Episode 58 Homes Under the Hammer

Hello. Now, with the ebbing and flowing of the property market,

it can be quite hard to know when to jump in.

Yeah, yeah, hold on a minute, but don't jump straight in.

I think maybe just dip your toe. Don't you start small.

And with all that in mind, why not see what's on offer under the hammer?

Well, buying under the hammer can be a good way to get the most

out of the property market.

Yeah, lots of people are finding their next property at auction.

Here's three that certainly did.

Let's have a look and see what they bought.

I'm at a three-bed in Buckinghamshire in a village

called Olney, trying to turn lonely into homely.

Go radical with this. Just take this wall out completely.

I'm busting a few moves in this bar in Burnley.

They've left in the dance floor for me.

I'm going out, I'm going out.

And I'm muttering about clutter and stressing over mess

in a four-bed house in Croydon.

What a load of rubbish.

All these properties were bought at auction.

We'll find out who got them

and how much they paid when these homes went under the hammer.

We all done? Sold.

The market town of Olney near Milton Keynes, Buckinghamshire,

has been home to a pancake race through its streets since 1445,

finishing at the church of St Peter and St Paul.

Like many English villages, there's a silent letter here,

so Olney is pronounced "Own-ey". I feel sorry for that solitary L.

# ..Only the lonely... #

Well, however you pronounce it, will I be pronouncing the property

I'm here to see a good one to go for? Well, let's find out.

It's a terrace, three bedrooms, guide price is £195,000 plus,

it looks all right from the outside. I like the brick. Let's go in.

OK.

So what have we got? Er... corridor, a hole in the floor,

that's not a good start, is it?

It looks like the floorboards might need checking out.

Looks like somebody's done a bit of work already,

all the skirting boards have gone and it's all been stripped back.

It's a start. Front living room is there, it's a decent size.

Nice. Lots of light coming in from the bay window,

but you know what? I'd go radical with this.

Straight away this is the rear sitting room.

I would just take this wall out completely, open it up.

I've seen that done on loads of occasions and, you know, you think,

"Oh, what am I doing?" when you knock that wall down.

Do it. Do it, do it.

Make it super open plan, make one huge, great, lovely living space.

Erm...you won't regret it.

Moving through the property, fairly traditional place to find it,

the kitchen. It obviously needs total refurbishment.

Slight downside, we have got the loo at the back here

and I guess that's the only loo in the property,

so that's something you're going to want to sort.

We'll have to explore it more to find out if we can

put that upstairs, but, overall, it's got a nice feel to it

and with a bit of playing around, it could be outstanding.

# ..Outstanding... #

OK, I admit outstanding wouldn't be at the top of most people's lists

of words to describe this place as it stands,

but look for the positives.

Solid brick construction, double glazing and, as with many

Victorian properties like these,

rear access to a decent-sized garden.

So, let's have a look upstairs to find out

if I think this three-bed terrace is potentially still...

# ..Outstanding... #

So up here, then, smallish bedroom towards the back.

Medium-sized bedroom in the middle.

Fairly narrowish feeling, sort of, landing area

and then through into your front bedroom, which is actually

a really nice size, but, of course, no bathroom,

so looking around, is there something you could do?

Well, I guess it's all about changing the walls, isn't it?

Taking them down, replacing them somewhere else

and then that comes down to the whole issue of are they load-bearing?

If they are, you need to be supporting them high up

so that the entire house doesn't collapse down on top of you.

If they're not load-bearing, stud partitions, then, it's all OK.

Yeah, there's probably enough room to do something,

just needs a bit of playing around with on a piece of paper.

Oh, just before I head downstairs, you know

I was talking about load-bearing walls?

I reckon there might be a bit of good news.

Because that wall there, in between the landing here

and that bedroom, is, in fact, a stud partition wall.

Basically, made of wood with a piece of plasterboard on either side,

so you should be able to remove it without too many issues.

The only thing basically you need to check is go up in the loft

and see which way the joists go

and as long as they run 90 degrees to it and are not supported by it,

then you can take it down without destroying the house.

Result.

We called in a local estate agent to give us

an idea of the potential profits of this house

given that the guide price is £195,000 plus.

With this property developed to a three-bedroom,

refurbished to a good standard, I would suggest

a price guide of £275,000

with a view of achieving

a minimum of £265,000,

but pitch the price guide at 275 and see what the market returns.

And what about the rental market?

The rental market should return £900 per calendar month.

Well, obviously a bit of work needed to sort this place out,

but you know what? Definitely worth it.

Good location, nice layout, yeah, a good opportunity.

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

We go now to lot 119, near Milton Keynes in Buckinghamshire.

200 anywhere?

180 then? Try and help.

-How much?

-180.

180 you've go. 181 anywhere?

181. Thank you.

182. 183. 184.

Bidding is a two-horse race until we rejoin at £196,000.

If not, it's with you, sir. The bid's £196,000.

It's against you at the back of the room. Anybody else? How much?

197. 198. 199.

A telephone bidder then joins

and bids escalate to where we rejoin at £213,000.

213. 214. 215.

216. 217.

Yes or no, 217? 218. 219.

219? If not, 218 for the first.

218 for the second.

218 for the third and final time. All done?

Sold.

The successful bid of 218,000 came from Lesley

and her fiance Matt.

They have been the ones hard at work stripping out

the property as soon as they finalised the purchase,

so I was keen to find out what their plans were.

-Lesley, Matt, good to see you both.

-And you.

-Congratulations.

Tell me why you wanted to buy this place.

We were looking for a property to do up,

looking in all sorts of areas, but this one came up

and it's in a lovely little town, so we decided to go for it.

Is this something you've done before or...

No, no, it's the first one.

-So, obviously, it's in a bit of a state at the moment.

-Yep.

-But I understand you're partly responsible.

-Pretty much, yeah.

Done it all, yeah.

Tell me what you've done in the short period between actually

completing and meeting you.

Lesley's taken all the ceiling tiles off, all the wallpaper

and we've decided to take everything,

the skirting board out...

-Right.

-..and a couple of doorframes.

-So you did the skirting board thing?

-Yeah.

-Matt did actually want to keep them at first, but I objected

because they didn't match and they were all different.

-Is this what you do full-time or...

-I'm a tiler by trade.

-What about you, Lesley?

-Well, I gave up my job last year to do this.

Right. What were you doing before?

-I worked for an insurance company in London.

-So, what prompted the move?

-Had a lottery win.

-A lottery win?

-Yeah.

-Oh, fantastic!

Yea, we didn't know on the Saturday that we'd won

and then, we were doing a car-boot sale on the Sunday morning

and checked my numbers, and I knew my numbers,

so stood there sort of dumbfounded that my numbers had come up.

-And how many numbers did you get?

-All of them.

-All of them?!

-Yeah.

For those of us who are nosy parkers -

I certainly count myself as one -

Lesley won nearly £800,000 in the split jackpot. Ker-ching!

So, I always imagine what that moment must feel like,

but to somebody who's gone through it, what was it like?

-Oh...

-Surreal.

-Completely surreal.

-Yeah.

-Yeah.

Just really surreal and we were checking the numbers

doing the car boot and we'd got all these people

rummaging through the stuff and...

-You were actually at the car-boot sale selling?

-Yeah, just get rid of some stuff.

This little lady, she's going, just as we were checking the numbers,

I was going, "25..." or whatever the numbers were, and this lady goes,

"Oh, wouldn't it be lovely if you won the lottery?"

Or we won the lottery, or someone won the lottery, and we was like,

"Yeah, it'd be fantastic." Like, I can't say nothing.

That's amazing.

You used some of that money to get into the world of property

-and also give up the job?

-Yes.

That's it, yeah, that's exactly what we wanted to do.

-Wait a minute, you've given up your job?

-Yeah.

-And you're still working full-time?

-Yeah.

-Run that by me.

-Just not allowed to give up. Tried, failed.

-Don't see a problem.

THEY LAUGH

That's a classic! Right. OK. That seems really fair.

I enjoy what I do as well,

so I don't really want to be sitting in all day at home.

Anyway, tell me about the house then,

what are you going to do to it?

The main thing we want to do is move the bathroom from the back

of the house upstairs,

so we're going to nick a little bit of room from the two bedrooms.

We're going to open up the dining room and the lounge.

Right, so this wall behind me is going to go?

Yep, that will be coming down to reveal an archway.

Unfortunately, the beautiful conservatory behind me

-is probably going to go.

-Really?

Lesley and Matt are cutting their developer's teeth on this property

and want to sell on when complete.

They feel the rental yields in the area are not that attractive.

They have set a £20,000 to 25,000 budget

and hope to sell for around £30,000 more than their total costs.

They reckon they will work on this full-time for the next 12 weeks

with Matt, of course, using his tiling skills.

-And are you going to get your hands dirty?

-Oh, yes, definitely.

Yeah, I like a bit of DIY. I've got my overalls ready.

-What are you going to do? You've obviously stripped the wallpaper.

-Yeah.

-That was a heck of a job.

-Yeah, it was.

-Well, I'll be helping take the walls down.

-Great.

-Just helping out wherever really.

-Right. Well, congratulations.

-Thank you very much.

-Good luck with it.

-Thank you.

Nice to meet you and look forward to seeing how you get on.

-Yes, definitely.

-Lovely to meet you.

So, Lesley and Matt using some of their lottery winnings to

get into the world of property.

What a great story and I think they've chosen well with this house.

How are they going to get on sorting it out?

You can find out later in the show.

# One, two, three, four... #

Burnley in Lancashire is a former mill town, but millions of pounds

of regeneration money are being spent to go against the grain of decline

and make this place the cream of the crop again.

And it's in this area that is scheduled for a makeover

is the property I'm here to see.

It's a two-storey public house with living accommodation upstairs.

It has a guide price of £50,000. Let's take a look.

Now that looks like a '70s disco to me.

# Well, you can tell by the way I use my walk

# I'm a woman's man No time to talk

# The music's loud The women warm

# I've been kicked around since I was born

# And now it's all right It's OK

# And you may look the other way

# We can try to understand

# The New York Times' effect on man

# Whether you're a brother or whether you're a mother

# You're stayin' alive Stayin' alive

# Feel the city breakin' and everybody shakin'

# And we're stayin' alive Stayin' alive

# Ah, ha, ha, ha... #

Oh, dear. That's disappointing.

But it's a huge space. You see the bar's there.

The toilet's at the back of the building and there,

through there is the kitchen as well, but one thing they have done,

they've left in the dance floor for me.

I'm going out. I'm going out.

'But one major plus point, no, sorry, hold on, the rhythm's got me.'

I'm coming back. I'm coming back.

Not feeling that disco fever? OK, back to the property, then.

Through in here you've got another bar,

more toilets at the back of the room as well and what looks like

it would've been a pool table area there, maybe a bit of a dance floor.

More seating. We seem to be getting two bars for the price of one.

I like it.

What I particularly like is that both bars have separate entrances,

so you could divide the two nicely to create two separate premises.

However, I do have one major concern.

There's damp running throughout the ceiling.

The bucket's a bit of a giveaway, isn't it?

And if it's been going on for a while,

it could have created rot in the roof joists.

This is suddenly less Saturday Night Fever

and more Monday morning aches and pains.

Any suggestions where the leak is coming from? Let's boogie on.

So I'm upstairs and I know this used to be a four-bedroom apartment.

It's in a lot worse wear than what downstairs is,

a lot more work to be done, but there's lots of space again

and when you've got this much space, you've got so many options.

It's a bit of a rabbit warren, so I'm going to have a look

and see what I can find.

And it's big. Very big.

In fact, I think you could get several flats up here

and who knows about the ground floor.

One thing's for sure, its disco days are over

and there's 559 square metres to play with here. There's huge potential.

But I forgot, I was in search of the source of the water coming in.

It says, "Push to open." So I will.

Look at this roof space here.

I wasn't expecting all this space out here at all.

There's so many options you can do with a space like this.

You can actually build on it,

you could make it into a nice roof garden, maybe a bit of a terrace.

Depending on what you do with the upstairs, it could be an area

for the residents of flats maybe to come and use as their garden.

At the moment though, it's the area that's letting in the water

so that needs to be fixed pronto.

I'm getting ahead of myself here

thinking of apartments and roof terraces.

There's planning permission to consider first.

The Town and Country Planning Act classes buildings and their uses.

Now, currently this building has two uses.

Downstairs, which is the bar, is classed as A4

because it's a drinking establishment

and up here, it's classed as a C3 because it's a residential dwelling.

If you do want to change the use of a building,

you have to ask the local authority's permission and it's a bit

of a gamble because you never know what they're going to say.

You could end up with a pub, like it or not.

And even if you have a pub or any commercial space on the ground floor,

that can reduce the saleability of any residential space.

Lots of potential and lots of pitfalls.

The most important thing to do

when you're buying a property like this is research.

The second thing is research and the third thing is do more research.

So let's start the research by asking a local property expert

what he would do with this huge lot guiding at £50,000.

If this were my property, I would turn the first floor

into residential apartments, which would suit the market

really well in a town centre, and the ground floor I would

turn into some commercial property, pop-up shops with low rents, easy

for new businesses to come in and out if the businesses don't work.

But how many flats could you get in this first floor space?

Based on accommodation available, we'd advise

two two-bed apartments and one one-bedroom apartment.

So, potentially, three flats. What kind of values might they have?

Two-bed apartment in this area

I would imagine sales value would be around £65,000.

Rental value for a two-bed apartment

would be around £500 per calendar month.

One-bed apartment would be valued around £45,000-50,000

and the rental value for something like that would typically

be around £400-425 per calendar month.

Three flats in the format the agent suggests could have a total

sales value of £180,000, or a monthly rental income

of around £1,425 and that's before we even think about commercial units.

Sales value of the commercial units will probably

be around 40,000 per unit, although that would depend on the size

of the unit, how many units the new owner put into the ground floor.

In terms of rental value, it would be around £400 per calendar month.

As soon as I saw this place I liked it.

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

Lot 26.

You've all read the particulars, you've all seen it in the catalogue

and hopefully you've all viewed, so the guide's 50 on this one.

Start me at 50. We need a bid. Bid me at 40. 40 here. At £40,000.

At 40, are we done? I'll take two. 42. 44.

44 I've got. 46. 48. 50. 52.

52 I'm bid. 54. Shake of the head. Here at 52.

First time then, just the two of you. You're back in at one.

53, 54, 55, 56, 57.

Not sure? No, here at 56.

First time then at £56,000. Second time at 56.

If you're all done and out, I'm selling. Back in at 57, 58. Nearly.

Might get it. Nine. 60. 61. Shake of the head.

Even number then at £60,000. For the first time and the second time.

If you're all done and out at £60,000, we are selling this at 60.

Well done.

With the hammer coming down at 60 grand, I think

Ian has got himself a bargain.

He's an experienced developer but this is a big task to undertake.

I wanted to know if he had the moves to bring the boogie back to Burnley.

-Ian, nice to meet you.

-And you.

-Congratulations, pal.

-Thank you very much.

-What made you buy this huge place?

-Need you ask?

As soon as I come in, I just looked at it

and I had the ideas of what I wanted to do here, straightaway.

What did you picture that you could do with this place as soon as you came in?

As soon as I saw it, the retail units with the space,

obviously downstairs, and then upstairs, the apartments.

On this floor, we're going to split this into five retail units.

Obviously take the bar out and everything

and make those retail units, affordable retail units

-in the town centre.

-So you're getting rid of this lovely bar?

-Yes.

-It's yours if you want it cheap.

-It's going cheap?

-Very cheap!

Ian had plans to turn one bar into five long commercial units

and then the other bar into one unit before renting it out.

A smart move as having more businesses in here will mean

that he's not out of pocket if one trader goes bust.

How about those apartments?

Upstairs we're going to do three luxury apartments.

They'll all have their own terraces, so big terraces outside.

-So, one-bedrooms or two-beds?

-Just one bedrooms.

-Three one-bedroom apartments upstairs?

-Yeah.

Fantastic, loads of space for that. And the roof area as well?

We're going to make the terraces there

so they all get their own terrace, so they get a terrace as well.

I used to stand on the terraces as a kid.

Ian has a great plan here, but I wonder

if it will have any takers for his renovated properties?

Have you looked and have you researched that

-it is needed in the town centre?

-Yes, of course.

Obviously, Burnley Football Club now doing really well, so they

have an academy here so they bring all the lads here training, so I get

phone calls already from the club for some of my other apartments.

Clever. Very clever. I'm good friends with Matthew Gilks, the keeper.

-I know Sean Dyche because I played with him at Millwall.

-Fantastic.

-What I'll do is make a phone call for you.

-Thanks.

Just pop the cheque in the post, it will be fine.

Nice to know I can still make a little bit of money

out of football, isn't it?

But Ian is splashing the cash here.

150 grand for a high-end finish.

But there is that all-important question of planning.

Before we bought it, quickly spoke to the planning people

and my architect did all the drawings as soon as we...

-The gavel went down.

-Everything's in place.

Straight into planning,

so I think we're about three, four weeks into planning already.

They don't want boarded-up buildings like this

and the council are spending 3.5 million, which I already

knew about, so they're going to be putting in all new paving

and it's coming down just to my area, so I'm sure

they're not going to complain about me doing this property up.

There's no doubt Ian has come in at a good time here,

but this building does have its issues. Like that damp.

A flat roof and a burst boiler are apparently the culprits.

Completely fixable but could they end up costing money?

We're going to be doing the works over the damp, we're going to

reboard it everything, so it's not going to cost us that much.

In the next 16 weeks, Ian and his building team are going to rip up

the dance floor, quite literally.

And while I think his plans are the right ones,

Ian has reasons to be nostalgic about this building.

When it opened 25, 30 years ago,

I did the DJing for the opening night.

-That's brilliant! That was 25 years ago?

-Yeah, 25 years plus.

Was it buzzing?

-It was, yeah. It were piked.

-Because you were DJing?

So now you've returned to somewhere you know very well.

Yeah, so I knew the building anyway.

I've been in here, like I say, when I were DJing.

-16 weeks, 150 grand, everybody's waiting to come in.

-Yeah.

-Good luck, pal. I know it's going to be a success.

-Thank you.

-Take care, pal.

-Thank you very much.

They say that life comes around in circles

and that's exactly what seems to be the case here.

Ian's returning to one of his old haunts where

he used to DJ many years ago, spinning those 45s to the beat.

Now he's back with new plans for this posting which should

secure its future.

You can find out how he gets on later on in the programme.

'Coming up - I'm burning up with ideas for this Croydon four-bed,

'but before we're cooking with gas...'

clean the oven because it needs it!

And in Burnley, is it disco inferno or a damp squib?

When I drive into town and I see it,

I feel proud and it looks really good.

We return now to Buckinghamshire and the market town of Olney,

pronounced "Own-ey" by the locals,

but I can't help pronounce the L myself.

# I know I'm not the only one... #

For it was here that I saw this three-bedroom mid-terrace.

Bought at auction for 218,000.

This is the rear sitting room.

I would just take this wall out completely, open it up.

I've seen that done on loads of occasions and, you know, you think,

"Oh, what am I doing?" when you knock that wall down.

Do it.

All very well for me to say, as it wasn't my project.

It belonged to Lesley and Matt and Lesley had recently found

she could go full-time into property development

with this her first project.

What prompted you into the sort of property-developing world?

Had a little bit of money come my way recently.

Had a lottery win.

-A lottery win?

-Yeah.

-Oh, fantastic! How many numbers did you get?

-All of them.

-All of them?!

Whoa! In Lesley's case, it was a set of numbers used every week

since the lottery began.

They don't seem to have been as lucky though with their three to

four month timescale, as we're back six months later to see the changes.

# ..Take me home with you tonight

# I'm not going to make it on my own

# My own two feet... #

I'm pleased to see Lesley and Matt have done exactly what

I would've done. Lesley got her hammer out and took down that wall.

Nice one!

The once cramped kitchen, which led to the downstairs bathroom,

is now much brighter.

With an inviting flow to patio doors into the back garden.

Matt's expert touch at tiling isn't just present in the kitchen.

Victorian-style tiles grace the entrance hall, invoking

the era the house was built.

The polished floors, neutral colour scheme and carpet

are a far cry from the sorry state it was in.

There is a newcomer upstairs

having relocated from the back of the kitchen.

The family bathroom, with a bath, has been squeezed in.

You can tell who's been busy here too with the MATT finish.

But has it robbed too much space from the bedrooms?

Let's see.

Do Lesley and Matt feel moving the bathroom has paid off?

We decided the bathroom needed to be moved upstairs.

It's more practical for families we believe.

And the best way to do it was to nick about two metres

out of the main bedroom and two metres out of the middle bedroom,

so then we could put a bath in.

Which I think has worked and has then enabled the kitchen

downstairs to be opened right up into the garden.

I love it. It just all flows. It's just specious. It's lovely.

The couple had help from Matt's dad, who's a plumber,

and Matt's colleague from the building trade.

And when it came to the decor...

We decided to go for quite a neutral palette really.

White walls, neutral carpets.

All I was allowed to do was the tiling in the hallway,

the kitchen and the bathroom and that was it.

But there's no doubting that Matt's done a fine

job in charge of tiling.

During the build, the couple sold their Hertfordshire home,

which didn't help with the schedule.

The timescale was about four months.

We did have to wait for building control regarding taking

the walls downstairs,

but we're quite happy with how we did regarding the timescales

and we needed to get it finished so that we could move in here.

Yes, that's right.

Matt and Lesley have moved in, as they sold their house

and needed to live somewhere.

And they might as well enjoy this lovely house, as their next home

will be a temporary caravan.

The couple have bought an old watermill,

which they plan to renovate.

Meanwhile back here, they've spent 21,500,

well within their £20-25,000 budget.

Will they have something more to celebrate?

We've invited two local agents to have a look.

A lot of people we come across

that want to achieve a first floor bathroom

go down to two bedrooms, generally losing value.

But I'm very impressed with what they've done here.

I think the double doors into the garden really do open up the kitchen,

which people do like now. And knocking the wall

through into the lounge, making it one room now, gives a bit more space.

So is there any profit likely from the £239,500 investment?

I think this property would resell, in today's market, at £290,000.

This property can resell for £295,000.

Which would leave Leslie and Matt with a potential profit of £55,500,

minus the usual taxes and expenses.

How do they feel about that?

Yeah, good. I think that's roughly where we would want it to be,

so really pleased with that.

The couple want to sell quickly

so they can get on with their next project

and buy other auction properties.

So their two dogs, two cats and five chickens will soon be moving again.

All in all, was it a good thing to do with the winnings?

There were dark days at the start when everything got ripped out

and I thought, "I can't see how this is ever going to come together."

But once it all starts to come together and we got it furnished,

I'm really, really pleased with the result.

Proud of myself and Matt.

Croydon is a London borough where it's all happening.

Lots of investment and a bid for the town to become a city,

coupled with a fast commute to the city centre of London,

means lots of property development opportunities.

I'm here on this road

to see a four-bedroom house arranged over three floors.

You've got the lower ground floor, the ground floor and first floor.

It went to auction with a guide price of £225,000.

I love this little raised stairway

and a nice porch area too, to keep the cold out.

OK, the walls are stripped back to the absolute bare plaster in here.

A little bit grim, I've got to say.

It's a bit of a narrow hallway.

We've got the front bedroom,

and it's absolutely rammed full of stuff!

But there is an interesting fireplace lurking over there.

The second bedroom, again, look, it's absolutely chocka.

Skips are the order of play here.

But looking beyond it all,

you have got two really good-sized rooms here.

So not a bad start. Shall I go up? Shall I go down?

I'm going down.

MUSIC: I'm Goin' Down by Bruce Springsteen

# I'm goin' down, down, down...#

Some of the hallway literally is back to the bare brick.

Quite a lot of work needs to be done on this property.

As you guys know that watch this show,

I'm not always a big fan of the basement.

It's not too dark down here, it is a little bit damp and a bit dingy.

It needs a complete and utter refurb.

But there is quite a lot of space to play with,

and I like the way you have got your social area here

and your kitchen area here.

Loads of space to play with.

And it's got a back garden which is letting lots of light in

so you could think about extending, or even a conservatory.

The one thing that this downstairs space doesn't have is a loo.

There is only one upstairs,

two floors above, so you would have to think how you would work that.

But the first thing I would do when I came into this property

would be to clean the oven, because it needs it.

MUSIC: Spring Cleaning by Fats Waller

# Shake off the trees Make 'em clean again

# Spring cleaning Gettin' ready for love... #

If this were my place,

I would be getting my scrubbing pads ready and my sleeves rolled up.

And I would be bringing my plastering hods too. And some skips.

It's not just the interior.

Outside, also, is a little, well - shall we say cluttered?

At first glance at this house, you might think,

"What a load of rubbish."

OK, it is a little bit messy.

But I'm beginning to love it. Why?

Well, upstairs on the first floor,

you have another two good-sized bedrooms. And a loft space.

And the reason I like it so much is its potential.

Ask yourself the question, does this have to stay as a four-bed house?

The ground floor actually has its own separate entrance.

This opens up the possibility of a separate flat

with its own front door,

but you have to consider if there is enough square footage.

Now, there is not always a specific legal minimum size,

it depends on the area and the local council.

As an example, in 2006, a report for Greater London recommended

the minimum of 37 square metres for a one-person studio flat.

But, of course, you would have to apply for planning permission

if you want to do anything like that.

So could you make this into two flats, and should you do it?

What did a local estate agent think of this property,

and what would he do with this place, guided at £225,000?

Whoever buys this property is going to have to spend

quite a lot of money. There are a few options.

Restoring it to a big four-bedroom may not be the best thing

to do with the property, just because it is on a busy main road,

it hasn't got a big garden.

Families might want a bigger garden for a house of this size.

I think probably the best option would be to see if you can get

planning permission and possibly develop it into a couple of flats.

But is it financially worthwhile chasing that planning permission?

Is this a popular rental area,

and what would it let for as a four-bed property, or as two flats?

This property is in a great location for rental,

being so close to the mainline train stations.

If it was to be rented as a whole unit,

it would rent for approximately £1,500-£1,600 per calendar month.

This property, laid out as a one-bedroom flat,

with a two-bed above, the one-bedroom flat

would rent for approximately £775 per calendar month.

Possibly £800 per calendar month.

The two/three bed above

would rent for approximately £1,250 per calendar month.

So roughly £500 per calendar month more potential rent

if it was the two separate flats the agent suggests.

What about sales?

This property, if it was sold as a four-bedroom house,

would sell for approximately £340,000.

This property divided as flats, the downstairs, lower ground floor

would sell for approximately £175,000.

The two-bedroom upstairs would sell for approximately £240,000.

Well, this four-bedroom property

certainly needs a freshen-up and a clear-out!

And there's always the potential

of turning it into two self-contained flats.

Let's see who bid for this one when it went to auction.

Lot number eight takes us to Croydon. A good-looking house this.

What shall we say for it?

Start me around 250 for it.

What's that? 230? We'll start there.

Thank you, sir. 230 I'm bid.

232? 232.

235. 238. 240.

Good value at this. Yours at 242.

245. 248? 248.

250. 252? 252. 253.

No surprise there, with Croydon's growing popularity,

that there were a few interested bidders on the day.

And we rejoin the action with the bidding at £280,000.

281? 281.

The lady is buying it again. For the first...

At 281 for the second. Third...

282. 283. 284?

283 for the first.

283 for the second.

For the third and final time.

That's yours now, madam, at £283,000.

Well done. Your bidder number is, please?

A 283 grand bid finally clinched the deal

for the new property development team, Anna and Damien.

They've both dealt in property before,

but this is their first property together.

So I was keen to find out more.

-Anna and Damian, congratulations.

-Thank you.

Tell me little bit about this venture

and why you've decided to do this.

We decided to invest together

as we thought Croydon was a great area to buy in.

-You've also got a third person involved?

-We have, yes,

there is another investor, Richard, who's invested with us.

He's off-camera. Between the three of us, we've bought it together.

What I want to know is how did you three get together

and why have you decided to do this?

Damian and I have been working together for a while

and we met Richard at a property event.

And we knew he wanted to invest and we wanted to invest

so we thought we would all get together and do something in London.

Are you three all property developers

or did you just have an interest in property?

I've got a history in property development,

I'm a chartered building surveyor. I've done development on my own.

Richard has done quite a few developments on his own as well.

So we thought, let's combine resources and do it together?

Does it really work, just pooling all your funds together?

-Come back in three-four months and we'll let you know.

-Wait and see!

MUSIC: Three Is Family by Dana Dawson

# What we've created together is

# The greatest gift in the whole wide world

# One and one is two

# Two is me and you

# Two plus one is three

# Three is family... #

The skill set certainly seems like a no-brainer here.

Aside from Damian's expertise,

Anna works in the city and has a background in land economy.

Camera-shy Richard has a building agency.

And the prospect of a first development together

left certain members of this trinity a little overexcited.

Anna did get slightly excited during the auction process.

She was climbing up the chair at one point

and checking everybody else out who was bidding against us.

I think at one point I did have to pull her back down.

Damian, next time, learn to control her.

Good luck with that!

How long have you guys known each other?

Nearly a year now.

Tell me what part are you all going to play in this venture?

I'm going to make it look pretty.

I'm going to make sure it stands up.

And Richard is going to pay for it.

That seems like a good deal to me.

Let's start from the beginning. Where are you going to start this?

Currently, it's just one big house, isn't it?

I think with this one, we're going to split the property

into a one-bed flat on the ground floor

and then a two-bed maisonette above.

That is going to require planning permission,

so we are in the process of starting that.

With a bit of luck, that will be an extension at the back,

generally a clean-up, and then the same upstairs.

I know the local council around here

are not keen on adding too much square footage to houses like this.

Have you thought about that and how much are you going to be going out at the back here?

We'll probably only go back the permitted developments at the back.

So we shouldn't have too much issue with the council there.

And upstairs, we've got sufficient square metreage

to qualify for the size of flat we are going to build.

They're hoping to get this project done in three to four months

and reckon on a budget of about £50,000-£60,000.

Three isn't a crowd here,

but how will they make their decisions together?

It's a bit of a committee system. We split it that way.

Whoever has the most experience in that particular area.

What is the look and feel going to be like?

-I think it will be fairly standard development - magnolia.

-Magnolia!

-Just say neutral!

-Neutral.

-Magnolia is banned on this programme.

-Really?

After having done this show for so many years...

For you, we'll paint it a completely different colour - purple everywhere.

-Let's call it off-white, shall we?

-Let's do that.

Purple it is then.

Oh, well, I suppose, just this time, I'll let them have magnolia

as it will make it easier to sell the flat,

which the trio plan to do.

But if they don't get planning permission to convert them,

what's their plan B?

I think our plan B is probably to go for an HMO.

There's not a great difference between the work we would have to do for the two flats, or the HMO.

So that's kind of our fallback option.

Guys, it's been brilliant meeting you. Good luck with this venture.

And it would be great to see if you do get what you want.

-Lovely to meet you both, thank you so much.

-Thank you.

-Thank you.

So this flat marks the start of a planned new venture

for property developers Damian, Anna and Richard.

But they want to convert this into two flats

and they know planning can be tricky.

And this is the first project they've all done together.

How will they get on?

Join me later in the programme and you can find out.

We've seen how one of the properties has ended up, how about the others?

Yes, how did the other two get on with their auction purchases?

I can't wait to find out.

Earlier in the show, I was in Burnley to see a real slice of Northern Soul.

This former disco and living accommodation above was guided at £50,000.

Despite the condition of the place,

you had two huge bars, both with toilets and kitchen.

And they left me the dance floor.

# I'm going out, going out... #

MUSIC: Dancing On The Ceiling by Lionel Richie

# Oh what a feeling Dancing on the ceiling... #

No, no, no, you wouldn't want to dance on this ceiling

as there is damp throughout.

Maybe that damp was coming from

the dilapidated former four-bed flat upstairs.

And exploring the maze of rooms,

I found a huge flat roof which may explain the damp.

And Ian was ready to throw shapes on the dance floor

when he paid £60,000 for this lot.

His moves were going to be about creating six commercial units

on the ground floor and three flats above.

It turned out he'd strutted his stuff in this place some time before.

When it opened 25-30 years ago,

I did the DJing for the opening night.

-That's brilliant. Was it buzzing?

-It was, yeah, it were packed.

-Because you were DJing?

-Hmm...

Former DJ, Ian, was ready to change the tune in 16 weeks

with a 150 grand budget.

We came back 16 weeks later and, wow! Look at the frontage!

That rather brutal exterior has been made so much better

by the addition of new angular windows making the retail spaces

light and also making maximum retail exposure.

Ian has created five retail spaces

and one of the bars has become a brand-new restaurant.

Ian has then used a portion of the space in the other bar

to build service corridors so that businesses have areas to move

and store their goods.

The other units have been partitioned,

but they are still undergoing work.

They all have new plastering, flooring and electrics.

And what about upstairs?

Incredible!

The flats all have one bedroom

with one apartment being extended to make room.

And they've all been fitted to a very high standard.

Just when you thought that's all you would get on this floor,

there's more outside.

Each flat has a private roof terrace,

two of which have been built on the leaky, flat roof.

But for one of the flats, it's up a set of stairs

and onto its own private roof garden.

Ian has done a great job here and he's worked hard to make sure

the retail space fits the needs of the tenants,

including laying a porcelain floor

at the request of one of his clients who wanted a larger unit.

One of my clients wanted a bigger space.

So we made a bigger retail unit for him.

He's a men's clothes shop and he needs a lot of spare

so we made it into a bigger one which...

Obviously, we get more rent for that and the restaurant...

..because it was licensed,

we thought it would be a good idea to keep the licence.

Licences are hard to come by

so that's why I kept that part of the building as a bar/restaurant.

It's in my name and that will be transferred to the people

who rent the restaurant off me.

Ian reckons there's just some snagging to do to the flats

and the shops are nearly done.

Just got to put a couple of floors in two of the retail units

so I would say another two weeks and we should be finished.

Two weeks over what we said, I think.

Ian has spent £200,000 so far and estimates

and other 40 grand to be spent.

That would take him £90,000 over his budget.

But how is he feeling about the project?

I think it has been a fantastic experience.

Really, really enjoyed it.

The thing I'm most pleased with is how it looks now

from the outside and when I drive into town and I see it,

I feel proud and it looks really good.

And I think you've got lots to be proud about, Ian.

But the other "P" word we care about is profit.

Ian thinks his total spend at the end of the project

will be £300,000.

What do two local agents think the flats will be worth?

For the apartments, I'd suggest a selling figure of £75,000

with a rental figure

of £450 per calendar month.

Should the flats be put up for sale then

I would recommend an asking price of £75,000.

On the rental market, the flats, I think,

would achieve a price of £425 per calendar month.

Erm... Rental, a little bit less than I thought, but still...

Fair enough. Yeah!

Based on the higher rental,

Ian could have an income of £1,350 per calendar month.

And the agents think that the commercial units altogether

could produce a rental income of £4,150 per calendar month.

For those of you without a calculator to hand,

that's an income of £5,500 per calendar month

and a cracking 22% yield.

That is huge.

But what is the building worth if you wanted to sell it?

Subject to all the units, first and ground floor, being let, then

I anticipate an asking price of somewhere between 500 and £550,000.

For the overall building, I think we'd be looking at

an overall figure of around £600,000.

It has been a long 16 weeks and, at this stage,

if somebody gave me half a million quid, I think...

I'd bite their hand off!

Well, Ian, it might have been stressful,

but you've made all the right moves here.

This former disco could make you a potential pre-tax

profit of 300 grand.

But with that potential 22% annual yield, you can understand why

he's sticking to his original plan and putting it on the rental market.

So, what's next?

We'll have a couple of weeks holiday and then come back

and it's basically back to the auction.

Earlier in the programme, I saw this four-bed family home in Croydon.

Spread over three floors,

it was more like a skip than a spacious suburban pad.

But looking beyond all the stuff, the layout meant there was

potential to change the house into flats.

Something that Anna and Damian thought

when they bought the property for 283,000 in a new partnership

with another investor, Richard.

You know what they say?

Three heads are better than one and each head did have its role to play.

I'm going to make it look pretty.

I'm going to make sure it stands up.

-And Richard's going to pay for it.

-That seems like a good deal to me!

Where are you going to start with this?

Currently, it's just one big house, isn't it?

With this one, we're going to split the property into a one-bed flat

on the ground floor then a two-bed maisonette in the flat above.

Obviously, that will require planning permission

so we are in the process of starting that now.

With a bit of luck, that will be an extension of the back,

generally a clean-up, and then the same upstairs.

Our plan B is probably to go for an HMO.

There's not a great difference between the work we have to do

for two flats or as an HMO so that's kind of our fallback option.

So, seven months on, have the three developers

achieved their dream of two flats?

MUSIC: It Takes Two by Marvin Gaye

It didn't go through planning.

TRUMPET NOTES DESCEND

Oh, dear!

The council rejected the planning application

on the basis that the basement floor would not have

sufficient square footage to meet regulations.

But not all is lost.

Instead of making two flats, the trio have made one.

One House of Multiple Occupation, that is.

# I'm having a dream

# And in it, I'm just a machine

# And I know it will not be easy

# Singing a song that has to be sung

# Only you can make one out of two

# After all that we've been through

# You keep on giving me a reason

# To see love through your eyes. #

The property is now a five-bed house of multiple occupation

with three of the rooms having en-suite.

But they have had to get very clever on the ground floor

to create a bedroom.

So, this is the ground floor bedroom which was originally

part of the open plan kitchen and we had to do some structural work,

some joists, for this bit. They were a bit rotten.

We opened it up and there was an outside bathroom as well

so we incorporated that back into the kitchen

just to make it a bit bigger.

As you can see, we've put a partition wall up there

and installed an en-suite bathroom as well.

There's still a few bits to go.

A bit of snagging, in here as well as the whole house,

and furnishings, window dressings and so on.

And the first floor looks great, too.

On the first floor, it was already into two rooms

so we've now turned one of them into a bedroom with an en-suite

and the other one is just a bedroom in its own right.

Again, we've just reformatted it a bit to get more lettable bedrooms

in the property.

Not too many changes on the top floor, but even more toilets.

On the third floor, the last one, there were already two bedrooms

up there and a bathroom so we've just redone both of them,

replaced the bathroom

and also incorporated a new ensuite in the front bedroom.

So we've added three extra bathrooms.

We've got a lot of toilets because we're renting room by room

and the rent is that much higher, about £50-£100 a month higher,

with an en-suite.

People like their privacy so they like to have a bit self-contained.

You've got to speculate to accumulate, but given the

change of plan, I'm reckoning their budget of 50-60,000 had to change.

Now that we've gone the HMO route,

the final budget is probably going to be about £70,000.

Because of the change in plans

and having to apply for planning permission,

things took a little bit longer than their original timescale.

But is everybody happy with the outcome of the project?

Both of us and also the other investor, Richard,

are really happy with the end result.

Time to call in two local estate agents to find out

if plan B is A-list when it comes to profit.

What do the agents think of the work they did?

And did they make the right decision in opting for an HMO?

The key with HMOs is location and obviously condition.

The condition is fantastic. It's all brand spanking new, pretty much.

Location is very, very good.

We're just outside of central Croydon, walking distance to West

Croydon station and East Croydon station so very good decision.

I really like the property.

I think the work has been done to a very good standard.

There are a few small snagging issues.

I'm sure they'll get completed.

And they'll have no problems renting or selling the property.

The layout of the building works very well because each room,

apart from two of them, has got an en-suite.

People prefer that as they don't really like to share bathrooms.

And you also have a main bathroom

and the property is over three floors, which is very good.

Being an HMO landlord does come with a lot of responsibilities.

You have to have appropriate fire doors and alarms,

amongst other things, to get the required licensing.

Will the rental income of the five rooms

make the three developers' £353,000 investment worthwhile?

I believe the annual figure for this property for rental

would be 33,000 per annum.

If you're looking at an annual rent,

you'd be looking at around £36,000 per annum.

So, we forecast just over 36,000 as the gross annual income.

Ball park. It's about what we were hoping for.

And a total rental income of £36,000

a year gives them a 10% yield.

But could it fare even better on the sales market?

If you're putting this property on the market, it depends on how

you're going to sell it.

If you're selling it as an HMO, I would then look at the value

based on the rental income coming in

and try to achieve about 8% return for my clients, gross.

So you would look at about 425,000-430,000.

However, if you're going to sell it as a family home,

which it still could be a three or a four-bed.

If it's a four bed, you're looking at around £350,000-£375,000.

Within the current market, I believe this property would be

looking to achieve anywhere in the region o £475,000-£480,000.

-Good!

-We'd be quite happy with them.

-Good year.

If you'd like to buy it, you can have it!

Well, unfortunately,

I didn't see the agent getting his cheque-book out, Damien!

But his top valuation of £480,000 would net him

a 127 grand profit before the usual taxes and expenses.

But, the three developers will keep on renting out the rooms.

After that, what projects are they planning for the future?

We're not working on any particular deals together at the moment,

but not to say that we wouldn't in the future.

It's been really good fun. Good experience.

This one's worked out all right so we might do another one together.

Well, as you can see, there's lots to learn

when it comes to investing in property.

Well, don't worry because we're always here with advice.

Yeah, make sure you join us next time

-for more Homes Under The Hammer. Bye-bye.

-See you, then.

-Bye.