Episode 2 Homes Under the Hammer

-Hello and welcome.

-For many, buying at auction offers the chance

to get hold of properties that need a lot of work.

People like to put their own stamp on what they buy

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

And you can often manage that if you buy your home under the hammer.

We love the thrill and the excitement of an auction room.

You can sometimes sense the hope and frustration in the air.

You never know quite how it's going to go until the very last second,

so let's see what tempted the buyers on today's show.

In Lewisham, south-east London, there's a battle to combat

the mould creeping through this top-floor two-bedroom flat...

And another battle, this time against the elements.

Could the weather be getting the better of this

mid-terrace in Gilesgate, County Durham?

These properties have been sold at auction.

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

when they went under the hammer.

GAVEL BANGS Sold.

This is Lewisham in south-east London.

It's an area that could be described as up and coming.

So, investing your money in Lewisham before prices start to escalate

could be a wise move.

Now, the property I'm here to see is on this tree-lined

residential street and it's a two-bedroom first-floor flat

which had a guide price of 130,000.

Let's head up those steps and see what we've got to greet us inside.

There are two other flats in the property

and the big back garden has been divided into three,

so that each flat has some valuable outside space.

Once through the front door, a second door gives

access to the flat I'm here to see at the top of the property.

What I love about these properties is the feeling of space.

Look, that's double, triple, quadruple height.

You really have got a lot of space all around you.

It needs a lot of work, though. Bathroom, a complete refit.

Same goes with the kitchen.

You've got a little window over here with a nice view of the garden.

But looking around, you know, you are going to need to spend

some time and energy, and there is mould, damp...

I'm not sure what it is.

It's not looking fantastic and it is worrying me.

I'm going to investigate further.

Well, there's me thinking the mould in the kitchen was bad -

have a look at this! It is everywhere.

All over the walls and the ceiling,

even the back wall. It's dripping down.

Now, I'm not sure whether there's been a big leak.

I think it's condensation,

but it's definitely worth getting in a specialist to sort that out

because you wouldn't want to buy this at auction to later on

find there are whole heaps of problems with this property.

The two bedrooms don't seem quite as badly affected.

The large double and the single both have high ceilings that I love,

and I love that original woodwork that remains in both the rooms.

The only downside is that both bedrooms overlook the road,

so that could be noisy.

I think I've found the solution and it involves

the living room, which is currently serving as a third bedroom.

Through here, we've got a fantastic space. Look at this.

It really is a wonderful room.

Again, one of the bonuses with this flat is the space you have.

I'm just wondering, is it worth moving that kitchen into this room,

and having a kitchen, little dining area, sitting room,

and then you could call that bedroom number three?

That is food for thought.

Another ingredient that might be worth thinking about is the loft.

This is a leasehold property, so it's vital to know

whether you would own this as well.

If it is included for that guide price of 130,000,

you could really add value if you get a room up there.

Outside, the property looks to be in pretty good condition.

The bit of garden allocated for this flat is overgrown

and hidden right behind the shed.

Be prepared to get your boots on to clear it before you can sit

and enjoy the lovely sunshine.

Could the new owner of the flat be about to clean up,

or will they end up stuck in the mud with this lot?

We asked a local estate agent to come and have a look

and get his opinion on the flat.

I think the property needs a lot of work, it's got a lot of damp.

Needs a new bathroom, a new kitchen, new flooring, quite a lot to be done.

OK, so let's talk figures.

How much could the flat be worth after a refurbishment

if it remained a two-bedder?

When this property is renovated, I think it could reach

a maximum of around £230,000.

This flat is a great size

and you might even be able to squeeze in a third bedroom.

However, I still have my concerns, as it needs plenty of updating

and there's that worrying mould to consider.

Let's head to the auction and find out who was prepared to take it on.

I move on now to Lot 133.

It's a two-bedroom raised ground floor flat, in need of updating.

It's got its own section of garden.

Who'd like to get me started on this? What about 150?

OK, we'll start there, 150 I've got. Thank you.

151, 152, 153, 154, 155.

Considerable interest at the auction,

and we rejoin the bids at £180,000.

180, 181, 182, 183, 184.

185? Yeah? 185, 186?

LAUGHTER

Anybody else? If not, 185 for the first,

185 for the second,

185 for the third and final time. Are we all done?

-GAVEL BANGS

-Sold, 185, well bought.

That successful bidder, paying £185,000, was Grant.

He and his partner Dawn have bought the flat as an investment.

I met them back at the flat to find out more.

Dawn and Grant, congratulations. I want to know the whole story

-and how you've ended up with this property.

-It was our first auction.

-Yep.

-Which was interesting. We'd had about five properties on the go

that we were looking at on the day. This one ended up

a lot more over guide, but it had potential and I liked it.

Are you a property developer?

Is this something you've been doing for a long time?

We started this a year ago, finished a place down in Hampshire

in Liss Forest, which is just under offer now.

A lot of work. Moved kitchens, bathrooms, the lot, so...

What was it that you did before you started the houses?

It's always been project management but in banking and insurance

and financial services.

Why did you want to stop that and move into this?

-Just a complete lifestyle change.

-Yeah, just a complete change

and just potentially do something different.

He's much happier. Although he's using the same skills,

if you will, project management, but it's obviously a different area.

Plus, you are your own boss.

It's also planning, and having a proper plan,

whether it's finding new people if someone doesn't turn up...

What's it like living with him? Because project-managing,

making sure you're on time... I mean, is he quite strict?

-Spreadsheets!

-SHE LAUGHS

-There are spreadsheets.

-Yes.

You've got to laugh. Poor Grant!

He doesn't stand a chance between us, does he?

I wonder WHY the couple have bought the flat.

Is the intention to sell or rent?

We'll put it onto the rental market. That's the plan.

So are you going to try and reconfigure the space,

or leave it as it is?

The bathroom is quite small.

There is a partition wall between that and the kitchen

which we'll take down anyway cos it's rotten,

so there might be configuring to be done there.

I've seen people move the kitchen into the lounge,

and then create a third bedroom. You could have that at the back.

-That could work, yes.

-That could work, just...yeah.

Hopefully the plumber can work the pipes.

We'll have a think about it.

Grant intends to take on a lot of the work himself

using the skills he learned on his previous project.

Dawn will provide crucial backup,

helping to source materials and tradesmen.

Now to tackle the problem that could scupper all those well-laid plans.

I have noticed a lot of black mould all over the walls.

What do you know about it?

We had a surveyor come in recently

and he confirmed it was just condensation.

He tested it with a damp meter and the walls aren't damp.

So it's just a bad case of condensation.

How much does Grant think the work is going to cost?

We've said 20,000 to do it,

How long do you think this project, start to finish, will take you?

-Erring on caution, probably three months.

-Yeah.

Guys, congratulations. It's been lovely talking to you both

-and I can't wait to see what you do with it!

-Thanks.

-Thank you.

Will we come back and see a spacious two-bed,

or will they have squeezed in that third bedroom?

You can join me later on in the programme to find out.

We're in the lively and historic university city of Durham

in the North-East of England.

The property I'm here to see is a 15-minute walk away

from the city centre, in a suburb that retains a lovely village feel.

So this is Gilesgate, very close to Durham city centre.

And more importantly, to its student population.

Yes, we are in Studentland, which makes this property

potentially very interesting. It's got three bedrooms,

it's terraced - let's take a look.

The guide price in the auction catalogue was £49,950-plus.

OK. Well, through the front door

and straightaway I'm thinking "Mmm, yes, bit of work required."

Look at that fuse board. The old fuses...not good.

So apart from electrics, what else is required?

Well, down here, glancing into that downstairs room

which would have originally been the lounge, you can see

that it has already been used, I think, as some kind of a let,

because that is laid out as a bedroom.

A fairly untidy one,

but a bedroom nevertheless.

But this room, this is a very large kitchen/living area.

This is an ideal room as a kind of common room -

it has a cooker in here.

It carries on through the back - a bit of a utility area

and on to the loo, and then upstairs to the bedrooms.

Erm... Oh, that's nasty.

Yes. It was all looking quite good until that.

Moving swiftly on. It's great.

Well, maybe not. But I'm prepared to give it time to grow on me.

The mould certainly has.

There is significant damp here.

I think our old friend the flat-roof extension is at fault.

I need to check outside.

Well, when you're looking at properties,

it's really important to look at them from all angles.

If you head out the front here, and take a look at the roof,

you can see something which could be a problem.

You can see the tiles look like they've got some problems with them

and if you look at the chimney stack,

again, the pointing on that looks like it's in need of some attention.

Now, any work on the roof is going to need scaffolding

if it's to be done safely, and that is going to be expensive.

So, as I said, whenever you view a property,

make sure you come outside and give it a good look.

If you're going to rent this out as an HMO

- that's a house of multiple occupancy -

then among a lot of other regulated issues, like fire alarms,

gas certificates and so on,

HMO inspectors would look at the suitability of the rooms.

At the front of the house, there is a good-sized double,

but the single room is small.

The third at the back is very small,

and only has this skylight.

Would they all qualify as habitable, lettable rooms? I'm not sure.

We invited a local estate agent along to find out what

he would advise for this property

that was guided at £49,950.

If you were to look at owner-occupier values, a resale price could be

somewhere in the region of £90,000 as a two-bedroom property.

If it were to go on the open student market for sale, you would be able

to achieve somewhere in the region of £110-£115,000.

On a family rental basis,

I would suggest somewhere in the region of £500 per calendar month.

On a student market, we rent on the basis of £80 per room per week,

which would equate to £240 per week,

a total of £960 per calendar month.

Don't forget that although this might sound like a no-brainer,

you have all those regulations to comply with for an HMO let,

and also, students don't rent for 52 weeks a year.

Well, this is a good-sized house with masses of potential.

Yes, there is work to be done,

but get it right and this really could be a bit of a gold mine.

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

We're going to go to a three-bedroom mid-terraced property.

It's got the gas-fired central heating, it's got the double glazing.

We've got it advertised with a price guide of 49,950 plus.

Can I ask for 50,000?

I'll take £46,000. 47 anywhere else. One bid on the left-hand side of 46. Do I have 47?

47 on the telephone. 48. 48.

49. 50.

Shaking your head.

I'll take 500 if it will help.

49 and a half. Do I have 50,000? 50,000 on the telephone. 50,500.

Definitely shaking. Going once at 50,000.

Sorry. 50,500. 51.

51 bid. 51 and a half. 52.

52 and a half bid. 53. 54.

54 bid. 55.

55 bid.

55 and a half. 56. 56 bid.

56 and a half. 57. Do I have 57 anywhere else?

Going once at 56 and a half, going for the second time at £56,500.

Sold to the gentleman standing.

That final bid of £56,500 was made by Andre

and Hillary here with daughter Sophie.

I met them to find out more.

-Hillary, Andre, lovely to meet you both. Congratulations.

-Thank you.

-Good place.

-It's got character.

-Tell me why you wanted to buy it.

Sophie is studying philosophy at Durham University and is

renting a house a couple of streets away.

She thought this might be a good area to buy in. We have let out houses before.

We have done them up and let them out, but not to students.

-Right. You bought it for your daughter?

-I want more rent than that!

-You are going to be ruthless, are you?

-We're not ruthless.

Durham I really like and it would be

an excuse to spend more time in Durham.

And Sophie could help us do this up.

-It's more than just a property? It's a lifestyle decision.

-Yes.

-Tell me about you two. What do you do?

-We teach at York College.

-Great.

-Art and Design.

-Fantastic.

-We've been teaching life drawing the last couple of days.

-Life?

-Life drawing. Nude model.

-This is something different, doing up properties.

I would have thought you'd be able to bring some of your art

and design into this.

-Do you want a mural on the walls?

-That would be good.

In our house at home he has painted lilies on doors and on the walls.

Good. I'd be disappointed if you don't. Make a feature of it.

It makes a change from magnolia. But no life drawing please, we're British.

But with Sophie studying here at university

maybe this could be her next student pad.

-She could be living in this next year?

-She could. She could.

-If she pays us enough rent.

-Come on. It's your daughter.

-This is business.

I think he's joking.

They have a budget of £7,000 set aside for the project

-What are the plans for it?

-The roof at the back probably needs replacing.

-The roof needs a good looking at.

-Roofs can be expensive.

-You could blow seven grand on the roof.

-I don't think so.

We have actually got some quotes and it won't be that much.

-Don't worry.

-We need to check the boiler out. We need to check the electrics.

-Yes.

The last house we did a heck of a lot of work.

But I wouldn't want to get up on a roof.

A wise decision. Some jobs should be left to the professionals.

The couple are hoping to have the house ready in about six

months, in time for the next student academic year.

As they both teach, they'll have time off in the summer to do some

finishing touches.

It could work out just fine.

What are you most looking forward to?

The point where the roof is done and all the major stuff's done

and we can just paint and make it look nicer.

Listen, lovely to meet you both.

I'm exhausted after that interview. Good luck with it.

-Thank you.

-Thank you.

And breathe.

Wonderful.

Andre and Hillary have got themselves a great buy here.

The charming thing is, I kind of don't think they really realise

quite what a fantastic investment it is.

I can't wait to see how they go on sorting it out.

Will there be a special mural painted when we get back?

Oh, yeah, and will she end up on the roof? Hopefully not.

You can find out later in the show.

Now, finding good tradesmen is often the key to getting a property

done up well and on time.

But some people choose to do it themselves to keep the budget down.

So, have our buyers been getting stuck in or just stuck?

Let's find out.

Lewisham in south-east London has begun attracting buyers who have

spotted that it's still a little more affordable than its neighbours,

even though it has good train access to Docklands and Central London.

Earlier in the programme, on this tree-lined street,

the two-bed first-floor flat in this property was

bought for 185,000 by Grant and his partner, Dawn.

The intention is to, having bought it and renovated it,

put it onto the rental market. That's the plan.

The most obvious issue about this property was that horrible, black

mould everywhere, but I wondered what else they were going to tackle.

So, are you going to try to reconfigure this space

-or leave it as it is?

-The bathroom is quite small.

There is a partition wall between that and the kitchen

which we'll take down anyway because it's currently rotten.

Potentially there could be other changes. I don't know.

They'd set a budget of 20,000 and hoped to have the flat ready

to let in three months.

It is now four and a half months later and we're back.

Wow. The flat has really undergone some major changes.

The staircase now welcomes you into this flat and the beautiful

open-plan kitchen/living area is at the front of the property.

They removed the walls that had formed the two front bedrooms

and this lush, light room is the result.

But where did the two bedrooms go?

Well, the former kitchen has become one, as I suggested, and with

the kitchen relocated to the very front of the flat, the middle

room that I thought would make a kitchen-diner is now also a bedroom.

And what about that black mould? Was there any damp? What was the cause?

It was literally just condensation.

All the rooms were locked up, all the windows were locked up,

so there was just moisture everywhere.

It was pure condensation.

Following the expert's report, they cleaned the mould

and then replaced a lot of the ceilings anyway.

The flat had new fire doors installed,

plus a replacement boiler,

and the flat roof over the dormer window's been fixed.

Grant has been on site every day,

project-managing the team that he's employed,

and he's been doing a lot of the hard work himself

to reduce the costs.

The loft space is jointly owned by all the flats in the property,

so Grant and Dawn couldn't make use of it for a third bedroom.

Outside, the overgrown garden has been partially cleared,

and money is being included in the budget to finish the job.

Talking of funding, how did the initial 20-grand budget fare?

We've run over - we're ready 4,000 over,

so we're looking at 24,000.

With the 185,000 they paid at auction,

it takes the total investment to £209,000.

And it sounds like the original plan to rent the property

-has now changed.

-We ideally want to sell it.

We don't want to keep it as a rental property.

We would like to just take the profit and then move on to the next one.

But will there be a profit?

Don't forget, they paid 55 grand over the guide price,

and they've gone over the renovation budget.

Not by a drastic amount, though, but it all adds up.

How much do the experts think the flat could now be worth?

If I was to put this property on the market, I'd hope to achieve

£255,000 to £260,000.

If I was to put this property on the market today,

I would put it on for £260,000.

Well, a possible profit of £46,000 to £51,000 before taxes

and expenses, if they were to sell.

If I was to put this property up to rent,

I would expect it to achieve £1,200 per calendar month.

If I was to put this property on the market today,

it would achieve £1,200 per calendar month.

And that would generate a yield of nearly 7% if they do decide to rent.

This has been the second property that the couple

have invested in, after Grant's career change.

So do they see this as a sustainable business model?

We'd need to be pushing three a year.

Right now, it's one to two.

If we can do three to four, that'd be great.

We're now returning to the city of Durham in the north-east

of England where, earlier in the programme,

in the suburb of Gilesgate, this three-bed semi was

bought for £56,500 by art tutors Andre and Hillary.

Their daughter, Sophie, is a student in Durham,

and she persuaded her parents that this would be a good place to

add to their portfolio.

We have let out houses before, done them up and let them out,

-but not to students.

-You bought it for your daughter then, or...?

Well, I want more rent than that, so...

-Oh, you're going to be ruthless, are you?!

-No, we're not ruthless!

The couple had a budget of £7,000 and hoped to have the property

ready for the next academic year in about six months.

Well, it's now ten and half months after our first visit

and we return to meet the family again.

The former kitchen at the back has been cleared

and the room is now a living area once again, because the

kitchen has been relocated into the utility room

in the rear extension.

You still have to go through the kitchen to get to the bathroom

where the suite has been retained and new flooring laid.

But the plans for the property have taken a detour.

Well, when we originally bought the property

we planned to rent it to four students,

and that all looked great, and then, we found

out that there are HMO regulations which mean room sizes have to

be a specific size in communal areas, so, in the end,

we realised that we couldn't do it, even if we shifted walls

and sorted things out.

We ended up having to keep it as more of a family home,

and we're actually renting it out to a couple now, which is great.

Yeah, and they are lovely, so, I feel good about that.

# Gonna make you feel good Gonna make you feel good. #

It means upstairs

the three bedrooms have remained in their original configurations,

decorated, and the damp doors dealt with.

Downstairs, the living room has been returned to its original use.

But treating the damp in the former kitchen

threw up some unexpected problems.

Well, when we came to this wall, we had real problems with the damp.

There was poor guttering and it was letting in a lot of water,

the slates on the roof needed sorting.

There was also another problem - there were some units here

and when they took them out, they found some dry rot.

That had to be sorted and that was quite costly and time-consuming.

The work took longer than expected,

but with Sophie's help, they did a lot of the decorating themselves.

Time to "brush up" on the budget.

Did that stick to what it said on the tin?

Well, I think we originally estimated about 7,000,

but with solicitors' costs, auction fees, unexpected things that happened like the dry rot, the roof,

it ran to about 11,000 at the end.

With the 56,500 they spent at auction,

it takes the total investment to 67,500.

Time to see what two local estate agents think of the finish

-they've achieved.

-I think it was a good idea not to pursue

the student route for this property.

The sizes of the three bedrooms upstairs would always

make it difficult for student occupation.

Overall, the property is deceptively spacious.

I think the property could be improved

by refitting the kitchen and also the bathroom.

Could the property be worth more than the £67,500 invested?

In the current configuration for the property,

I'd recommend an asking price in the region of 80-£85,000.

I'd currently value the property at £75,000.

That valuation range for the current three-bedroom configuration

would generate a profit of £7,500-£17,500

before taxes and expenses.

Interestingly, both agents agreed the rental income would be

£450 per calendar month

in its current configuration - a yield of 8%.

And Hillary and Andre are achieving a slightly higher figure.

They haven't added a student let to their portfolio.

I wonder if they'll be trying again.

All the complications have made us think it is perhaps a little bit

harder renting to students than you actually first think.

Well, that's it for today.

Join us next time for more Homes Under the Hammer.

-We'll look forward to seeing

-you then. BOTH: Goodbye.