Episode 55 Homes Under the Hammer

Hello. It seems the property market is looking up in certain

parts of the country,

so is now a good time to invest?

It very well could be, but just be aware,

you might not get as much for your money these days.

One way to potentially maximise what you do get is by going

to your local auction.

Why not go along to your local auction room

-and see what's on offer?

-That's exactly what today's buyers did.

Let's see what they bought.

First up, this London house might be feeling its age,

and after meeting the buyer, so am I.

I've been watching Under The Hammer all my life,

so I know what to do.

Up in Alloa, Scotland,

this bedroom's a bit of a pain in the neck.

Uh, uh, uh! It's a little bit... I mean, I can't even stand up.

Whilst in Chilton, County Durham, the problem is staring me

in the face.

Hm. Yes, the electrics definitely need sorting.

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.

-Selling, are we, then?

Well done.

This is the busy town of Ilford, North East London.

Believe it or not, the skeleton of a mammoth was found right here

and is now preserved in London's Natural History Museum.

Safe to say, quite a lot has changed since those beasts wandered here,

although there is still plenty of green spaces as well as a busy

town centre.

And, as our property shows, progress can produce mixed results.

On the plus side, this road overlooks a really pretty park,

right there.

From a negative side, well, I think it's quite a busy road,

with lots of traffic driving past.

So not the quietest place to be.

So, pros and cons already, but what about the property I am here to see?

Well, it is a three-bed mid-terrace.

It had a guide price of £275,000.

It does have a bit of an overgrown garden here and here.

But I can already see it has got double glazed windows -

another plus that will also help reduce this road noise.

I'm going in.

# Stop the noise, stop the noise

# I wish that I could stop the noise. #

Hurrah!

You can't hear so much of the traffic.

It is pretty noisy out there. So, what have we got?

A really nice hallway here.

You could certainly do with decorating this place.

But look at that lovely stained glass behind me, that's really nice.

Along here, we've got the banisters,

the spindles are properly hiding underneath there.

So another character feature for this '30s house.

A really nice-sized lounge.

We've got a second reception room at the back,

with lovely doors that lead out to the garden.

Oh, no, it's a bit of a shame.

Very small kitchen.

But this is what you would expect for a '30s house.

You can tell it hasn't been tampered with, it hasn't been extended.

I suppose if you didn't want to go into all that, you could think about

knocking through here and stealing a little bit of space from next door.

The next-door room could certainly take it.

But it is all looking rather good. So, yeah, thumbs up.

I'm having a look upstairs.

-# So far

-So far

# So good

# Gonna make it Knock on wood

# Yeah! #

Yes, generally the house is promising,

but it isn't totally without its problems.

There are a few signs of damp and the plumbing has, well,

seen better days.

Upstairs, the third bedroom is disappointingly small.

As is the rather sorry family bathroom.

The other two bedrooms aren't bad. Lots more lovely stained glass.

And the master bedroom has a fantastic bay window, although

there are some signs of cracking that will need to be looked at.

All in all, though, it is definitely more thumbs up than thumbs down.

# So far, so good. #

Overall, this isn't a bad size family property,

but the kitchen and the third bedroom are disappointingly small.

So, should you and could you extend and make it bigger?

Well, as you can see, it has just got this lovely,

pretty garden out here, which could definitely accommodate an extension

and still leave you with loads of space for the kids

to play in the garden. So, what are your options?

Well, you could improve the size of the kitchen

with a single-storey extension or maybe build up to the second storey

and fit in another bedroom as well.

You could even go up into the loft

and create another bedroom and perhaps an en-suite.

My advice - speak to some local agents

and find out what is most in demand in this area.

There might be the space,

but you don't want to risk overdeveloping this house.

Overdeveloping means

when you put in more than you can ever get back in terms of value.

Every property has a ceiling price, that's the top price you can get.

And no matter how much you do to a property, you are unlikely to

exceed it, because it is not just dictated by the house itself.

Other factors - like its position, the value of surrounding houses

and the type of area the house is in - all have a bearing.

So the real trick about a development opportunity is to know

when to stop.

# Oh, oh, oh You better stop

-# Stop

-Before you tear me all part

-# You better stop

-Stop! #

So, what development work does a local estate agent think

is best suited for this property?

You are finding that mostly in demand... It's a standard

three-bedroom, middle terrace,

1930s house with an extension across the rear.

That normally ticks all the right boxes

with purchasers in this area.

Once you go into the loft areas,

you need to make sure that the ground-floor accommodation

will suit the amount of bedrooms that are in the property and will

accommodate for that.

OK, so a single ground-floor extension to improve

the kitchen certainly seems to have some merit

and would suit the local market, but what about a loft extension?

Most people will look at putting one bedroom into the loft area

with an en-suite or shower room.

Some people will try to put two bedrooms

and a shower room in there, but sometimes that can make

the rooms quite small and a little bit harder to sell.

But obviously, any extension costs time and money.

So, as an investment,

would they be worth doing to this house that was guided at 275,000?

Should the property have a ground-floor extension

and be completely renovated, we would expect to achieve

a figure in the region of £345,000 to £355,000.

Should the loft extension be done, we would expect to achieve

a figure in the region of £375,000 to £385,000.

Those resale figures suggest an additional uplifting value

of £110,000 if both loft and rear extensions were carried out.

But with building costs for them both,

I can't see a massive increase in profit.

With rental figures thought to be around £1,350 per

calendar month as a three-bed house and £1,500 per calendar month

as a four-bed house, again, suggesting

if this was a developer's project, you'd need to think long

and hard about any extensions you do or don't carry out here.

Now, this might not be the most peaceful spot with lots of cars

whizzing past your front door,

but it is a solid property with plenty of potential and,

if you make the right decisions, well, I think

the pluses do outweigh the minuses here.

Let's see who agreed when we went to auction.

Lot 89.

A three-bedroom mid-terrace house.

Off-street parking. Needs updating.

Start at 280, move upwards.

280 I've got. 281 anywhere?

281. 282. 283?

283. 284?

Have a think. 284 coming in. 284.

285.

286. 287.

288. 289?

289. 290.

291. 292.

293. 294.

295.

One more? Lose it for 1,000?

Anybody else? If not, 294 for the first.

294 for the second.

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

Sold, 294, well done.

And so, for £294,000, the new owner of the three-bed

mid-terraced house in Ilford, Greater London, is local man Sheikh.

I met him back at the house to find out what he had planned.

# Shake, shake, shake, shake Shake it

# Shake, shake, shake, shake Shake it! #

Congratulations, Sheikh, lovely to meet you today.

-Lovely to meet you, too.

-Why did you want to buy this at auction?

When I first saw this property, I fell in love with it.

And when I came into this house, I thought, you know,

it needed a little bit of TLC, you know.

And I think there is a huge potential with this property, so...

Have you bought this house for you to live in?

Not exactly to live in, but it all depends on my missus

and how she likes it. Most likely, I'm going to end up selling it.

So you are under a bit of pressure.

If your wife likes it, she might want to move in.

-So what do you intend doing?

-Well, I don't know.

I mean, I do have a plan in place.

Hopefully, you know, I'm going to start from the top.

We are thinking of converting the loft, having the two bedrooms

and also having a separate bathroom as well.

-Two bedrooms up there?!

-Yeah.

-To make this into a five-bedroom house?

Yes.

Hm. Five bedrooms. I'm not sure.

I think that might be squeezing too much out of this house.

And he's not stopping there.

Where the current kitchen is, we are going to have another shower,

basin and toilet there.

And we are going to move the kitchen into where we are planning on

doing the extension, really, and keep the second reception as well.

Well, it is certainly an ambitious project.

And Sheikh has set a budget of 90 grand.

But he is savvy enough to realise that he might go over this.

But this is his first-time project and he aims to be on-site

full-time, so what role does he think he'll play?

I would say, in the stepping stone of becoming a project manager.

So, can you turn your hand to a lot of things?

Because, I mean, you know, this is not for a novice,

a project like this.

I mean, I've been watching Under The Hammer all my life,

so I know what to do. I mean, I've got...

I think you need a little bit more than a couple of a series

of Homes Under The Hammer to know how to build a house.

Now you're really worrying me, Sheikh.

No, I think, you know,

I've done my research, so hopefully,

if everything works out the way it is, then, you know,

hopefully, I should make something out of this.

Well, I hope for Sheikh's sake that it does work out.

He's hoping to make a career out of property developing,

but with the £90,000 spend on top of that £294,000 purchase price,

potentially taking his costs to 384,000,

he is not far away from that £385,000

top-end price the local estate agent thought might be possible.

And he is hoping to get all the work done in just three months.

He is certainly going to be busy.

This is your first foray into property developing, really,

-isn't it?

-Yeah, I mean, I actually love it.

It has been a dream of mine to do such a huge project like this.

But hold on a minute, whoa, whoa, whoa.

Now, you say you love it. This is your first project.

You only love it because you've been watching lots

of Homes Under The Hammer. You've never actually done it, have you?

Oh, I don't have to do it, but I've got to start somewhere, don't I?

So you think you're going to love it.

But the thing is, I do have the drive and ambition,

so that, you know...

And I've got a lot of energy, you know,

to put into this property. And, hopefully,

I'm thinking I can do really well with this.

Sheikh, I am really excited for you

and I hope your first property journey goes smoothly.

-Thank you very much.

-Lovely to meet you.

-Lovely to meet you, too.

I think it is great that Homes Under The Hammer has inspired Sheikh

to try his hand at property developing for the first time.

But do we make it look too easy?

He certainly has the enthusiasm, but is he making the right

decisions with this, his first property?

I am a bit worried he might be taking it too far with those

ambitious loft plans.

Join me later on in the show and you can find out how Sheikh,

our budding developer, gets on.

We are heading to Scotland for our next lot.

It is situated in Clackmannanshire, in the town of Alloa, to be exact.

Alloa's famous landmark is its 15th-century tower, but has

a more modern imprint with its beer and glass industries.

And it is also a favourite with commuters,

with the Kincardine and Clackmannanshire Bridges

offering good road links

while the reopening of the rail link has eased

access to Scotland's major cities.

Here is the property I am about to see.

It is a traditional, one-bedroom mezzanine flat, and it is in a prime

town centre location with fantastic buy-to-let opportunities.

Now, the guide price, wait for it,

£20,000 to £30,000 for a one-bedroom mezzanine flat.

It is in here. It is above this bank.

And I'm excited.

A nice handsome building from the outside.

The thing that really hits you in the face is that smell of rubbish.

Look, one, two, three, four, five... Six dirty bin liners there.

So, I would try and sort out a better place for the rubbish bins.

Um, this is nice, though. Lovely, generous proportions in here.

Really nice banister. Although a bit of paint wouldn't go amiss.

And walking straight into the flat,

I've got to be honest, a little bit oppressive.

Low ceilings. Look, I'm very small

and I can touch the ceiling.

I know it is a mezzanine...

So there is, one, two, three layers to his flat.

It is like a little sponge sandwich, isn't it?

But, you know, it is small, but it is what it is, I suppose.

The kitchen is over here. You could do with addressing that.

I think an upgrade wouldn't go amiss. You've got a little loo,

a shower through there.

A window letting in lots of natural light. So that really does help.

Let's have a look upstairs.

I'm not usually a huge fan of these spiral staircases,

but they do offer a fantastic use of space.

And I'm not going too giddy just yet.

What could make your head spin, though,

are the numbers of regulations around spiral staircases.

Details like the maximum rise, the gaps between stairs,

the handrail heights, the load they can take,

all have to meet building regulations.

So check them out if you fancy this one.

# I'm spinning around Move out of my way

# I know you're feeling me Cos you like it like this. #

It is really, really interesting the way they've done this.

I'm not sure whether I like it or not.

It's like another layer,

another level has just been sliced through the property.

I mean, this really is it, this small space.

Cleverly done, maybe.

Not that many features.

A fireplace here, which is pretty useless, not doing much.

A really nice window over here. Now, that's beautiful.

I know this building is listed,

so if you did want to change anything, like that

window for example, you would need to get listed building consent.

And it might be worth doing because that is a single-glazed window.

And this is the fun bit.

Look at that, that is the mezzanine level.

I'm going to go up.

Shall I go up? It looks pretty precarious.

I'm not sure.

I think the kid in me just wants to go up there

and have a little jump around. So off I go.

I'm not sure whether a fireman's pole might be a bit easier,

actually.

Here we are. Now, there is not that much room at the top.

Uh, uh! It is a little bit... I mean, I can't even stand up.

Can you imagine in the middle of the night having to

get down the stairs and use the loo? But, you know, it is quite spacious.

It does what it says on the tin, this property.

And come on, people! £20,000 to £30,000 guide price?

It's a bargain.

But it does need work.

A new kitchen and a new bathroom wouldn't go amiss here.

And, unless you like living life on the edge, literally, well,

you would want to take another look at those stairs.

# Yeah, living on the edge

# Living on the edge. #

I think it is pretty safe to say that those steps won't be following

any building regulations.

We asked a local estate agent

to come for a spin around this flat and tell us what she thought.

I feel that it's quite good value

because it is quite expensive to live in the city.

And you could be within Glasgow

and Edinburgh within sort of 40, 45 minutes by rail link.

Just park your car. And there is no cost for parking here.

And you can get the properties far cheaper than in the cities, like,

you know, a good £30,000, £40,000 cheaper than Glasgow or Edinburgh.

Which would make this little mezzanine a very attractive

prospect for commuters and investors alike.

Once the refurbishment is complete here, what might it be worth?

I think because the market has

been improving quite considerably in the last six months,

it could achieve £50,000 to £55,000 on the open market.

And the rental value?

Once renovated, I believe this apartment could achieve between

£350 and £370 per calendar month.

This is a really unusual property. It's got three floors

linked by a spiral staircase.

It's certainly not everyone's cup of tea,

but I think it is in a great location

and it has a gobsmackingly low guide price.

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

Mid-terrace flat with first-floor mezzanine bedroom.

25 to start me.

20 then. Start me off at £20,000.

20 here. At 20 I'm bid now.

21 here. 22.

23. 24.

25. 26?

Not quite sure. With you at £25,000.

At £25,000.

Take a half. 25,500. 26?

26 I've got.

You are out. With you at 26.

At £26,000. Are we done?

At £26,000, then, are we selling this?

At £26,000, first time.

At 26,000, second time.

All done. Are you sure? All out?

The successful bidders with a bargain at £26,000 were

Nick and wife Irene.

Both originally from Bulgaria, they have been living

and working in the UK for five years.

This is their second renovation project.

And with that low price,

they'll be laughing all the way to the flat above the bank.

I met Nick, he works in marketing,

to find out about their climb onto the UK property ladder.

Nick, congratulations, lovely meeting you today.

-Thank you very much.

-Well done, you!

What an interesting property you've got here.

Yeah, well, it's a very nice, small property, actually.

It is quite interesting, cos this is the sort of property

you'd find in the centre of London -

a small place where somebody really has tried to make the most of it.

But for £26,000, you did really well on auction day.

Yeah, well, to be totally honest, yeah.

-I'm pretty pleased.

-So what are we going to do here?

Because it's not for everybody.

The staircase leading up to the sleeping area is what concerns

-me here.

-Me too, to be totally honest.

We haven't decided what to do with it yet.

-We will be upgrading quite a lot of things inside.

-Yes.

But eventually, we will decide what we are going to do with this.

So, have you got any budget?

The initial budget is between £2,000 and £3,000.

And how many days,

weeks or months are you going to spend on this place?

We are thinking between three and four weeks.

Wow, that is a quick turnaround and a tight budget, especially

when you consider that Nick and wife Irene both work full-time

and will only be able to come here on evenings and weekends.

So, what do they plan to get done in that time?

We're going to just paint it. We're going to refurbish the kitchen.

We're going to upgrade the bathroom.

And new carpets, that is pretty much it.

So, how are you going to upgrade the kitchen? To what extent?

Because, I mean, it is OK, but it's a bit shabby.

Yeah, well, we will look at it

and we will decide eventually what needs to be done.

Probably most of the budget is going towards the kitchen,

so we will see how it goes.

You have got a magnificent window here, in this room.

That might benefit from an upgrade,

but you would have to apply for listed building consent.

Yeah, that is absolutely right.

We'll definitely go for something. We'll see how it goes, actually.

But probably we are going to upgrade a little bit the windows.

Did you research this property prior to bidding on auction day?

Did you get a survey done?

Did you read the legal pack? Come on.

To be totally honest, well, the legal packs, yes.

We prepared it with the legal packs. We haven't done a survey, no.

Do you think you needed to get a survey with a property like this?

Do think there could be structural damage to a property like this?

Probably we should.

Um... We should.

But we didn't.

So it looks like a survey is now a priority.

If all goes to plan,

though, the couple want to sell the property in a couple of years' time.

But for now, they intend on renting it out.

And a quick tot up of the figures makes you think, well,

they can't really go wrong.

So come on, Nick, tantalise my taste buds.

How much rental return could you get for a property like this,

bearing in mind you paid 26 grand on auction day?

The average rent in this area is 375, so probably... If we get 375,

-I will be quite happy.

-That is over 10% yield.

-Yeah.

I mean, that really is stunn... That's brilliant!

"Quite happy." I can't see how he wouldn't be.

A quick toss of the maths here,

pay attention at the back of the class, please.

Bought for £26,000,

spent £3,000 on renovation, brings us to £29,000.

So, even if we go with the estate agent's top estimate of 375,

the yield would still be,

wait for it, around 15%.

I think you've done really well, Nick, and I think this is

a great property in a great location for a fantastic price. Well done.

I'm really looking forward to seeing how you upgrade it.

-Nice to meet you today.

-Thank you very much.

Nick has certainly got himself a bargain here.

But I've got a feeling this property won't look too different on

our return with his £3,000 budget and his three-week timescale.

Will this spiral staircase and the bunk-bed ladders

put potential tenants off? That is my worry.

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

Still to come, the numbers are adding up in Chilton, County Durham.

I paid more for a caravan a few years ago that I have for the house.

But in Scotland, it is the weeks that have racked up for Nick.

The original timescale was four weeks.

It turns out to be six months.

Ilford, in Greater London,

is where we first came across a three-bed mid-terrace house.

It needed not just a full refurbishment,

but a bit of rethinking on the layout.

Small pokey kitchens and shabby bathrooms just don't cut

it in today's competitive property market.

And a tiny boxroom off a third bedroom is hardly going to

excite either.

So, the layout definitely needed looking at.

And the man to take this challenging property on was Sheikh,

who bought it for £294,000 at auction.

-So, what do you intend doing?

-Well, I don't know.

I mean, I do have a plan in place.

Hopefully, you know, I'm going to start from the top.

We are thinking of converting the loft, having two bedrooms

and also having a separate bathroom as well.

-Two bedrooms up there?!

-Yes.

-To make this into a five-bedroom house?

-Yes.

And it wasn't just a loft conversion Sheikh was hoping to carry out.

Oh, no, he hoped for a rear single-storey extension to enhance

the kitchen space. Ambitious plans, indeed,

particularly when you considered this was to be Sheikh's first

development project and his only experience of property work was,

well, watching episodes of Homes Under The Hammer.

But he had given himself £90,000.

Provided he got planning permission,

he hoped to get the work done in three to four months.

So, has Sheikh managed to do this top-to-bottom redevelopment?

Well, three and half months later, we are back to find out.

Well, there may be scaffolding still in place...

..but it definitely looks like the top of the house has got what

he hoped for - a loft conversion. But how many rooms does it have?

Initially, we actually planned to have one big

room with an en-suite.

Then we decided to have two rooms there, which is

a reasonable size, I believe.

And we also managed to fit in a wet room as well.

Well, this really is impressive.

Sheikh has gone for his most ambitious plan of adding two

extra bedrooms and found space for a wet room.

Down to the first floor, the bedrooms have been re-plastered,

new electrics, re-plumbed and the chimney breast has been removed.

And there are new windows. And I have to say, it is

a shame those lovely stained-glass panels have now gone.

And the bathroom, well, it still needs a bit of work.

With those loft rooms,

Sheikh has now got the five bedrooms he was after.

But what about downstairs?

It is still a work in progress.

There is no ground-floor extension yet, but it is in hand.

His initial application for a downstairs

extension at the back with a six-metre depth has been refused.

And he has currently submitted plans for a slightly smaller one

of five metres.

So, here's hoping that will succeed.

If he gets the go-ahead, what will it be like?

Where the existing kitchen was, there is going to be another wet room.

And we're going to have the toilet and the sink

and a fitted shower.

From there, we're going to have the kitchen extension going out.

I have to say, despite my reservations that Sheikh was being

overambitious here, I think he has done a pretty impressive job so far.

But how hands-on has he been?

I would say I have taken the role of management.

Um, I had a little baby boy a month ago and that has

kind of taken up most of my time, you know, just spending time with him.

And I spend the rest of the time here.

Wow, new baby boy, an extensive renovation project,

Sheikh has clearly had a lot to deal with.

And perhaps not surprisingly, it has all taken longer than planned.

But he is hoping,

provided he gets planning permission for the rear extension,

he'll be able to complete the house in two more months.

So he is overrun on his timescale, but what about his proposed budget?

Originally, the budget was set for £90,000.

I think we just might exceed that by another £8,000 more.

OK, so a spend of £98,000 on top of his £294,000

purchase price would bring Sheikh's

total expenditure to 392,000.

So has he got his numbers right on this one?

Will the house be right for the local market?

What did two local estate agents think?

The market is strong for five-beds in this area.

They don't come up that often and get sold quite quickly.

Having an extension at the back is a good idea.

It will extend the kitchen or you can have a conservatory

if it is for a family home.

So, having an extension is always a good idea.

All very encouraging.

Now, I was worried about this house being overdeveloped, so with the

projected £392,000 spend, will he have hit that ceiling price?

Let's find out what the house might fetch in its current configuration,

before he goes ahead and builds that ground-floor extension.

Fully renovated, I think this property could achieve

between £460,000 to £490,000.

I would suggest to advertise the property

on a price ranging between £475,000 to £500,000.

Well, those figures suggest a pre-tax profit

anywhere between £68,000 and £108,000.

And the agents felt you could add another £20,000 to £30,000

if Sheikh gets permission to build the proposed rear extension.

And I think that would really help balance out the house.

In any case, I was worried for nothing.

He hasn't over developed it and he has come up trumps

on his first project. So well done, Sheikh.

This is fantastic news.

So, first time around, yeah, not too bad, actually.

And with rental values in the local area for a five-bedroomed house

being £2,000 per calendar month,

that would generate a fairly healthy yield of 6%.

So, all looking good. But Sheikh's plan was always to sell it on.

And his wife is pretty keen for them to actually move into the property.

But is Sheikh still unmoved?

I still intend on selling this, no matter what.

No matter what my missus says.

And realistically, he might have to risk his wife's wrath

if he wants to have the funds for another project.

Or has this first one scared him off?

This is something I have dreamt of doing for a long time

and I hope to pursue this career once I'm finished with this.

To the north-east now and the former mining

village of Chilton, which achieved town status in the year 2000.

Close to Durham and Bishop Auckland, it boasts over 200 allotment plots.

It was also the hometown of Alan White,

drummer of the band Yes and The Plastic Ono Band.

Well, seven miles from Durham city centre, a mile from the A1,

is the property I am here to see.

So, a very popular spot for commuters, for sure.

And up for auction was a classic two-bedroom mid-terrace.

There is no guide price for this property.

This auction house operates on offers invited.

In this case, offers around £14,950.

It is a different terminology,

but basically very similar to the guide price,

where the starting price is usually about 10% lower than the reserve.

So, what have we got? Um, well, nice, bright space.

It looks like it has been partially decorated, although...

Some signs of damp over there around some very strange pipework going on.

I think that is where the gas is coming in.

But I don't exactly like the way that has been done.

But it is not a bad size.

Open fire, which is good to see.

And then knocked through at some point into a kitchen area.

And it creates a really nice downstairs.

Very open-plan.

Obviously, it hasn't got a finished kitchen.

What it has got though...

..is rather a lot of damp on this wall here.

I'll go outside in a minute and see

if I can see where that is coming from.

But obviously, an issue. And you've got to ask yourself...

It has been started, in terms of renovation,

but some very basic things have been missed out.

Properties that don't have a complete kitchen or a kitchen

at all can be refused a mortgage, so it is definitely worth doing.

Ah-ha, perfect place for a door.

Upstairs, though, seriously,

what have we got? Missing floorboards here and there.

Obviously, you'd have to sort those out.

And I think your options for stripping that

back are a little bit limited.

They are slightly all over the place.

But up here, two bedrooms - one there, not a bad size.

Bathroom where you'd hope it would be.

It looks to be in... Well, again, half-completed condition.

But maybe those units are salvageable.

But then down a rather intriguing corridor.

Hm.

What is this?

Oh!

A fairly substantial set of stairs there, leading up to what?

Cos it is only described as a two-bedroomed house. Hm.

Definitely worth investigating further.

Huh. Now, you see, this is a perfectly usable room.

But it is really important that it is not defined as a bedroom,

because in order for it to be a bedroom, it would

have to pass certain building regulations -

most importantly, ability for someone who is

sleeping in here to escape in case of a fire,

in which case that would have to be the suitable kind of roof window.

Now, you may well think it is worth doing a little bit of extra

effort to make this a building regulation compliant bedroom.

On the other hand, it may well be cost prohibitive.

You only know that by finding out how much three-bedrooms

sell for and how much two-bedrooms sell for around here.

In any case, it is

not as if there's a shortage of work to do elsewhere in the house.

It's as if jobs have been started in every room,

but sadly, none have been finished.

# Come on, baby Finish what you started

# I'm incomplete! #

One thing that is really important to check out

when you're looking around houses is the state of the electrics.

And a good place to start for that is to look at the fuse board.

This one, however, is sending out some very mixed messages

cos you've got a fairly new consumer unit at the top there,

but this lower one, with these old sort of cartridge-style or

even wire fuses in there, that is very old.

That is a bit more modern.

My guess is that is mirrored in the state of the wiring

in the house in general.

Some old, some new. That is not good.

# Something old, something new

# Something borrowed Something blue. #

One clue to the age of the electrics is the colour of the conductors

and the state of the sockets, light switches and consumer unit.

Hm, yes.

The electrics definitely need sorting.

Yes, electricity and damp don't make for good bedfellows.

Time I investigated the worst-case wall in the kitchen that

I noticed earlier.

So, let's see where that damp might have been coming from.

Obviously, penetrating. Out the back here, what do we see?

OK, first of all, some of the pointing on the brickwork,

that looks like it is not in a very good state.

You could get water going in there.

I noticed that there is a new gutter up there,

so perhaps in the past, there was an old gutter,

and that was causing sort of water to cascade down there.

My guess, having done a bit of analysis, is that it is historical

and whatever was causing the problem has been sorted out.

Phew!

We called in a local estate agent to get her views about the attic

bedroom and get resale and rental valuations,

bearing in mind the auction house wants bids

starting in the region of 15,000.

I would probably say that they should have a look

at the planning regulations for the loft conversion

because if it was to be classed as a three-bedroom property,

it would be more desirable.

Price difference value wise wouldn't be a massive amount,

but for the rental threshold, it would change slightly.

So, no appreciable effect on the resale value.

How would the rentals compare, then?

As a three-bedroom property, if you could market it at that,

you're looking at around £350 per calendar month.

If for some reason you couldn't get the planning permission or

there's problems with the regulations on the loft room,

you're looking in the region of £300 per calendar month.

So it might be worth upgrading the bedroom

if it is going to be a rental property.

And how about the best resale value?

I think once the basic renovation works have been done

and they are finished with the kitchen,

possibly damp-proof course and some decoration, I think that the

property would probably be worth about £25,000.

Well, there is always a bit of a risk when you take on a house

that has had some work done to it

that you don't know to what standard that work has been done.

However, on the face of it,

you are getting quite a lot of house for the money.

So around that guide price... Definitely one to go for.

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

Start bidding around 15. Only 15,000.

Who is in for this one? Come on. 10 I'll take to start.

At £10,000.

At 10. At 10. Go 11.

-Come on, let's get on.

-11.

11 to a voice. 11. 12. 13.

13?

I've got 12 in the far corner. No? At 12, 12, 12.

13 there. 14 on the table? At 13 there. 14, new bidder. 15, sir?

14,500.

15. And a half?

16.

And a half? 17.

17. New bidder altogether. At 17.

17,500?

Yes or no?

No, he says. 17, new bidder altogether.

£17,000, it is going to go.

First time at 17.

Second time at 17.

Third and final at £17,000. Your bid, sir.

And your number is? 336. Well done.

And the successful £17,000 bid came from John, who first

started property developing after an accident in the work place.

I met up with him back at the Chilton property.

-Good to meet you, John.

-Nice to meet you, man.

-Congratulations.

-Thank you very much.

-Tell me why you wanted to buy this place.

It was mainly the price, to be honest. I came and had a look.

I watch your programme all the time.

So I knocked on next door to find out a bit about the house,

and it is quite a nice area cos the lady from up the street

came down and asked me what I was doing with it.

I told her I was hoping to buy it at auction and she told me

-it had been empty for 12 years.

-Oh, wow.

But people had been backwards and forwards to... As you can see,

it is a half modern house, half not.

So, I went to the auction, I had a price in mind.

-Like you said, I'd done my homework and I got it for 17,000.

-Yeah.

So it wasn't so bad, but then, obviously,

you have the auction fees.

Ah, auction fees,

always something for any developer to scrutinise carefully.

In this case, John knew that on top of his bid of £17,000,

he'd have to fork out the vendor's selling costs as well.

That and all the bits and pieces came to £6,200,

not an inconsiderable sum.

I was quite shocked at why it was 6.2.

And it is still not a bad price.

I paid more for a caravan a few years ago than I have for the house. So...

And like what you always say, you make money on bricks and mortar.

So I can't really lose, I don't think.

Well, it is always possible to lose,

given that valuation of 25,000 the agent gave earlier.

We could be talking about you losing money even before you'd started

to work on the house. However, John is not local.

He comes from Redcar, about 45 minutes away,

so he took advice and researched on the internet.

That research has told him the resale value for this

type of house in the area is nearer 50,000 to 55,000.

It is always advisable to use as many research sources as you can.

The internet is one,

but I'd recommend taking advice from local agents, too.

So, what was it about this particular little place that

you liked, other than just the price?

To be honest, when I came, it seemed a nice family sort of area.

Like the lady up the street said to me,

"I hope you get it, as long as you are not going to rent it."

I said, "No, I'm not, I'm just going to do it up and sell it.

-"And hopefully it will be someone's little family home."

-Right.

-And just make a bit of profit on it.

-What are your plans for it?

To be honest, I don't know how good the work has been done,

what has been done, so you have got to still look at it.

Obviously, it wants a full damp-proof, the floor,

obviously it wants a new fitted kitchen, the bathroom wants doing.

Just the basics, really.

And then a complete paint, carpets,

and put it on the market.

-So what is your budget?

-Round about 8,000. But...

-another two contingency in case things go over.

-Sure.

That seems fair. What is the timescale?

Roundabout, I'm hoping, three and a half, four month,

so that is what I'm looking at.

-Well, listen, John, really great to meet you. Congratulations.

-Thanks.

Very nice to meet you.

So, John has taken on his first property and hopes to have it

done in three to four months.

Work to be done. But still, hopefully, a profit to be made.

You can see how he gets on later on in the show.

Well, we have seen how one of today's properties fared.

What about the others?

Will there be big changes or a few minor improvements?

Let's go back and find out.

Back to Clackmannanshire and the pretty town of Alloa,

where earlier, I looked around this one-bedroom mezzanine flat,

slap bang in the middle of the town centre and above the local bank.

It would be fair to say that this flat wasn't the most

conventional when it came to the interior, with the kitchen on the

ground floor and a spiral staircase leading up to the living space.

And then, there was this.

Was it worth the climb? Well, hm, not exactly.

Here we are. Now... There is not that much room at the top. Oh, oh!

Is a little bit... I mean, I can't even stand up.

Can you imagine in the middle of the night having to

get down the stairs and use the loo?

It was bought on auction day for a bargain -

26,000 - by Nick and his wife Irene,

who are both from Bulgaria.

They work in marketing.

And this was their second property bought at auction.

And although this flat was weird and not so wonderful

in many respects, there was one big attraction.

So come on, Nick, tantalise my taste buds,

how much rental return could you get for a property like this,

bearing in mind you paid 26 grand on auction day.

Quite a lot, actually.

The average rent in this area is 375, so probably, if we get 375,

-I will be quite happy.

-That is over 10% yield.

-Yeah.

I mean, that really is stunn... That's brilliant!

It was unconventional but it was a good size across the three levels.

And with some creative thinking, it could realise its potential.

Nick had plans to rent the property out after a quick

renovation of three to four weeks and a tight budget of just 3,000.

Almost six months later,

we've returned to Alloa to see how Nick has progressed.

The kitchen has been replaced and it is an improvement, while

the rooms have been stripped and plastered, and they look fantastic.

The precarious-looking steps up to the sleeping area remain.

And although painting those and the banisters have brightened it

up here, there is, however a fair bit of snagging to sort.

So why is such a small flat taking

so much more time than Nick originally thought?

Um... Yes, the original timescale was four weeks.

It turns out to be six months

because eventually I have purchased one more property,

which was closer to me, so I have actually done it before this one.

And also it was the holidays, so I enjoyed a little bit of a holiday.

The main idea of this property is for me to learn how to do things,

because this is something I really enjoy.

So it was a definite learning curve for me.

For me, the biggest challenge was when we removed the old wallpaper,

the condition of the walls, it wasn't in the best condition.

So we actually needed to do a lot of work on the walls.

Hopefully, it turns out good.

To be totally honest, I actually did all of the work.

The only thing which I am going to use professional help

is for the sash windows.

As it is a listed property,

we need to use a professional to do the sash windows.

So this is the only help I'll be using.

We've done quite a few things.

We started with the carpets, new carpets.

We re-decorated the walls.

We've removed the old wallpaper.

We have actually brightened up the flat a little bit with more...

Let's say nice and neutral colours - white and beige.

So it was a pretty straightforward job.

We actually do have a couple of things we need to do.

We do need to redo the bathroom.

We do have the units here,

so I presume in just a couple of days, the job will be done.

Up to this moment, we have spent roughly around £1,500.

I presume there will be an additional probably 100 to 200 or even

£500 for the sash windows and for the finishing of the bathroom.

So, with those extra costs,

Nick may creep up towards his original budget of 3,000.

And although it is not yet finished, an overall outlay

so far of £27,500 still looks like a good investment.

Nick reckons he would make a handsome return on this flat.

We invited two local agents along for their opinions.

It really is quite different.

It's quite quirky,

which makes it quite desirable in the market.

There is not anything I have seen like this for a while.

So that might be quite popular.

The modern presentation of the property would be a good

reason for a person to be interested in this one,

with the new kitchen and the quirky nature, to be honest.

The mezzanine flat would appeal to a certain client base.

Obviously, the property is not fully complete yet.

But with a new kitchen and when the bathroom is installed,

it will look a lot better.

I think this property would appeal to first-time buyers or investors

looking for something they could let to a tenant with access into Stirling

with the train station as well,

and obviously centrally located in Alloa.

What about those handsome rental valuations that Nick thought

they could achieve here? What do the agents think?

In the current rental market,

I would value this property at around £350 per calendar month.

I believe the property would let for £350 per calendar month.

That's pretty much what we expected, to be totally honest -

350, 375.

This is what we are looking for.

Well, it looks like Nick was spot-on with this one.

That £350 per calendar month could give Nick a possible

yield of around 15%.

And coupled with a top sales valuation here of 50,000,

that means Nick has made a really sound investment,

even if it isn't finished.

So, will he be heading back to the auction house?

Oh, yeah, it was a great experience.

I'd definitely recommend to anyone to get

the experience of buying a property through an auction.

Back now to the former mining

village of Chilton, in County Durham, where earlier,

I looked around this two-bed mid-terrace, which from the outside

looks solid enough, but on closer inspection,

there were one or two worries.

Some signs of damp over there around some very strange pipework going on.

That is where the gas is coming in.

I don't particularly like the way that has been done.

Despite the damp and what looked like some half-finished work,

I was impressed, especially when I found there was an attic room.

Now, you see this is a perfectly usable room,

but it's really important that it is not defined as a bedroom,

because in order for it to be a bedroom, it would

have to pass certain building regulations.

Now, you may well think it is worth doing a little

bit of the extra effort to make this a building regulation

compliant bedroom.

On the other hand,

it may well be cost prohibitive.

You only know that by finding out how much three-bedrooms

sell for and how much two-bedrooms sell for around here.

This property went to auction with offers invited at £14,950

and was snapped up on auction day for £17,000

by former truck driver and novice property developer John.

So what was it about this particular little place that you liked,

other than just the price?

When I came, it seemed a nice family sort of like area.

Like the lady up the street said to me,

"I hope you get it as long as you are not going to rent it."

I said, "No, I'm not, I'm just going to do it up and sell it,

"and hopefully it will be someone's little family home."

John had a budget of between £8,000 and £10,000

and a long list of jobs ahead.

However, his timescale of four months seemed pretty achievable.

Well, four months later,

we have returned to see how he has progressed.

The walls have been stripped back, re-plastered

and neutrally decorated to a high standard.

And the kitchen is modern and appealing,

with a brand-new boiler in situ.

Upstairs, and the improvements continue.

Carpets are still to be laid and the bathroom still needs tiling,

but the improvements up here are obvious.

And the attic is also looking much better.

As you can see, the attic room...

If people want to use it as a third bedroom, they can,

but I haven't gone down the building regulations for it.

It is going to cost a bit of money and it is still a nice sized bedroom

if they want to use it as that.

Or a storage room.

Not upgrading the attic to a bedroom means that John can only

advertise his property as a two-bed and hope that perspective buyers

see the potential and possibly decide to change it themselves.

He has overseen a total rewire here as well as full damp-proof coursing,

new radiators and central heating.

And with so many jobs for novice John to oversee,

it has been a steep learning curve.

Cos I live so far away, and it is about 45 minutes

to an hour to get here, backwards and forwards, uh...

..that was a pain, to be honest with you.

And it was also a pain trying to get tradesmen here to do the job.

But in the end, I think we've got it here. And we are quite happy with it.

The time, I don't know what I said - three and a half, four month?

But I think we have come just in that.

But I did want it done quicker.

I did think we would get it done quicker.

I thought I was going to give myself a bit more time

by saying three and a half, four month.

But, as I've said, we have come in and it just needed stripping.

It looked half decent, but it needed back to basics and starting again.

Along with his friend, Neil, John project managed the job.

Although, it is up to him to get the bathroom tiled and finished.

The way circumstances were, I couldn't be more hands-on.

So I should have done... This weekend I brought my...

I took my daughters and the missus, Joann.

They have cleaned the windows, cleaned the window frames inside.

And obviously, I've got to buy them now diamonds or summat.

The missus wants a holiday in Dominican.

So God knows what this is all going to cost me for them.

But obviously, whatever profit I get,

I'm not going to be able to spend, am I?

Cos they're spending it before I even get it.

Well, it just goes to show, there is no such thing as free labour.

And aside from jewellery and holidays, John has

so far spent £12,500 and hopes to be finished in two weeks,

when the property will go on the sales market.

With a total investment so far of 29,500

and in an area where house prices have a definite ceiling price,

it will be very interesting to hear what two local estate agents

think of John's improvements,

starting with the agent who originally predicted

a resale valuation of 25,000.

This is my second visit of the property.

I came to it before the renovations were done.

There's been an awful lot of changes made.

And it looks really, really good.

I think the selling point of this particular property is

definitely the kitchen.

It does look very, very attractive.

And, you know, it is, in my opinion,

one of the nicer kitchens in this area.

All sounding positive so far. So, time for the big one - valuations.

If this property was placed on the open market,

I would expect to achieve around £30,000.

I would expect the property to achieve in the current market

conditions around about £30,000.

Oh, crikey, not good news for John.

Those valuations would leave him

with a pre-tax profit of just 500 quid.

And he's not even finished yet!

How is he feeling?

Shocked.

I honestly thought it was worth a lot more.

30, no, I totally disagree with them.

Totally disagree.

John has had other valuations done

and has put the house on the market at 54,950,

which would give him a much better return.

There is better news on the rental valuations.

Both agents thought £400 per calendar month,

which would mean a whopping yield of 16%.

So, will John change his plan and rent it instead of selling?

If it is only worth what they are saying,

I'd definitely have to look at rental, maybe keep it three,

four years until the house market picks up to...to make a profit.

The good news is John is currently in negotiations for something

closer to his preferred figure.

So what does he feel about his first foray into property?

I'm happy with the finished house. I know it's not totally finished,

but it is nearly there. And I am happy with what we have done.

We have done it to where it is a really good standard, in my opinion.

And whoever gets the house has got a lovely house,

they don't have to do anything to it.

We will have more news from the auction rooms

from around the country for you next time.

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

Goodbye.