47:20

Natalie bought the property for 247,000

0:47:200:47:23

and spent a further £59,000 on renovations,

0:47:230:47:27

making a total outlay of 306,000 so far.

0:47:270:47:31

So what could the value of the property be if it was put up for sale?

0:47:310:47:36

If I was going to place this propert on the market, I'd be looking

0:47:390:47:43

to place it at around about £430,000

0:47:430:47:47

The property could be sold for in the region of £440,000.

0:47:470:47:52

That would be a potential profit of between £124,000

0:47:520:47:56

and £134,000 before costs and taxes.

0:47:560:48:01

Wow!

0:48:010:48:02

I hadn't asked about re-sale values at all

0:48:020:48:06

because I was somewhat concerned that I may have lost money,

0:48:060:48:11

so that is really exciting and really amazing.

0:48:110:48:15

I was dreading that part today, but that's brilliant.

0:48:150:48:19

If the property were to be rented out, what could the possible monthly income be?

0:48:190:48:25

Per calendar month, if I was going to rent this property, I'd be lookin at placing it around £1,700.

0:48:270:48:33

You could rent the property out for, per calendar month, £1,875.

0:48:330:48:39

Based on those figures, Natalie would be able to earn an annual rental yield of about 7%.

0:48:440:48:50

Yeah, that's brilliant. That's really good.

0:48:510:48:54

I was aiming for around 1,700, so yeah, that's brilliant.

0:48:540:48:59

So has the project been worthwhile for Natalie, now that the transformation is complete?

0:48:590:49:05

I think now that you've told me the figures, it's definitely all been worth it.

0:49:070:49:12

There were definitely highs and lows

0:49:120:49:14

There were minutes when I hated coming here, like so many tears,

0:49:140:49:19

but overall, I've really enjoyed it and I'm pretty proud of my accomplishment.

0:49:190:49:25

It's back to Sunderland in Tyne and Wear now

0:49:290:49:32

where earlier, we saw this two-bed, end-of-terrace house which was tired, shabby and run-down.

0:49:320:49:38

It badly needed attention from someone who runs a home improvement business when in walked Graham

0:49:400:49:46

who runs such a business. What are the chances of that?

0:49:460:49:49

He bought it for 36,250 and reckons that prices in Sunderland represent good value.

0:49:490:49:55

I think the prices here are very good. You can get a very good return on them.

0:49:550:50:00

It's an up-and-coming area

0:50:000:50:02

and also, really, I think a bit of local expertise helps a long way

0:50:020:50:07

in knowing what you're doing and how to do it.

0:50:070:50:10

Local man Graham aimed to turn this house around on a budget of £8,000

0:50:100:50:15

and have it up for the re-sale market or rental in six to eight weeks.

0:50:150:50:21

When we returned 11 weeks later,

0:50:210:50:23

we were hoping to see if Graham's skills in home improvement

0:50:230:50:27

had put the sun back into this part of Sunderland.

0:50:270:50:30

Certainly with fresh paint on the front door and on the upper wall, plus new double glazing,

0:50:300:50:36

the house is now much easier on the eye.

0:50:360:50:39

Gone is the shabby front room to be replaced by a far more tasteful sitting room

0:50:400:50:46

with new flooring and the gas-effect electric fire.

0:50:460:50:50

The kitchen space was small, but it has also had the benefit of Graham's eye

0:50:530:50:59

with new contemporary units installed.

0:50:590:51:02

In here we have the kitchen.

0:51:040:51:06

With these houses, one of the bigges problems is lack of storage space,

0:51:060:51:10

so I was very pleased, in quite a tight area, to get a big bank of storage units like this

0:51:100:51:15

which provides massive storage space

0:51:150:51:18

and in here we have the fridge and the freezer and everything as well.

0:51:180:51:23

Over here, we have more of an idea. We have the cooking area with a new hob, extractor and oven.

0:51:230:51:29

Obviously, we've got the drawers and in here we have the washing machine with a sink unit there.

0:51:290:51:35

It's quite compact, but it is very usable, so I was quite pleased with the design

0:51:350:51:40

and the fact that we have been able to get an eating area in here too.

0:51:400:51:45

Upstairs, the bathroom has been stripped and gutted

0:51:450:51:48

and a stylish suite, along with new tiling, has been put in.

0:51:480:51:52

The landing and the bedrooms have been done in simple, but effective decor,

0:51:520:51:57

leaving a blank canvas for whoever buys this.

0:51:570:52:00

The rear garden is also more attractive now after an impressive tidy-up

0:52:020:52:07

with a lawn laid and a patio area to relax on.

0:52:070:52:10

And it seems like the wasteland at the back is undergoing a transformation all of its own.

0:52:100:52:16

When we first looked at this site, over there was just derelict with some concrete foundations.

0:52:160:52:22

I knew something was going to happen but I didn't know when,

0:52:220:52:25

and I was delighted when a month after we bought the place, work began.

0:52:250:52:30

It's going to be an incubator unit for offices.

0:52:300:52:33

It's going to give jobs for about 100 local people, hopefully.

0:52:330:52:38

I'm delighted that this area is getting tidied up and it should increase the value of this property

0:52:380:52:44

because it's finished and there's a lot more going on with the area.

0:52:440:52:48

It'll look nicer and there'll be a bit more employment.

0:52:480:52:52

Back inside, the old timber ceiling has been replaced with walls and ceilings skimmed.

0:52:520:52:57

With no gas supply to the estate, Graham had new storage heaters installed.

0:52:570:53:02

Cleaning out the gutters solved the damp problem in the front bedroom,

0:53:020:53:07

so it's been a pain-free renovation for Graham.

0:53:070:53:10

But apart from doing the design and decor here, was he hands-on with the actual renovation?

0:53:100:53:17

I do have people who work for me and unfortunately, they were fairly busy

0:53:170:53:21

And I do have my own source of labour in the form of four sons

0:53:210:53:25

who have all helped reasonably willingly in one shape or form with the decoration

0:53:250:53:31

and helped me organise and keep an eye on what's happening.

0:53:310:53:34

That's an old one - exploiting the kids!

0:53:340:53:37

It sounds like Graham may not have even picked up a paintbrush, but he has been busy

0:53:370:53:42

because along with running his home improvement business, he's renovating five other properties,

0:53:420:53:49

so it's no wonder the timescale for this refurbishment shifted from six to eight weeks to 11 weeks.

0:53:490:53:55

How did his £8,000 budget cope?

0:53:550:53:57

I was hoping to bring it in a bit less than that. It's been a little bit more. We're just short of 9,000.

0:53:570:54:03

Most of that went on the electric re-wire

0:54:030:54:06

and also the landscaping to the garden, back and front,

0:54:060:54:10

which we were hoping just to be able to cut down and get something decent out of.

0:54:100:54:15

We've had to go back to scratch and re-do it,

0:54:150:54:18

so that's bumped the budget up to a little bit more than where we wanted to be.

0:54:180:54:23

Add that to the original purchase price of £36,250

0:54:260:54:31

and the total outlay here is around 45,000.

0:54:310:54:34

Time to ask two local estate agents if Graham's work has made this property a winner.

0:54:340:54:40

It's a lovely house, very nice for the area.

0:54:420:54:45

The finishing's not perfect, but it's just about right to move into.

0:54:450:54:51

It's been renovated to a high standard for an investment property.

0:54:510:54:55

This will attract a higher quality tenant and inevitably increase re-sale value.

0:54:550:55:00

But will the returns exceed Graham's possible spend of £45,000,

0:55:000:55:06

first, if sold?

0:55:060:55:08

I'd market this property at 69,950,

0:55:080:55:11

looking to achieve offers between £60,000 and £70,000.

0:55:110:55:14

I would market the property at around £65,000

0:55:140:55:18

with a view to achieving about £60,000.

0:55:180:55:21

That's about right. It's nearer the 70,000 I'd be looking for.

0:55:210:55:25

I certainly wouldn't sell it for less than 65

0:55:250:55:28

on the basis that four to five years ago, these properties changed hands for £90,000.

0:55:280:55:33

Those two figures could give Graham a possible pre-tax profit

0:55:330:55:37

of between £15,000 and £25,000, but with rental a possible option,

0:55:370:55:42

what sort of income could he command?

0:55:420:55:44

I'd expect the property to achieve £525 to £550 per calendar month rental income.

0:55:440:55:52

I think the house in its current state would achieve around £425 to £450 per calendar month.

0:55:520:55:57

550 is probably about right. That's what we were hoping to achieve.

0:55:570:56:01

As it happens, we now have a tenant which we're very happy with.

0:56:010:56:05

We've checked her out and she's looking to take it from next month.

0:56:050:56:10

We've agreed a rent of £525 a month.

0:56:100:56:12

That's an excellent annual yield of 14%,

0:56:120:56:16

but Graham is still considering selling on

0:56:160:56:19

as this newly transformed property now makes it an attractive proposition to other investors,

0:56:190:56:25

so overall, I reckon it's all gone well for him.

0:56:250:56:28

I think this has been a success,

0:56:280:56:30

bearing in mind what we paid for it, the work that's been done has been quite involved,

0:56:300:56:36

but I think we've come up with a good product

0:56:360:56:39

and it's very attractive for whoever wants to take it, either for a rent or to buy it.

0:56:390:56:44

We'll have lots more auction properties to show you next time.

0:56:460:56:50

-So join us then to find out what happens when that hammer comes crashing down.

-Oh! Join us then.

0:56:500:56:57

Subtitles by Subtext for Red Bee Media Ltd 2012

0:57:160:57:21

Martin Roberts and Lucy Alexander visit a cottage in Devon, a basement flat in London and a property in Sunderland. All of these properties have been sold at auction; Martin and Lucy find out who bought them, and what they paid when they went under the hammer.