Episode 62 Homes Under the Hammer

Hello and welcome to the show.

If you're looking at investing in property, especially for the

first time, you really need to gather all the information you can.

You can never know too much.

If you're experienced or a newbie, there's always something you can learn.

Whether you're a first-timer or an old hand, maybe now is the right time to buy under the hammer.

There are so many factors which decide

whether you'll make a profit from your property or not.

And one or two of those factors might come as a bit of a surprise,

and not always a nice one.

So did today's buyers bid wisely? Here's what they bought.

I smell profit at this massive commercial unit

and flat in Castle Donington.

But there's something else in the air.

It really does pong. Damp!

In Silverdale you get two terraced houses

and a chance to build a third.

However, there is that to consider.

So stay tuned to find out what "that" is.

And in Tredegar, South Wales, I'm in a rabbit warren of council offices,

but there's big potential.

I think the big money here is to be gained by converting this into flats.

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.

It's yours, sir. Well done.

First up is my first visit

to the very pretty village of Castle Donington.

Set on the Leicestershire border

and only four miles from the M1 motorway, it is nice and accessible,

which is handy because once a year this quiet little village plays host

to one of the UK's biggest rock festivals at nearby Donington Park.

# Singing

# We will, we will rock you. #

This might be a rather busy road,

but it's only a couple of minutes' walk from the local shops,

which makes it a convenient place to be.

But what about the property I'm here to see?

Well, it's steeped in history as it dates back to at least 1710.

It was once used as a butcher's

and most recently as a homes and gardens centre on the ground floor

with a flat above.

Now, it had a guide price of £95,000.

I can't get in the front door, so I'm going to head around the back.

# So, let out your heart Please, please

# From behind that locked door. #

Yes, this whole property, for a guide price of just £95,000.

It's in a conservation area which will mean restrictions to changes,

but it's not listed,

which allows you a little bit more freedom internally.

Through the large gate and into this great-sized courtyard.

I'm heading into the commercial premises on the ground floor.

It already has an A1 business classification,

which if you so desire means you could turn it into anything

from a hairdresser's to a locksmith's.

Hmm. Lucy's Locks! I like the sound of that!

Wow.

Whoa!

Excuse me.

Honestly, it really does pong.

Damp, damp, damp, damp, damp.

It stinks and we'll get back to that in a moment.

Now, character is in abundance with this property.

Look at that lovely old fireplace there.

You've got these beams up here

but with the strip lighting on top of them!

Walking through here, well, you can just smell the history.

But again I'm going to mention it, you can smell the damp.

Look over here!

My goodness!

Obviously the timbers have been taken away and you're just left with

what's been growing upwards from the bottom.

I mean, look at it!

It's almost like a little grassy, mossy patch over there.

But it certainly is an interesting property.

Where would one start? I don't know.

In this part of the building it does feel a bit like a rabbit run

with rooms coming off rooms and even a basement.

But that smell of damp is pretty overpowering.

Plenty of work is obviously needed here

and I feel it will need someone with a lot of know-how and experience to take it on

and hopefully they'll retain all these great character features.

Heading back into the yard,

there are a couple of old stables as well as an outhouse.

Rather you than me!

An external staircase heads up to the three-bedroom flat

which I am happy to say is in much better condition

and feels rather homely.

A bathroom is to the right of the front door.

The large kitchen-diner leads into a spacious lounge

and three double bedrooms.

It's bright and airy and with a little bit of TLC,

not to mention elbow grease, well, I think it could be absolutely lovely.

And then you've got this.

Now, I would love to see a glass box bolted on the end of this building,

but something a little more contemporary and juxtapositioned

because I don't think this old thing really works,

and even if it complies with today's building regulation standards.

Wow!

What have we got out here?

I was not expecting this.

It's like a little secret untouched garden on a raised level

and it is so pretty.

You've got loads of planting, a little secret pathway.

It's quite magical up here.

I'm even more excited. I'm going to explore.

So I think we've established this is a pretty special

and unique auction lot.

But let's think about the bigger picture.

What could you actually do with it?

We've asked along a local estate agent for his opinion

of the property, which is guided at £95,000.

With regard to what needs to be done here, if we were to just use

the word "everything" we probably wouldn't be far wrong.

If this were my property I would renovate this

to offer as many of the features as possible as one single dwelling.

I think this would make a wonderful home.

I couldn't agree more, but if we are thinking more with our heads

than our hearts, what would make most sense financially?

If I wanted to maximise my return I would probably look to divide it

into two or possibly three units.

If this were converted into two dwellings

I would anticipate each property being on the market

for somewhere in the region of £190,000 to £200,000.

If this property were offered for sale as one property

and offered for sale, but brought to the market in a good standard,

I would anticipate to achieve somewhere in the region of £370,000.

It's not often I get to see properties

with quite so much character as this one.

And this garden is so special.

It's hard to think with your head

and not your heart with something like this.

But whether it be one house or two flats,

I think residential is the way to go here.

Let's see who wanted their own little piece

of Castle Donington history when we went to the auction.

Unique property, very historic indeed, ladies and gentlemen.

Start me on this one if you will. Let's say 120 for it.

110?

£100,000? Thank you. In the corner at 100. At £100,000 the opening bid.

101, I've got. 102. 103. 104.

104. 105.

After a hesitant start, the bidding soon picks up.

We rejoin at £161,000.

£161,000. Coming in at the back?

£161,000.

The bid is way over on my right.

161,000 once.

62. 162. 163? No?

£162,000 once.

Twice. Third time.

162,000. Sold.

That successful bidder, paying £67,000 over the guide price,

was experienced property developer John.

Now, if you recognise his face, that's because, along with his wife,

Penny, he previously met Martin way back in 2005

when he bought a three-bedroom townhouse.

This time, it's my turn to meet John

and we met back at his latest acquisition to discuss his plans.

-John, congratulations.

-Thank you.

You did pay quite a bit over the guide price on auction day.

What happened there?

There was a bit of competition for the property, I must admit,

and I kept trying to outbid them early on, but it wasn't working.

We had a budget of 160,000 on the property.

That was sort of our top bid.

We went over 2,000, so it wasn't too bad.

I know you are a property developer and this is what you do.

So why have you decided to take on something more unusual this time

because it will be a challenge.

It is, Lucy, but the thing is we have been doing this

for 15 or 20 years and obviously we are looking for challenges now.

This is something that I feel is a challenge

and it will be nice when it's done.

What are you going to do with it?

-I would like to do a four- or five- bedroom individual house.

-Really?

-You would like to make this a nice family home?

-Yes.

Because you can incorporate the garden.

We can maintain it as one unit.

I think, once we start building more than one, then we're going to split the garden

and it's going to be a challenge, I think, in terms of how we do that.

And it would allow us probably to do a better job overall.

So what about the commercial unit on the side here?

Would you like to incorporate that into one family house?

Yes, it will all be converted into one unit.

At the moment, it's commercial but we will look for change of use on that,

which will be submitted in the next couple of weeks

-and then we will see what the architect comes up with.

-Wow!

-Then we will move forward from there.

-I just see pound signs.

I see a lot of money going into something,

and you as a developer should know, are you going to get it back

by turning this into one family house?

Probably not as great as if I split it.

At the end of the day, I generally think it would spoil it

to split it and whilst we would get less of a return on it,

I feel I would be happier going down that route.

Because to split it into potentially two semi-detached houses or even

just apartments, you could probably thick and fast get your cash back.

-Yes.

-Why don't you want to do that?

-I don't know. You'll have to ask me that...

-Is it something in your heart that you...

You're going to have to ask me that in nine months' time!

Because when you come back, you may see three units or you may see one!

But generally, I follow my heart, and on this particular one, to justify the building,

I generally think I'm going to keep it as one unit.

How refreshing to hear a property developer considering

the building itself rather than their own profit margins.

Bravo, John.

He's hoping to convert this property with a budget of £60,000

and predicts a valuation of around £350,000 once complete.

And he's hoping that the renovation work here

will take around nine months.

So, John, tell me, how are you going to retain the character here?

Let's say you are going to have one dwelling,

what is it going to look and feel like?

I would like for it to feel cottagey.

I would like to put a cottage-type image into the building.

Into the kitchen, the staircase, maybe into the ceilings

and also the centre part.

As you can see from the front, we do have a nice main door

and I'm trying to have the image as you come through that door as a focal point to the stairwell.

Then we will try and spread out from there.

-John, I am really excited about this one. Good luck.

-Thank you.

Yes, John might have paid more than he intended on auction day

but I am so pleased that this characterful place has

fallen into the hands of a developer with a heart.

And I really can't wait to see it transformed into a gorgeous home.

Join me later in the programme and you can see what happens.

Silverdale, west of Newcastle-under-Lyme in Staffordshire

saw coal mining as early as the 13th century.

But the last colliery closed in 1998.

Nowadays, good transport links and lovely countryside nearby

offers value for money for a property buyer.

The lot I am here to see is quite a complicated set-up.

You get this plot of land.

This two-bedroom property.

And this two-bedroom property.

And get this, all for a guide price of £85,000.

I've got to see this.

First thing that hits you, very '80s feel,

especially with that brick fireplace as well,

and in the corner they have even built

a sort of television stand with brick.

I have not seen one of those in a long time.

Knocked a wall down here to try and create as much space as they possibly can.

I'm pretty sure that isn't original.

Anyway, through into the kitchen, which looks quite tight.

You've got the stairs going up to the bedrooms as well.

And the bathroom at the back of the property.

A bit of modernisation here and the whole of the property I've seen so far

would bring it bang up to date.

The structure is sound, the layout is good,

but brick TV stands, fake beams, textured walls?

# It was acceptable in the '80s. #

Similarly, upstairs has two good-sized bedrooms

and a decor that belongs in an era

when I was sporting a pencil moustache and a Norwich youth kit.

Who wrote this?

Moving swiftly on, I can see that the other property has been built as an extension.

But what will we find inside?

So, into the extension,

which is really a separate property all alone.

you've got a decent-sized lounge here

and a kitchen which sort of takes up half the downstairs.

You've got two further floors so I imagine two bedrooms

and bathroom upstairs.

You've got some double-glazed doors going outside.

But the configuration is OK.

I am liking what I'm seeing, so it's so far so good for me.

And so the good keeps going.

On the next floor up, double bedroom and bathroom.

That, OK, it's not to everyone's taste, but you can see the decor

throughout this house is more from an era

when I was banging them in for Villa

and I decided that moustaches weren't for me.

That's much better.

But another floor up, the attic bedroom is a giveaway

for a secret I've been holding back for some time.

# Let this be our little secret

# No-one needs to know we're feeling

# Higher and higher and higher

# Higher and higher and higher. #

This extension property might seem in good nick,

but it has no completion of building certificate.

This means that none of the work carried out has been inspected.

So you can't kid on that this is a finished house

until you get the final stamp of approval

and that may involve unpicking some of that work.

Time for a look outside, where hopefully there is some better news.

At the side of this property you have the benefit of

this plot of land which did come with planning permission

for a three-bed detached property.

That planning has now lapsed, but I'm pretty sure you could get it

reinstated, with maybe even bigger and better plans altogether.

However, there is that to consider.

OMINOUS MUSIC

And what is that?

Well, the ominous music should tell you it's not good news for any developer.

Time to dig deep.

It's called a culvert and it means that at some point a river

or water management system has been routed underground.

This could be a problem which only deep pockets could solve.

# I'm going deeper underground

# When I've got to go deeper

# Got to go much deeper. #

This is a very large underground stream and you can move them

but you need local authority's permission and possibly

the Environment Agency's approval and it's not cheap.

Before you do any underground work though,

let's do some homework with an agent from the auction house who sold it.

What are their thoughts on that tricky culvert?

Looking at the legal pack, it does appear there is a culvert.

Perspective purchasers would have to really look at the building regs side of things,

speak to the local authority and maybe get some structural engineers

to look at the problems here and just go from there.

The third part is complex, but what about that stand-alone extension?

In the extension, there is very little that needs doing.

I feel, with the right investigation,

it would be quite easy

to get the completion certificates for its own address.

So each part of this lot comes with its hassles and problems

but would it be financially worth it against that 85 grand guide price?

First of all, what about the values in the main two-bed property?

In the current market, once renovated

I would have this property on the resale market for £85,000.

Should the extended part of the property have a completion certificate

I would be expecting to achieve somewhere in the region of £90,000.

Finally, if you built that planned three-bed at the side, what could that be worth?

I would expect it to be worth in the region of £125,000.

So there's quite a few things to consider here.

That second property with that no-completion certificate,

this piece of land with planning, but that has now lapsed, and that culvert.

Is it worth building over it? Or would it be money down the drain?

Let's see who was brave enough to take it on when it went to auction.

Really good opportunity here. Lot 37. Let's say 80 to start me.

80, bid. Thank you. At £80,000. At £80,000. I will go in twos on this.

82. 84. 86.

88. £89,000.

89,000. 90. New bidder. At 90.

91. 92. 93.

Coming back in? No?

If not, £93,000 then for the first time.

£93,000 for a second time.

Third and final time at £93,000.

You have bought it, sir. Well done.

And so the hammer fell at £93,000

and the successful bidders were Matt and Julie.

They have been slowly building up a property portfolio

for their retirement and Matt carries out

most of the work himself as he is a plasterer and joiner by trade

with 22 years' experience in the building industry.

But between these two properties and a potential third house,

this might put his skills to the test.

I went along to find out his plans.

-Nice to meet you.

-Nice to meet you.

-Congratulations.

-You have got yourself a monster!

-I think so.

-It's not frightening you at all?

-No, not really.

You have done stuff like this many times before?

I've done three or four up. This is probably my fifth.

You've got a bit of land, you've got this property, you've got that.

You've just got to take it in stages.

This one will be the first stage.

That one next door and then the new-build after.

Let's start at stage one. Let's start at this one we're in now.

What are you going to do? Tell us what you're going to do and what it's going to be.

This will just be a two-bed terrace, traditional,

bathroom downstairs because there is not enough room to move it upstairs.

It will be totally refurbished.

So new bathroom, new kitchen, wires, plumbing. That sort of stuff.

There are a few issues with the second phase.

Just run us through them.

Well, there is no completion certificate

so that means the building inspector, I don't know what

he's actually inspected so there is that little bit of an issue.

But in my experience, I have been around

and seen the quality of work so I know it's not too bad.

But the only issue is,

the electric supply comes from the meter that is in this house.

Some bright spark has wired the extension's electrics

into the existing house, so plenty to sort out.

Then there is stage three and that culvert.

It's piped. I don't think you will be able to build over the top

because it's quite a big structure underground.

But the planning have passed a three-bedroom house

which sits just off the culvert.

Have you got to redo the plans or will you reissue those plans?

I'm hoping just to see if I can get a little bit bigger three-bed,

but if all fails I can't see the council not allowing me

to do what they have already said is OK to do anyway.

Matt thinks a timescale of two to three months for the original house

seems realistic as he really only needs to fix the electrics

and get the building certificate for the extension.

He thinks that will take two to three weeks.

But the real prize for this lot is the new-build

and that is something Matt has never done before.

But he estimates it should take him around six months to construct.

He plans to rent out the first property while the extension

and the new-build are to be sold on.

-Is this one of your bigger properties or one of your smaller ones?

-This is probably the biggest.

But it's not big if you take it in little stages.

Exactly, yes, and you chop it up and do it bit by bit

and hopefully the income of the first one...

I might have to remortgage one of these to fund the new build.

OK, so your total... What total have you got in your head?

Probably 80,000 or 90,000, something like that.

-It's not too bad, is it, really?

-No.

If we say 10, 12, 13,000 on this one

and then, you know, five or six on that one.

-Matt, I wish you all the best.

-Thank you very much.

I've got my overalls in the car, pal, so I'll muck in!

OK, I give you a ring on Saturday!

Matt has really got his hands full with this project.

The renovation of this property, no completion certificate

and the lapsed planning as well.

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

Coming up - in Tredegar, South Wales,

property developers seem to be getting younger all the time.

On the face of it, you seem quite young.

-How old are you?

-I'm 16.

-And I'm 29.

Youth is the name of the game, Martin.

In Silverdale, Matt has had help from daughter, Beth.

She will probably want paying now. That's no good!

There's always the sweet village of Castle Donington

on the Leicestershire border

as its home to one of the UK's biggest rock festivals.

Earlier, I was air-guitaring with joy,

or whatever the property development equivalent is,

at this vast 18th-century commercial premises and upstairs flat,

all for a guide price of 95,000.

Downstairs was a rocky start.

Stadium-sized space

but more damp than your average festival Wellington boot.

Upstairs, characterful features from when rock only came in stone varieties.

And a huge garden to the side.

But it was going to take a buyer with real guts to take this on.

Step forward experienced developer John

and his successful £162,000 bid.

Well, John, I've got to say, you had a lot of courage going

for this one, so from all Homes Under The Hammer fans and myself...

# We salute you

# We salute you. #

And John planned to make the whole property into one family home.

From a developer's point of view,

I wondered if that was more foolhardy than brave.

I see a lot of money going into something

and you as a developer should know -

are you going to get it back by turning this into one family house?

Probably not as great as if I split it.

Because to split it, you could probably

-thick and fast get your cash back.

-Yes.

-Why don't you want to do that?

-I don't know, Lucy. You're going to have to ask...

-Is it something in your heart that you just...?

-You're going to have to ask me that in nine months' time.

Cos when you come back, you may see three units!

But generally, I follow my heart and on this particular one, to justify

the building, I genuinely think I'm going to keep it as one unit.

John's head said to split it all up, but his heart said to make it

a big family home, so what instinct won out 12 months later?

# And my head told my heart

# Let love grow

# And my heart told my head

# This time, no

# This time, no. #

Well, clearly, his head has won here, as John has converted

the property into three two-bedroom flats and a one-bedroom flat.

The master bedrooms of the two-bed flats

have their own en-suite shower rooms,

as well as spacious modern bathrooms.

Each has a kitchen-diner with tasteful decor that still gets

a bit of that cottage feel that John was looking for.

There's a delightful touch on the top floor,

where one flat has a door that opens onto a new patio area

that forms part of the new tidied-up garden.

John must be delighted.

But how did his head overrule his heart here?

My heart did rule my head initially,

but then my head started to rule my heart.

When we looked at the aspects of what the property had, the location

of where the property is,

and indeed what the five-bedroom detached house would be worth

in this area, we found that by doing the four independent flats,

we were getting best use of the property and the location

and also to get the increased value that four flats would have

over an independent property.

I've got to be honest,

I was looking forward to a big, rambling family home, John,

but from a financial point of view, yes, I think

this probably was a smart decision.

John had to get permission for change of use,

as this was originally a commercial premises on the ground floor and

the building was in a conservation area, so how did he deal with that?

I think the planners realised that the ground floor of the building

was in a dilapidated state

and the application we put in for four apartments suited the area

and they were quite happy with the application.

We've tried to maintain the building...

If you look at the outside, there's brickwork that dates the building back to 1850.

We've just kept them four bricks and also you've got the moat wall, which is...

The main structure of the wall.

That's been around for 300-400 years.

So we tried to keep it a bit of a feature on the outside

of the building and also realise that we are in a conservation area

and we wanted to try and keep the property in line with that.

Well, I'm really glad John did keep some of the history of this

beautiful building. With the three-month delay getting started,

while head fought heart, and meeting those building regulations

on soundproofing, the whole project has taken 12 months.

And with the change of plan surely came a change

to that £60,000 budget.

What you've got to allow for, especially in a property

in a conservation area, is the additional costs.

I'm not saying we didn't take it into account,

but the soundproofing was a major cost above what we anticipated.

I think that ended up costing us about £12,000.

The windows, again, close on £20,000.

The ground work and the damp-proof coursing and the extras that entailed,

the total cost of this redevelopment is in the region of £200,000.

That's a whopping £140,000 overspend,

but understandable, given the scale of the project,

the extent of damp and meeting conservation requirements.

But I think John could make that back,

as he has four dwellings, rather than one large house now.

Sometimes, head over heart can be a very good thing.

But in this case, is it?

We asked along two local property experts to give us

their opinion on the flats

and if they think John made the right call

by splitting the building up.

I would say that whoever bought this

had a very, very tough decision to make.

In a sense, it lends itself to a single house,

but a single house here has got a limited value.

To divide it into a series of smaller residential units

gives it a greater multiple value.

I think he's done a very, very good job with it

and I think he's maximised the opportunity

that was presented to him.

He's done a very good job, in terms of the development works,

high quality on the kitchen fittings, the plasterwork, painting, tiles.

The layout works well.

Good idea to convert the commercial into the four residential units in four flats.

John is unsure if he wants to rent or sell the flats,

so it's got to be the option that's the most profitable against

his £362,000 spend, so what could the flats bring in in terms of rent?

The two-bed apartments would rent for £525 per calendar month.

The rental value for the one-bed apartment would be £495 per calendar month.

On the rental market, we're looking at about £600 a calendar month

for the two-bed flats.

Probably about 550 for the one-bed flat.

In my view, these properties will be marketed for the two-bedder

in the region of 625

and the one-bedder will be marketed in the region of 575,

which I feel is a good price for a good quality property.

So, John's still using his head, it seems,

and his figures would give him an 8% yield,

compared to just over a 7% yield based on the agents' average.

But how about sales?

You've got three two-bedroom flats which would probably average out

at about £150,000 each.

And your one-bedroom flat would be £110,000 to £115,000.

The two-bed apartments, we'd look to achieve in the region of £120,000.

The one bed, around £117,500,

to achieve £110,000 to £112,000.

The flats, I believe, warrant around the 125 probably for the one-bedder.

And for the two-bedder, with the en suite,

in the region of £145,000 to £150,000.

So, some very differing opinions there.

John's top estimates would mean a total sales price of £570,000,

whereas the lower values from the agent would mean £100,000 less.

John's figures would mean

a potential pre-tax profit of £208,000.

So, rent versus sales, what will win here?

I will rent these properties, I believe.

A lot of work's gone into them.

They're good quality investments and I believe that we'd work them

into our portfolio for the long term.

Umbrellas up and rain macs on now for our visit to South Wales

and Tredegar.

This former mining town sits 30 miles north of Cardiff

and about 15 minutes' drive from Merthyr.

So, what was up for auction?

Well, very close to the town centre, it's these former council offices.

Look pretty new. Guide price £50,000 plus.

Let's have a look.

Oof!

Well, at least it's dry, and given that it's fairly new,

it's probably going to be fairly dry literally, without any leaks

and all sorts of things coming through the ceiling.

Actually, what you're looking at here is a fairly newish building

and everything that's positive about that. Um...

New electrics, new roof, good damp proofing, all the services etc.

Obviously, it's been an office in the past,

so you've got this entrance area here and then lots of these

stud partition walls, separating out all the different areas.

Lots of little rooms dotted around. That little room over there.

We've got another little room over here.

Another room here, then this sort of main area here.

Um... For office space, ideal.

Lots of light coming in, it's been kitted out, you've got

all your power sockets and all the sort of cabling you might need.

So, for office, taking it on just like this, absolutely perfect.

It may be perfect for an office,

but for a humble TV presenter such as me,

it's properties like this one that can really get me...discombobulated.

Downstairs, there are yet more offices and little rooms,

not to mention some loos.

Upstairs, there are another four rooms, plus a kitchen.

Now, was it left or right I took at that photocopier?

So, what are you going to do with this place?

Well, you could pretty much leave it as it is,

but I think the big money here is to be gained

by converting this into flats.

Well, there's some good news there

because this currently has B1 classification.

Now, in planning terms, it's a lot easier to get B1 office,

which is basically stuff which isn't to do with the financial services

industry, converted into flats than it is other kinds of offices.

Even better than that, in 2004, there was a planning application

made and granted for two flats in the adjoining building

and two flats in this building, so a precedent has been set.

Doesn't necessarily mean they'll say yes now,

but the odds are definitely looking in your favour.

The planning laws that govern converting offices like this

into flats changed back in 2013

and this conversion can now be done under permitted development,

although you'll still need to comply with building regulations.

And modern regulations require a whole heap of fire

and soundproofing between flats.

So, conversion costs can mount up.

What does a local estate agent make of this small office block

that had a guide price of £50,000 plus?

Does he think it would be better to keep this as a commercial premises

or convert into flats?

I think the most lucrative avenue here

is probably to look for change of use

and to put it into affordable residential dwellings,

which are in fair demand for the rental market within the community.

The estate agent recommends that small units such as

one- or two-bedroom flats can be created.

But what kind of rental figures would we be looking at?

If it was converted into one-bedroom residential properties,

they would achieve in the region of £300 to £325 per calendar month.

If it was converted into two-bed residential properties,

somewhere in the region of £400 per calendar month.

How about sales?

If they were developed into one-bedroom properties here,

the sales market would allow a value of

in the region of £35,000 to £45,000.

If converted into two-bedroom residential properties,

I would estimate a sales value in the region of £55,000.

That all sounds really positive, but you always need a plan B.

So, what kind of rental could be expected if it remained as offices?

If it was kept as the commercial unit that we see today, it would be worth

for rental purposes in the region of £10,000 to £12,000 per annum.

When brought back up to the standard required for the sales market,

it should be worth somewhere in the region of £80,000.

Well, clearly, it's a pretty decent building as it is.

You could just let it out as offices or use it yourself.

However, the big money is obtained by getting planning permission

and converting it to those flats.

Who was willing to take a gamble? Or needed offices? Let's find out

when it went under the hammer.

So, lot number five. Start me, guys, at 50.

Start me at £50,000, will you? 45 then, if you like.

Thank you, 45.

At 45 there. At 45 there. 6, can I see?

6, thank you, 6. 47.

47, 48, 49, 49...

And 50. 51.

51, 52, 53.

54, 55, 56.

57, 58, 59.

And 60, 60? 59,500 then.

59,500. 60 to you? 60. 60,500?

No. At £60,000 here then.

You're now out, at £60,000 here then, for the first time.

Are you sure? At £60,000 second time.

-Third and last time, at £60,000.

-BANGS GAVEL

Yours, sir. Well done.

That successful bid of £60,000 was made by Nigel.

Nigel, who is an experienced property developer,

was at the auction with granddaughter Jasmine.

It was Jasmine and her cousin Alex who I met back at the property.

Jasmine, Alex, good to meet you both.

-You too.

-Congratulations.

-Thank you.

So, tell me why you ended up buying this place.

Well, it was quite a new build and it was local from where we're from

anyway and we saw a lot of potential in this property,

so we thought we'd buy this one.

Right. Now, on the face of it, you seem quite young. How old are you?

-I'm 16.

-And I'm 29.

You're 29, OK. So, how come you ended up buying this place?

Well, I didn't buy it. It was my grandfather that bought it.

But he's decided to take a backseat on this property to let

-me and Alex experience what it's like.

-Wow!

So your granddad's come along and said,

-"I tell you what, I think you should be property developers."

-Absolutely, yes.

-Yeah.

-Right, and he's sort of helped you out with the first property.

-Yes, yes.

He's bought this property, and myself and Jasmine are going to help with the planning

and arranging of the builders, etc, and meeting with architects.

-Right.

-So he'll be taking that kind of backseat role in it.

So, did you have any interest in property before this? Or did Granddad just come along and say,

"I tell you what, I think it's a good thing to do"?

-Well, we've been to some auctions before.

-Yeah.

So, we've been to auctions with him and we've obviously helped him out

-on odd occasions with places that he has obviously bought.

-Right.

Now, I think most people would be happy with a packet of boiled sweets

and some fun stories from their granddad,

but Granddad Nigel, who's been property developing

since 2008 and has a small portfolio of rental properties,

has seen fit to hand over the reins to Alex and Jasmine.

I think I need to find out a little more.

Did you have any input into the building that was chosen?

Not particularly. I went with him to the auction and I saw it there

and he had already told me about it, of course, beforehand,

what he was planning on doing. So...

And I had a phone call after the property was bought to say

-I've just bought this property up in Tredegar.

-Right.

-That's my involvement in it.

So, what's your experience? What do you both do?

Well, I'm in college at the moment, studying maths and some science subjects.

-And what about you?

-I'm a site buyer for a manufacturing company.

-OK.

So I have some experience in purchases and obviously

liaising with kind of contractors, so that'll be partly what I'll be doing.

But also, I might possibly in the future want to go into property

development myself and possibly good experience to gain here.

Yeah, for sure. So, obviously, in the past it has had planning permission.

Was that important to you, in terms of the decision to buy it?

I think we know that if it's already had planning permission once,

-then applying for it again is always going to be easier.

-Yeah.

Obviously, you can meet with the same kind of architects,

-so they'll structurally know the building.

-Right.

So it does make it a slightly easier project for us, yes.

What's your plans?

Our plan is to turn it into three flats.

Downstairs will be a two-bedroom flat

-and upstairs will be two one-bedroom flats.

-OK.

Let's talk through the numbers then. Ballpark...

What do you think it's going to cost to do what you have in mind?

We're thinking around £15,000 per unit. So around 45,000 all together.

-Right, which would bring your total investment to...

-105.

105, yep.

OK, I'm a bit worried because using the agent's valuations,

the flats would be worth about £130,000

and even at that £15,000 per flat,

in my opinion, it's tight to convert this building.

However, the plan is long term and renting is their chosen path.

They've predicted they'll bank a 10% yield from this investment,

but the big question is...

How does it work financially?

-Cos your granddad obviously paid for this, did he?

-Yes.

-Yeah.

What about the renovation costs?

All the renovation costs will again be funded from that.

So you're putting your time and effort...

-We're putting our time and effort in and gaining experience at the same time.

-Yeah.

-And do you financially benefit at all?

-Not entirely sure yet.

It's all about the family. It's about us helping the family out.

We're a very close family.

So whatever money comes into it is obviously all based around the family.

So what's the timescale for the whole thing?

We're thinking, after the planning permission, around six months, six to seven months.

-Congratulations to you both. Good luck with it.

-Thank you.

-We look forward to seeing how you get on.

-Thank you very much.

Well, how about that?

What a great opportunity Granddad Nigel has given

Jasmine and Alex to become property investors and developers.

But quite a project to take on for your first one and it's not

exactly a two-up, two-down terrace that just needs a bit of paint.

Still, with all those challenges comes lots of experience.

How will they get on? You can find out later in the show.

So, one of our properties has taken a bow and gone.

But luckily, there are two more waiting in the wings.

Will you be giving them a standing ovation? Let's take a look.

We return now to Silverdale, near Newcastle-under-Lyme,

and this former mining village was home to this complex lot.

You get this plot of land,

this two-bedroom property,

and this two-bedroom property,

and get this - all for a guide price of £85,000.

I've got to see this.

Inside this first property was an '80s throwback in need

of renovation, but next door in the other two-bed property,

built as an extension, it was in need of a building certificate,

as despite its good condition,

it hadn't been passed by the local authorities.

A plot of land had been granted permission for the building

of a three-bed house, but those plans had lapsed.

And there was a culvert - to me and you that's an underground stream.

That meant building said house could be tricky.

Are you keeping up with all this?

# Tell me, why'd you have to go and make things so complicated?

# I see the way you're acting like you're somebody else

# Gets me frustrated

# No, no, no. #

But no job was too complicated for Matt,

who, along with his wife Julie, saw this as a good addition to their growing portfolio

and after paying £93,000 at auction, Matt was keen to utilise his skills

amassed over 22 years in the building trade.

Now, what were their plans for property number one?

Well, this will just be the two-bed terraced, traditional,

bathroom downstairs, cos there's not enough room to move it upstairs.

And the extension property just needed that building certificate and some minor work as well.

But then there was the potential of a new build.

Have you got to re-do the plans, or will you reissue those plans again?

I'm hoping just to see if we can get a little bit bigger three-bed,

but if all fails, I can't see the council not allowing me

to do what they've already said is OK to do anyway.

New builds were a new challenge for Matt,

but I knew he could rise to it and overcome any obstacles.

# I'm building up... #

Yes, I'm building up this new build because six months on,

I was expecting a gleaming new three-bed house on that derelict plot.

# I'm building up... #

OK, I can't build it up any more. Here's that beautiful build.

# I'm building up to an awful let down. #

Aw, that's disappointing,

but Matt has good reason for not tackling that build just yet.

The plans are still there. I could build, really, but there's the culvert issue.

I have looked into it a little bit. I could leave it for a later date,

but I think it's going to cost a little bit too much money

for what the house is going to be worth in the end.

So, that nightmare culvert

and a little bit of finance got in the way, but it's more than

made up for with the stunning work Matt has done on the existing houses.

Matt has installed a brand-new modern kitchen

with plenty of cupboard space, which is ideal in a cramped terrace.

The black granite worktops are a world away from that old

'80s kitchen.

The bathroom now feels much larger, thanks to these tiles

and a brand new suite is an ideal touch.

The bedrooms are completely replastered and re-carpeted,

while there's no more brick TV stands in the living room.

And Matt has altered the arch for a more modern feel.

Throughout, electrics, plumbing and re-plastering have been done.

Over to the extension property and over to Matt, who I am pleased

to say has secured a building certificate for this property.

The electrics have obviously been tested. The gas has been tested.

New bathroom and we've probably done a lot more work downstairs,

as in we've taken the breakfast bar out and opened the room out.

Again, put good quality stuff back in.

Probably the biggest...really work out there was the outside,

which, obviously, as you can see, was a mess

and now is hopefully looking a little bit better.

It is looking so much better outside, Matt.

Both properties' gardens have been divided and beautifully landscaped.

Matt has finished both houses in his timescale of six months.

Although there are some snagging issues in the extension property.

He has tried to keep the costs low by doing most of the work himself,

with help from his brother and daughter, Beth.

But has family elbow grease helped him

stick to his 19 grand budget for these two houses?

Obviously, I've put nice stuff in,

so it's going to cost a little bit more.

But I think I've roughly spent about 25 grand, probably.

Matt might build the three-bed in the future,

so he has changed his plans for the two existing houses.

The plans have changed. I was going to sell this one

and rent the other one. But I've decided to rent them both now.

I really want it to be a long-term let, so whoever comes

and rents it, then, you know, they don't want rubbish stuff.

And again, it lasts longer, so I haven't got to come back again.

A great attitude from Matt, and hopefully,

putting quality first means you don't have to come back.

It's time to get some valuations from two local estate agents.

Will Matt's total of £118,000 investment pay off?

While he's looking to let the properties out long term,

could he make a profit on the resale market?

I would expect the larger property to achieve

somewhere in the region of £90,000.

I would expect the smaller property to achieve

somewhere in the region of £80,000.

In today's market, I would expect the larger property

to achieve in the region of £97,000.

For the attached smaller dwelling on the side, I would estimate

the property in today's market to be worth in the region of £85,000.

I was hoping probably if I sold the larger one,

I'd probably get nearer to the hundred.

But 80-85 for the smaller one, yeah, is probably what I was thinking.

Well, those top valuations of £97,000 and £85,000

would give Matt a pre-tax profit of £64,000.

Not bad at all. But what about those all-important rental figures?

In today's letting market,

I would expect the more spacious larger property

to achieve in the region of £525 per calendar month

and the attached smaller dwelling, I would expect that

to achieve in the region of £475 per calendar month.

I would look to rent the larger property for somewhere

in the region of £525 per calendar month.

I would look to rent the smaller property for somewhere

in the region of £475 per calendar month.

Probably a bit more than I thought.

I was thinking 475 and 450, so yeah, again, good news really.

Shows you, good job.

Good job from a good team equals a good yield of 10%,

if Matt gets the figures the estate agents suggested, but will

the youngest member of the team be following in her dad's footsteps,

regarding property?

Yeah, I would imagine. Yeah. Hopefully, she... You know.

She does lend a hand. So, we'll see how she goes.

She'll probably want paying, you know. That's no good!

Time to head back now to South Wales and the town of Tredegar.

It was here that I first encountered this rather unusual lot.

These former council offices had a guide price of just £50,000 plus

and whilst they were in good condition,

and would be ideal for anyone looking for offices, I felt that

if you wanted to maximise profit, you'd have to think a little bigger.

In 2004, there was a planning application made and granted for

two flats in the adjoining building and two flats in this building.

So, a precedent has been set.

Doesn't necessarily mean they'll say yes now.

But the odds are definitely looking in your favour.

And after a bit of a battle,

the successful bid of £60,000 went to Nigel.

Experienced property developer Nigel decided that this was

the perfect property for grandchildren Jasmine and Alex

to have their first taste of property development.

So your granddad's come along and said,

"I tell you what, I think you should be property developers."

Myself and Jasmine are going to help with the planning

-and arranging of the builders, etc, and meeting with architects.

-Right.

So he'll be taking that kind of backseat role in it.

# Why don't we, why don't we

# Why don't we

# Jump right in to the middle of it, you and I

# Let's give it a try. #

With Granddad Nigel financing the work, Jasmine and her cousin Alex

had plans to create three flats, a two-bedroom flat on the ground floor

and two one-bedroom flats on the first floor,

all of which they hope to rent, once complete.

Now, it's almost nine months later

and first impressions are that this still looks very...

Um... Council office-like.

And inside? Well... Yup, it's still ex-council office-like.

# Don't count your chickens before they hatch

# Don't count your chickens before the hatch. #

Aside from some cleaning up of rubbish, very little has been done.

And there are certainly no signs of the planned flats.

And with Alex unable to attend filming due to work commitments,

it's up to Jasmine and her granddad, Nigel, to explain to us

what's going on.

Or not going on.

Things didn't quite go to plan, with regards to budget

and due to new building regs, really.

When you convert a building like this,

from an office block to a residential,

then the work has got to be done as if it's a brand-new build,

so it's got to be built to that specification,

which raises things up, obviously.

It brings a lot in with the fire, the security, the soundproofing,

and not only that,

you've got to have the engineers who come in beforehand to measure it

and then tell you what you've got to do

to make it to the brand-new standard.

Obviously, I mean...

Fortunately, this building is not that old,

but that could be quite extensive.

Nigel's quite right.

Recent changes to building regulations meant that

when he got the quotes to make them,

it was pushing the costs of the flats up too much.

So he and Jasmine and Alex decided on a different approach.

First, a very smart move,

they went ahead getting the appropriate permissions.

We got planning permission without no problems at all.

There was no real conditions,

other than we stick to the original plans, and that took us three months

because the architect did the drawings and then we kept...

-Changing.

-Changing them all the time.

Redesigning it. And then it was about...

Eight weeks for planning permission to go through.

Eight weeks. So, eight weeks after that.

That's probably five months, near enough.

Including all fees and tidying up the building and surrounding areas,

they've spent around £11,000 and it seems the trio were always

prepared to change their plan if they needed to.

We had a contingency plan when we started it,

so, say if we went a certain amount over our budget, that we would revert

and put it back in to auction. Cos of the location, basically,

it wouldn't be worth going too much with it. So that's what we did. We put it back in auction.

And good for us, we made a little profit as well.

All's well that ends well.

They sold the property at auction for £75,000, giving them

a £4,000 profit.

But did they do the right thing?

We asked the agent who saw it the first time for his opinion.

The owner moving this on with planning

was probably quite a shrewd idea,

knowing that the cost implications of converting this place

are going to be such that it may make these properties

quite difficult to re-sell and get the money back.

The new owners here, I would imagine, will probably try and

do something where they will release equity via a rental agreement here.

So, the agent thinks they were right to get

the necessary permissions before selling the property on,

but will that be reflected in his valuations?

This property, without planning, as a commercial unit requiring

some modernisation would be worth in the region of £60,000.

With the residential consent in place for three flats,

this property is worth somewhere in the region of £70,000 to £75,000.

Well, I think it's fairly spot on as an auction value again

because that's what we achieved with it, we achieved 75, so we...

He's absolutely spot on there with that one.

Nigel bought this property so his grandchildren could get experience

in the property game, and despite all not going to plan,

it's still a good lesson in how fickle the property market can be.

-It was a good experience. It was all new and we had a good time doing it.

-Yeah. It was great.

-It was good.

-A bit of an eye-opener here and there, but good.

-Yeah.

Well, that's it today. We'll be back with more properties

and their new owners for you next time.

We look forward to seeing you for more Homes Under The Hammer then.

-Until then, goodbye.

-Goodbye.