Episode 16 Homes Under the Hammer

Hello. Now, today, we are in the grounds of a stunning,

-beautiful castle in Scotland.

-Yes.

Well, it is incredible, Lucy, you're right.

But you know what they say,

every man and woman's home is their castle.

Let's see who bought theirs under the hammer.

All kinds of lots are up for grabs at auction - land,

pubs and even business premises.

Yep, houses that are complete wrecks

or houses that just need a lick of paint.

So let's see what's on offer on today's show.

Dereliction is the decor style at this South Normanton, Derbyshire,

property. And it is not just the paint that is cracking.

This crack, look at it!

While the decor at this Seaham, County Durham, semi has more

magnolia than a garden show.

Whoa, hold it a minute. I can see some colour.

And at this Tylorstown, Rhondda Valley, lot,

a flattened shop needs some elbow grease.

I don't think, for instance,

you'd want to cook on this particular cooker as it stands.

All these properties were bought at auction.

We'll find out who got them

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

Well done, sir, stuck at it.

The village of South Normanton grew rapidly after the colliery

opened in 1871.

It then went on to have the largest output of coal in Derbyshire.

As is typical of ex-mining areas, South Normanton is dominated by

rows of terraces, which would have once housed the miners working here.

And it is a terrace that I'm here to see.

It's a two-bed with a guide price of £36,000-plus.

Now, it's on a road like this, which can get a little bit busy.

You can't have everything, can you? No.

I'm going to check it out.

So, straight from the...

-ALARM SOUNDS

-Aha!

That noise was not my ears defying me.

There is an alarm over there.

So it's obviously been set up by the person who used to live here

to be aware of people coming and going,

so no sneaking into this house late at night!

But once you're in, you can see for yourselves.

I mean, ha, it needs so much work.

Somebody's obviously put a fire here

because they wanted to attach it to the wall.

The fireplace and the bricks have all been knocked about.

You can see they're down here, ready to install this.

Polystyrene tiles through here. Some old-fashioned sliding doors.

Look at these!

I'd probably take these off, but I like the way that the

whole of this has been opened up to one big room.

So that really does work.

You've got a larder in there, which is always great storage.

But, you know, bare plasterwork here. It needs painting.

You need to get rid of this kitchen, put something a lot more modern in.

It needs flooring. Although it's quite spacious,

there is a lot of work that needs to be done here. Hm.

And it's not feeling too cosy as it is.

# At the end of the day You're gonna be hard work

# But you're good for me. #

Cosy is a term that wouldn't be on top of anyone's list

when finding words to describe the bathroom down here.

It's dilapidated, dated and needs a restart with a new suite.

As it is, arachnophobes need not apply.

The smaller of the two bedrooms is a little too small in my view

to relocate the bathroom up here.

But it should be a warm room, as it's got a new radiator

and central heating boiler, which is very handy.

# I'm not going to lie You're hard work. #

The larger bedroom has also got new heating,

but the dreaded polystyrene tiles on the ceiling will have to go

the same way as the wallpaper, where stripping has already begun.

No, it might not look too pretty at the moment, but, well,

we can see past that on Homes Under The Hammer, can't we?

Now, something that I'm afraid I can't see past is this crack here.

Now, it's on the outside as well as the inside. Look at it.

Now, unfortunately, it could be a sign of subsidence,

which means this building, it could be sinking into the ground.

And to sort that out,

well, the whole terrace might need to be underpinned.

And that is a big and very costly job.

A case of subsidence can potentially wipe out any potential profit

in a property and make buildings insurance expensive.

In former mining areas, I would always recommend getting

a mining report to reveal if mine workings exists under the property.

I would also want a structural survey to check

things like the gable end wall.

Is it about to part company with the rest of the house?

Now, this might look like a simple,

unassuming alleyway that runs along the side of the house.

But what this actually means is that you could take materials

straight through here to the garden or to the back of the house

without having to traipse through all the rooms at the front,

which is great news.

However, there is a negative with this too. Just take a look up there.

That window belongs to the house next door, and so this property has

a flying freehold, and that can make it more difficult to get a mortgage.

So buyer beware.

We invited a local estate agent

to see what he would recommend

and give a valuation of the house's potential.

The property needs a complete scheme of renovation.

However, I have noticed that there is a central heating system

already been installed.

I would generally put that down as putting a new kitchen in,

new bathroom. I would also take down the ceilings,

which are obviously polystyrene tiled also.

Well, some valuable work has been done here, like the boiler and

central heating, but a lot of other expensive jobs remain to be done.

So assuming that you got the house for anywhere near the guide price

of 36 grand, how much room is there for profit if you resold it?

Once renovated, I would expect the property

to achieve around £60,000.

So a few potential pitfalls with this terrace,

but if you can see past those, well,

you do get a decent amount of property

for your £36,000-plus guide price.

So, who was ready to take this on?

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

We move on to lot 24.

A traditionally built end-terraced house that's double glazed,

gas central heated,

but otherwise needs a full scheme of modernisation and improvement.

Start me where you like with that one. May I say 36 for it?

34,000?

Bid me 30 then to move in on. £30,000, thank you.

I've got 30 as a start. At 30,000.

31 somewhere? 31 is bid. At 31.

32? 32.

33. 33,000.

34? 34 is bid.

35. At 35.

36? At 36,000.

500. 36.5.

37? 37 is bid.

At 37,000.

Five again? 500.

38? 38. 38 is the seated bid against you.

38.5? It's going to get sold, ladies and gentlemen.

At £38,000 for the first time.

For the second time. Third chance.

Sold at 38. Thank you.

The successful bidder was Sam, at the auction with his mum, Gail.

He bought jointly with his brother Ben

as their first property developing purchase.

So will it be the first time lucky for the boys

and the £38,000 investment?

-Sam, lovely to meet you today.

-Nice to meet you.

So, what has been your inspiration behind you wanting to buy this?

I watch quite a lot of Homes Under The Hammer at home,

-so that's the main inspiration.

-Yes! Really?

-Yeah.

-Oh, I'm so glad.

Yeah, that was, like, the main inspiration.

So how come you're watching daytime telly?

Are you not working in the days?

I'm playing football semi-professionally at the minute,

so that's two nights a week and a Saturday,

so I've got a bit of free time.

-So I thought this was a good option.

-And who are you playing for?

Alfreton Town at the minute, so it is in the local area.

So why did you want to buy this in particular?

How much research did you do?

I did quite a bit of research. I did a bit of driving around

and had a look at some of the houses that are up for sale,

and this one just sort of popped out because of the guide price.

There was a house for sale down the road,

and that sort of went for around 70.

So I thought there was quite a good scope, sort of thing,

to make a bit of money on it.

So first things first,

what did you notice that made you a little bit wary?

-The crack on the outside.

-Oh, good, so you did see that!

-Yeah.

So you still wanted to bid for this, knowing there was a big glaring

crack on the outside of the property,

why didn't that put you off?

Well, my dad is a builder, so he gave me a bit of advice on it.

He had a look at it and he didn't think it was too much of a problem.

He thinks it might have settled,

so he doesn't think there will be any more movement,

but it's something we'll be able to check out.

OK, so you're not too worried about that. What about the other THING?

-Do you know what I'm talking about?

-What's that?

-Flying freehold?

-No.

-Oh, so you don't know about the flying freehold?

-No.

OK, so there is a flying freehold with this property,

which means part of your building belongs to another part,

it sort of goes over another part of the building.

So that does put a lot of potential buyers off.

And also, it can sometimes be quite difficult getting a mortgage,

hence that is why it's cash purchases.

So did you read the legal pack thoroughly?

I did read the legal pack, yeah, but I didn't pick up on that.

Yeah. So is that something that would worry you about this?

I think we'll have to have a look into it and see.

Read into it more and see what we can do about it.

I mean, it's sometimes difficult to sell the property on with

-the flying freehold.

-Yeah.

-That's all. Hence, that might be

-the reason why this went into the auction in the first place.

-Yeah.

Issues with flying freeholds can sometimes become complicated,

so it's always best to check things out with your solicitor.

Quite often, it can be sorted out with relative ease

and it is not always a big deal. So Sam needn't panic just yet.

So what sort of budget have you got to do the work?

We're looking at around 5,000 to 7,000,

so try and get it done quite cheaply and sell it on as quick as we can.

So make a bit of money on it.

So the plan is to literally do it up,

-sell it on, make some money.

-Yeah.

How much value do you think you can add to a property like this?

Looking at the figures, buying it for 38,000

and then hopefully being able to sell it for 60, 70

is what we're hoping. So I think that should be OK.

OK? I should say so!

If the boys sell at £70,000, they will be making more than

a 50% gain on their investment, minus any taxes and fees.

But still...

# Goin' to the B-A-N-K

# She's got me Goin' to the bank. #

So tell me what it is going to look and feel like on the inside?

I think we're just going to keep it really clean, really plain.

Nice clean kitchen, new floors, new bathroom.

Just make it sort of look like a new house inside, really.

Any chance you might want to live here?

-Possibly.

-Where do you live at the moment?

I'm living with my parents at home.

That's in Ilkeston, so it's not too far away.

Would you want to trade up or out and kind of leave Mum

and Dad to come and live here on your own?

-Or have you got it too cushy at home?

-Too cushy at home, yeah.

-Why would you want to live on your own?

-Exactly.

Dad Dave being a builder will be a great safety net for Sam

and his brother on their first project together.

Though it doesn't seem like he'll be called

upon for his building talents too much.

I'm doing the project with my brother,

so we'll both be doing the work.

My girlfriend, Sarah, she's a properties surveyor,

so she's been able to lend a bit of a hand. So that's been good.

She's been on hand to give you some good advice as well?

She has been, yeah. It's been really helpful.

Will she be getting her hands dirty and helping with the renovations?

I don't think she knows it yet,

but, yeah, she will be. THEY LAUGH

Sam and Ben certainly have some handy contacts.

And brother Ben has some very handy skills as he's an electrician.

And Sam has helped his father decorate a property in the past.

So they sound like they'll be a great team.

So what is your timescale?

How soon do you hope to get this done and dusted and sold on?

As quick as possible, so hopefully six to eight weeks.

And you think it is going to interfere with any training at all?

-No, I don't think so.

-What position do you play?

-I'm a defender.

-I place centre-back, so...

-So you're good at defending.

-Yeah.

Hope you can defend this.

Listen, it's been brilliant meeting you. Good luck. Well done.

-Thank you.

-So the first investment property for footballer Sam

and he didn't know about that flying freehold,

I had to tell him. Has he met his match?

Well, join me later on in the programme and you can find out

if he finds a buyer and manages to let a decent profit.

Oh, I do like to be beside the seaside. And today, I'm in Seaham.

Yes, the clue is in the name, it's on the coast.

This County Durham town was once a mining area

and is famous for its 19th-century lighthouse.

But for me, I was really moved by the World War I memorial,

which the locals refer to as Tommy.

While history is never far way,

there are also great shopping facilities nearby.

With regeneration over the last decade or so,

this area is on the up.

So get your bucket and spade at the ready.

This street I'm on is about a 20-minute walk

away from the local train station and about a five-minute drive from

the A19, which has direct access

to both Sunderland and Middlesbrough.

So it's really well-placed.

Also, you've got the seaside just a ten-minute walk

in that direction.

Anyway, this is our house.

It's got a guide price of £25,000-plus

and it has three bedrooms.

Let's get inside and have a look.

OK, wow. Nice and bright hallway here.

Nice and long hallway as well.

And I would expect another door here, somewhere.

And, yes, there is actually cracking all around this area here.

So, hopefully, if I'm correct... HOLLOW SOUND

Yeah, that door has just been blocked in.

Why it has, I have no idea.

Further down the hallway, you get to the first reception room.

I can see nice, big size, high ceilings,

central heating as well.

And your second reception room to the front of the house is here.

I don't know why they've blocked that in.

A small doorway going through to that room.

I'd be inclined to maybe knock that or make that a little bit bigger,

double the size of that doorway

so you've got one big room, lots of light.

Everything is white in here, so it is completely a blank canvas.

You've got a nice big window to the back yard

and a back door just there.

And a, well, relatively small galley kitchen compared to the

size of those two rooms. But it's in good condition.

You'd get away with keeping everything that is in there.

Get your white goods in there and your kitchen would be finished.

You could quite easily put your own stamp on what I've seen

downstairs so far.

Upstairs could be a different matter.

So, a good start.

Two decent-sized reception rooms and scope for improvement

and a well-appointed kitchen,

all in relatively good nick, which, believe me, is rare on the show.

# Could've been magic Now

# Now... #

But before I count my chickens,

let's see what upstairs has in store.

# Could've been magic... #

OK, upstairs to the three bedrooms.

And as I look around here,

I'm pretty sure this has been put on at a later date.

This would have been originally a two-bedroom, but they've put

a box bedroom in there, possibly best as a nursery or even a study.

Down the hallway a little bit, you've got

a really nice-sized bedroom to the front of the house.

Again, in reasonably good condition.

There you've got the family bathroom.

Again, it's not huge,

but you could salvage most of that bathroom suite in there.

And in here... Whoa, hold it a minute. I can see some colour.

Blues and greens and reds. This is not like this house.

All downstairs is completely white.

But it's a good size third bedroom.

Nice big window there looking over the back yard.

Little bit of storage over there, I can see, as well.

So not a lot to be done.

A bit of elbow grease

and you'd have this place turned around in a matter of weeks.

Well, it's not often I say that. This house is a bit of a gem,

especially when you take into account the low guide

price of £20,000-plus.

And we haven't even mentioned the back garden yet.

It's small but does have off-road parking,

a major plus for any would-be buyers or renters.

I think a little bit of hard work would go a long way with this house.

But what could it be worth after being renovated?

We invited along a local estate agent to find out.

The ex-mining properties,

you know, the old school build,

you know, pretty sturdy,

good-sized properties. You know, these were originally two bedrooms,

been converted to three, which makes three decent bedrooms still.

And I think, you know, good family houses.

We're agreed, what's not to like?

It's in reasonable shape, but what does she think it needs

for the market?

I think the property would need to have a bit of TLC on it,

just a little bit of niceness put onto it.

I think once it's been redecorated, possibly re-carpeted,

re-floored, whatever - the amenities are quite good around here -

I think you should get people interested to either buy or to rent.

I think the rental market will have the edge.

So the agent thinks there's a decent return for investors

looking to rent out around here. Good to know.

If you got this for anything near that guide price,

it couldn't fail to give you a good return, surely.

So what could a house like this rent out for?

If this property was put onto the rental market,

it was done to a good standard, the rental income would be anywhere

between £475 per calendar month to £495 per calendar month.

-And for sale?

-In the current sale market,

it should achieve between £55,000 and £57,000.

This should be a simple job

cos there's nothing drastic that needs doing here.

Now, if you get it for anywhere near that guide price,

I think it would be a fantastic investment.

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

25 is your guide. This is lot number three in the catalogue.

Three-bedroom, mid-terraced house. 25 is the guide.

That's where we'll start. 25.

At 25, no bid. 20 then.

20 here. At 20, I'm bid.

In ones. 20 bid now. At 20,000.

21 here. 22. 23, sir, can you? 23.

At 22,000.

23 seated. 24, second row. 25. 26.

With a good bit of interest in the property, the back-and-forth

bidding continued. We return when the bids reached £40,000.

40. 41.

42. 43. Shake of the head.

At £42,000. Seated then at 42.

Are we done? Half I've got.

43, sir, can you?

42,750. You're testing my maths.

43. Could have been worth it. 42,750 then. For the first time.

Proxy is out. Second time. Third and final time then.

Selling away at 42,750. Well done, sir.

Can I have your paddle number, please? 35.

With that final bid of £42,750,

close to 18 grand over the guide, was Glenn.

I've met Glenn before,

when he bought a Cleveland property at auction on behalf of a client.

Glenn's own company owns some 200 properties.

I caught up with him to find

out what his plans were on his new venture in Seaham.

-Glenn, good to see you again.

-And you.

-Congratulations.

-Thank you.

What attracted you to this particular property?

I'm in a scenario where we've got other rental properties

and it's a great opportunity for an investor.

And did you buy this for one of your investors?

I did, yes.

So, Glenn, what was your brief from the investor?

They're looking for a two- or three-bedroom property.

It's their first investment property,

and this one fitted what they were looking for.

-So they put all their trust in you.

-They did.

THEY LAUGH

So, Glenn, what kind of yields do you look for?

Here in the Northeast, we get a good deal

because of the purchase price of the property against what the rental is.

So very often, we are getting in excess of 10%.

So is your brief from the investor to hit a certain yield?

Not necessarily.

They want the property to be OK.

And then, you know, we look at the whole package, really.

So what are the plans for the house once it is all done, Glenn?

It will be rented out. The investor is looking for an income from it.

So, yeah, not looking to sell.

How do you make your money in this sort of situation?

I charge a sourcing fee. Obviously, I know the area well.

I have a great relationship with estate agents,

auction companies, etc., so that's how I get paid.

There are a growing number of professionals you can employ

who can manage all aspects of property investing for you.

If you don't mind giving a slice of the profit away, that is.

Make sure that you check out anyone that is going to be

acting on your behalf.

Get recommendations from other clients.

By law, all letting agents must be signed up to a redress

scheme, so check out the industry professional and regulatory bodies.

As with everything in this game, do your homework.

Now, tell me what you're going to do to this place.

Upstairs, the main bedroom, we're going to strip the wallpaper,

skim the walls, decorate all three rooms,

so we'll have new carpets, as will the landing and stairs.

There'll be a splash back put in, in the kitchen,

for the side of the cooker.

Where the fire was, this will be plaster boarded

and plastered over and a new skirting board.

Some more decoration.

And then external - needs new lintels over the double doorway.

OK, and who does that work?

Have you got a group of people that help you out with the work?

Or do you get involved yourself?

I'm a joiner by trade, but I do have my own building company,

-so my guys do the majority of the work.

-OK.

And in regards to budgets, cos there's not an awful lot

to be done in the house, is there?

So probably be looking towards 5,000.

And what about your timescale to get all the work done?

-Probably two to three weeks.

-And that's it?!

-Yep.

That's a quick turnaround, real quick turnaround.

-Glenn, I wish all the best, sir.

-Thank you.

-Hope it works out.

Thank you very much.

So another simple project for Glenn.

This should be a walk in the park,

or should I say a stroll on the beach.

But will he hit that target of a 10% yield?

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

Coming up, in Tylorstown, South Wales,

this shop and three-floor flat has some legal issues.

Get your solicitor involved and find out exactly what is going on.

And in Seaham, County Durham, Glenn might be counting

the costs of changes in taxation.

And the announcements by the Chancellor will have a small effect.

We head back to the village of South Normanton, in Derbyshire,

to remind ourselves of this end-terrace, two-bed,

guided at £36,000-plus.

The outside was rather arresting, but not in a good way.

But inside, it was just plain alarming.

So straight from the...

-ALARM SOUNDS

-Aha!

But the real warning sign wasn't just the lack of flooring or

the obvious damp.

It was the large crack upstairs, as it ran both inside

and outside the property, that indicated potential subsidence.

That wasn't the only exterior issue.

That window belongs to the house next door, and so this property

has a flying freehold,

and that can make it more difficult to get a mortgage.

So buyer beware.

The property passed to Alfreton Town FC

star centre-back Sam,

who along with his brother Ben, bought it at auction for £38,000.

For Sam's first development, he took inspiration from TV's

most famous footballer turned property presenter Mr Dion Dublin.

I watch quite a lot of Homes Under The Hammer at home,

-so that's the main inspiration.

-Yes!

I'll chalk that up as one-nil to Lucy Alexander.

And while Sam knew how to keep it tight at the back

when it came to footsy, there were a few gaps in his property knowledge.

What did you notice that made you a little bit wary?

-The crack on the outside.

-Oh, good for you, you did see that!

What about the other THING? Do you know what I'm talking about?

-What's that?

-Flying freehold?

-No.

-Oh, so you don't know about the flying freehold?

-No.

I think we'll have to have a look into it and see...

Read into it more and see what we can do about it.

Despite that issue, Sam and Ben had a good team, supported

by their builder dad and Sam's property surveyor girlfriend, Sarah.

The footballer and his family targeted

a timescale of six to eight weeks

and hoped to net themselves a 70 grand resale price.

# That's my goal!

# That's my goal. #

Four months on, are they ready to kick this back to resell?

Well, outside, the gable end is looking much better

and no more cracked render.

Inside, the dingy incomplete lounge is restored and sliding

doors removed to create a nice flow to the brand-new kitchen.

The open-plan feel is one that is very much in right now,

and I love it.

# Cos we never go out of style We never go out of style. #

The bathroom is still downstairs, but it's much more modern and clean.

Whilst upstairs, those bedrooms benefit from a full re-plaster.

Magnolia throughout isn't to everyone's taste,

but neutral colours do make selling so much easier.

# Cos we never go out of style

# We never go out of style. #

The fresh look is completed with the garden.

The small space is well landscaped, and overall, I think

any buyer could really put their roots in this property.

# Take me there

# Just take me there! #

Ben and Sam must be so pleased with the result,

but I'm wondering if that crack did prove to be a major issue.

It was a bit scary. That was a bit of a crack.

So my dad's a builder

and he helped us out with that cos he knows a structural engineer,

and he just said it had settled, so we just re-rendered the outside

and repainted it.

Good job.

As for the other matter of the flying freehold,

Sam has looked further into it and his local agents have advised him

that it shouldn't present too much of a problem for resale.

The property has also benefited from a full rewire.

One job they didn't expect to do was the damp course.

With the damp course, it needed injecting

all throughout the downstairs just to make sure.

And it's had a damp proof membrane put up as well.

The plasterer did the majority of it

and we just sort of helped labour for him.

That was a bit of a surprise.

But it wasn't too bad because we helped the plasterer.

Hopefully, not a nasty surprise for their budget, though.

We were hoping around 5,000 to 7,000 at the start,

but we didn't take into account sort of how much

the plastering would be with the damp proofing included,

so it has gone up to just over 10,000, I think.

Sort of 10,000, 11,000.

Not bad as an overspend as the boys have saved money by doing most

of the labour themselves with the help of their dad and his labourers.

Sam has been pretty much full-time around his football training.

And Ben, who works full-time,

has also had to work on the project on evenings and weekends.

Sam did have some support from Sarah,

and apparently her catering is second to none.

But despite all the effort,

the timescale expanded to 12 weeks rather than the original eight.

So now it's done, any advice for developers?

Time for Ben to run with the ball.

Advice for anybody who is thinking of doing it?

Be prepared for how much hard work it actually is.

It looks very easy, but it's actually not.

So with the full-time whistle blown on this project,

it's time for some post-match analysis

from two local estate agents,

including the agent who saw it before the renovation.

The first impressions are very good.

It's clean, tidy, well presented.

It's obviously been done to a good standard.

It's ideal for the investment market

or first-time buyer.

This is my second time here, so from seeing it originally to now,

it's in very good order.

It's been well decorated. The finish is pretty good.

Clearly, everything is new.

Should be great for a first-time buyer.

The boys have spent a total of £49,000 here,

so will they hit their resale goal of 70 grand?

I think this property would probably achieve somewhere around £75,000

if it went on the market today.

I would expect it to achieve, on the sales side,

approximately £75,000.

Yeah, we were always working towards 75

for our profit margin anyway,

so, yeah, we're happy with that.

That figure would bring the brothers to a pre-tax profit of 26,000.

Pretty much the perfect debut, I'd say. Are they ready for a rematch?

It's been really hard work, but now we're done, it's been well

worth it and hopefully we can get on with the next one soon.

Tylorstown, in the Rhondda Valley, has often punched above its weight.

A 45-minute drive from Cardiff,

the ex-mining village was the hometown of Jimmy Wilde,

the first-ever flyweight boxing champion and the man known

by the peculiar nickname of the Ghost with the Hammer in his Hand.

Sounds like he would have made a good auctioneer.

Speaking of which...

So, what was up for auction in these beautiful parts?

Well, interesting opportunity.

Three-storey building which includes a commercial unit as well.

Guide price, 18,000-plus.

So, entrance to the living accommodation is around

the side, but there is also a door through to the shop,

which is obviously at the front there.

My guess is that somebody would've run the shop

and lived in this part of the property.

And it's not bad, especially at the back here.

It's obviously in a bit of a state,

but a really nice and quite surprising room here.

Really high ceilings.

Lots of windows, so lots of light.

And the views out across those amazing valleys.

Just one room here, though, so a bit of refurbishment required.

There are three levels to this residential property.

Let's look at downstairs first.

So, downstairs, the living areas continue.

This is a really decent-sized kitchen.

Clearly, a bit of work required to get it into a usable state.

I don't think, for instance, you'd want to cook

on this particular cooker as it stands. Eek!

But, no, it's a good size.

Again, high ceilings down here too. And there is more good news.

Out the back here, storage, presumably for the shop.

But what I'm more interested in is the fact there's a door.

So, could this potentially be two flats?

One with the upstairs door there as access and another one here.

Oh, mixed-use developments, we like those.

Down here, there is also some storage space for the shop.

And a toilet.

But to have even one flat, you will need some areas to sleep.

So back upstairs and up to the top floor.

Well, in case you're wondering where the bedrooms are,

they're all up here on the third floor.

And what a surprise!

Four bedrooms, all pretty decent sizes.

In fact, this whole building is a bit of a surprise, isn't it?

How big! There's a toilet up here as well.

So once again, could this be split into flats?

This is almost crying out for self-contained in its own right.

So suddenly, an £18,000-plus guide price?

It's sounding like a lot of property for the money.

Four bedrooms, two toilets,

one bathroom, over three floors, plus a commercial unit.

Yeah, 18 grand is pretty cheap.

But as we know on this show, low price can often indicate problems.

Now, there is one thing I haven't touched on so far

about this property,

and it is alluded to in the auction catalogue because it says,

"Tenure - advised freehold to be verified by a solicitor."

That is basically saying the auctioneers aren't quite sure

whether this is freehold or leasehold.

And if it is leasehold, what the circumstances, requirements,

details of that lease are.

The legal pack is obviously something

that you should be reading. How many times have I told you that?

And hopefully, that would contain the necessary information.

But it looks like that might not even be everything you need to know.

So again, it's a classic case of forewarned, forearmed,

get your solicitor involved and find out exactly

what is going on with the whole leasehold/freehold issue.

If it is leasehold,

then you will need the freeholder's permission to split this into flats.

And of course, there is another opportunity here - the shop.

What does a local estate agent think this shop could

fetch on the rental market?

I'd expect the shop to achieve £450 to £500 per calendar month.

On the sales market,

I'd say the shop would be in the region of £15,000 to £20,000.

So with that 18 grand guide price, we are off to a flyer already.

But now the flat, what would the agent do?

If this was my property, I'd look at it from a business

point of view, separating the one flat upstairs into two separate

flats to increase both rental income with the business and upstairs.

Dividing properties always involves planning permission

and big renovations. So will the cost and hassle be worth it?

If you were to split the whole property into two separate

dwellings with two bedrooms in each,

I'd expect each to achieve around about £375 per calendar month.

On a sales market, around about £35,000 to £40,000.

The agent thinks it is best to stick to rental in this market,

but his figures suggest some jaw-dropping returns

might be possible.

It all depends on how much that guide price creeps up at auction.

Overcome the problems, undertake a challenging renovation

and you could be quids in.

Well, obviously, first thing, sort out that freehold/leasehold issue.

And then it all comes down to the numbers -

how much is it going to cost to sort this place out

and is it worth it?

Well, let's find out who thought it was when it went under the hammer.

That was lot five. Lot six has been withdrawn.

Brings us onto lot number seven, guided at just 18,000.

It's here to be sold. Start me, will you, I don't know, 15,000, somebody?

Thank you. 15 over to you there. 15.

Now 16, can I see? 16.

17. 18. 19.

20. 21.

22. 23.

24. 25.

Nope, at 24,000 on my right.

25, thank you. 26? 26. 27?

28. 29?

28.5.

29. And a half?

29.5. And 30?

30. 30.5?

30.5. 31?

31. And a half?

32.

And a half? 33.

And a half?

33.5. 34.

34.5. Thank you, behind.

34.5. 35. Do you want to come again, do 35?

35.5?

36, do you want to come again behind?

Go on. 36. And a half?

37? 37?

36.5 seated here then.

For the first time. 37. Back to you, sir.

37. And a half? All having a go. 37.5. 38?

38. And a half? 38.5. 39? No.

At 38.5 then, seated on my right-hand side.

For the first time.

Second time. Third and last time. At £38,500.

Well done, sir, stuck at it well. Your number, please?

At more than twice the guide price, Aziz secured the property

along with his business partner Ozgur.

While the latter went for a look around,

I got the chance to ask Aziz about their new 38.5 grand purchase.

-Aziz, good to meet you.

-Nice to meet you.

-Congratulations.

-Thank you.

Tell me why you wanted to buy this place.

Because it's a commercial...

This is the first thing. The shop and the flats.

Something interesting, basically.

Do I gather, then, that the idea is to keep the commercial bit of it?

Yes, definitely. It's going to be some different idea, possibly,

maybe a takeaway business, or cafes,

-or maybe some other idea, we're just thinking about it.

-OK.

Now, obviously, you are going to have to apply for change of use.

Exactly, yes. That is the first thing we are going to go through.

We just make our mind the next couple of weeks

and just apply for change of use for the shop.

So, Aziz and Ozgur are attracted by the commercial unit here.

And if it is either a shop or a takeaway,

they have very relevant skills as Ozgur previously ran a supermarket

while Aziz was a chef for 15 years. However,

Aziz did not follow the Homes Under The Hammer recipe

book for a perfectly smooth purchase.

-Basically, the building is bigger than what we expect.

-Really?

Yes, yes. I mean, we didn't look at it before.

You didn't look at it before?

So it is in better condition that we expected, anyway.

-Really?

-Yeah. Yeah, yeah. We've bought worse than this.

Well, Aziz is taking this in his stride.

But what are his plans for the space he didn't expect to buy?

We're going to make that,

keep it all in one or maybe separate two flats.

That is our idea, but we haven't exactly made our decision yet.

That's changed a little bit on visiting it

and discovering that it is bigger than you thought.

Yes, exactly. It is something just to work out the cost/price

to separate it to two separate flats. Electric, wiring, everything

has to be completely separate.

And we are just middle of the other project,

so it is going to be a bit too much for us.

Maybe we have to just do it up for a while,

let it for a couple of years,

and then when we are ready, just separate to two flats

and just let it out.

With other projects keeping their hands full, there is

every chance that splitting the flat will be a future endeavour.

Now, they didn't view,

so what really worries me is did they read the paperwork?

I do hope so.

Now, there was a bit of an issue regarding the freehold/leasehold

of the place. What did your solicitor find out about that?

Yes. Basically, that was the only issue. The solicitor

advised us there is some kind of lease, could be.

-Somebody turn up, say, "I'm the leaseholder here."

-Oh, OK.

So that was the risk we took. Yesterday, I spoke to the solicitor,

so he said, "That's all clear, there's no lease."

Basically. I registered to Land Registry,

so we are safe on that.

So the problem... But you could always take out insurance

-against it.

-Yes, exactly. Good news.

-Good.

-But you only found that out after you bought it.

-Exactly.

That was the risk, yes, exactly. We took that, yeah.

Now, it's interesting the way the property market has gone.

-Cos I understand this was sold for £100,000 in 2007.

-Yes, exactly.

I mean, that was one of the things.

-It was in the market last year for 100,000 as well.

-Right.

But of course, that's good coin for us.

That's all we're hoping, to get that price for it.

Yeah, no kidding.

A sober reminder that you can lose as well as win on property.

Sometimes, it is about timing in the market,

over which you have little control.

Talking of money, Aziz has a budget of £17,000 for the shop

and the flat as is and thinks

it will take two to three months to complete.

But he thinks it could cost up to £30,000 if they were to split

the flat, due to planning permission and building costs.

-And who are you doing this with?

-I'm doing it with Ozgur.

And my brother-in-law as well.

So I've got a brother and Ozgur, so we'll be doing it all together.

-Are you going to share the profits and share the cost?

-Yes,

exactly. If you share the risk, you have to share the profit too.

So, yes, between the three of us -

share the risk and we're going to share the profit too.

-And then plans for more?

-Yes, hopefully. If we are successful.

-Just making some money, why not.

-Well, listen,

-I wish you all the very best with it. Good luck.

-Thank you.

-Thank you very much.

-Congratulations.

Well, Aziz and his business partners certainly got this place

for a lot less money than it had previously been sold for.

Still, there are some big challenges ahead.

You've got to admire his enthusiasm, though, and his positivity.

What will this be when we return? You can find out later in the show.

Well, that's one property sorted, but what about the other two?

Yes, Martin, how have they done?

Have they bitten off more than they can chew?

Only one way to find out, stick around.

Now back to County Durham and the seaside town of Seaham,

where earlier, I saw a typical three-bed mid-terrace,

sold at auction for £42,750.

And in here... Whoa, hold it a minute. I can see some colour.

Blues and greens and reds.

This is not like this house. All downstairs is completely white.

But it's a good size third bedroom.

Nice big window there looking over the back yard.

A bit of elbow grease

and you'd have this place turned around in a matter of weeks.

Glenn, who runs a property management company,

purchased the property on behalf of a client investor,

the aim being to rent out.

I was interested to find out what sort of yield

his client could expect.

Here in the Northeast, we get a good yield

because of the purchase price of the property against what the rental is.

-So very often, we're getting in excess of 10%.

-So is your

-brief from the investor to hit a certain yield?

-Not necessarily.

They want the property to be OK

and then, you know, we look at the whole package, really.

How do you make your money in this sort of situation?

I charge a sourcing fee.

Obviously, I know the area well and have a great relationship

with estate agents, auction companies, etc.

So that's how I get paid.

OK, and in regards to budgets...

Cos there's not an awful lot to be done in the house, is there?

So probably we'd be looking towards 5,000.

How about a timescale to get all the work done?

Probably two to three weeks.

-And that's it?

-Yep.

-That's a quick turnaround.

A real quick turnaround.

But is it a quick turnaround that Glenn has achieved?

So we're back after three weeks to see the changes.

The electrics are sorted.

And there has been some re-plastering.

Overall, it has brought this house back to life.

# But I can feel my heart beating

# Cos you make me feel

# Like I'm alive again. #

Venturing upstairs now,

and who could forget that multicoloured bedroom number three?

# Oh, oh, oh

# Whoo, hoo

# If we've only got this life

# This adventure's all we have

# If we've only got this life... #

There are minimal changes in the bathroom,

but there is a new shower screen.

Saves messing up the floor.

Out back, there has been a new downpipe fitted

and the roof has been overhauled.

So how was the budget?

We thought we'd spend £5,000.

We actually came in under budget, spent somewhere around 4,500.

So it all went good.

Glenn manages over 200 properties in the area.

Is he concerned about the announcement

at the time of filming relating to mortgage interest

relief for buy-to-let properties and planned increase in stamp duty?

The announcements by the Chancellor are saying about the 3% stamp duty

will have a small effect.

Obviously, the prices are less up here,

so it's not such a big amount.

The interest on mortgages, not being able to put them

down as an expense against the property, will have more effect.

It's early days, but these changes could end up having a big impact.

As well as receiving a lower rate of tax relief on mortgage

payments under the new laws in England and Wales,

buy-to-let landlords

and people buying second homes will have to pay

a 3% surcharge on each stamp duty band.

It may not sound like much,

but for the current average buy-to-let purchase

of £184,000, that means you now have to pay an extra £5,520.

Back in Seaham,

we called in two local estate agents

to see what they think about the property and its values.

First up, the agent who saw it before.

It's brightened everything up.

I mean, new carpets, the decoration being done pretty neutral

in order to blend in with most things that potential tenants

or buyers want, you know, for first impressions.

So I think it's been done quite well.

I think the main selling points for the property are it's

well laid out, it benefits from three bedrooms,

it's got gas central heating and double glazing.

If you add the £42,750 auction price to the spend on refurbishment

of 4.5 grand, you get £47,250.

So what is the current value of the house?

In the current sale market,

the prices that you could achieve would be anywhere between £55,000

and £60,000.

For the sales market,

I think this property could achieve anywhere around £60,000.

I know Glenn is only the managing agent, but what does he think?

The sale valuation is good. There's some increase there,

so that's a good start.

That's my line, Glenn.

Yes, the potential 12 grand profit is a good start.

But how about rental?

I think in the current rental market, you can

achieve anywhere between £475 and £500 per calendar month.

I think, for the rental market, this property will achieve

somewhere between £450 to £500 per calendar month.

At the top figure, that is a yield of just over 12.5%

for Glenn's client.

But as you may have guessed, the house is already let.

The rental figure we are getting is £475, so that fits with that.

And obviously, it was rented quickly, so we're happy with that.

Well, that is still just over 12%.

So, will the future changes in law affect Glenn's business?

Plans for the future -

we'll continue to expand in what we're doing.

I've got many investors asking us to buy properties for them.

And we'll also add in to our own portfolio.

We will just have to wait and see what sort of implications

these changes have on the buy-to-let market.

But in the meantime, it looks like Glenn's plans stay the same.

Earlier on in the show, I was in Tylorstown, in the Rhondda Valley.

And there, I saw a decent-sized shop space with a four-bedroom flat

above, with the flat being set out over three floors.

All of this had an intriguing guide price of just £18,000.

And the intrigue didn't stop there as the layout offered

some possibilities.

Could this potentially be two flats?

One with the upstairs door there as access and another one here?

Oh, mixed-use developments, we like those.

But it was the shop that attracted Aziz, here on the left,

and his business partner, Ozgur.

They were surprised to find that their new £38,500 purchase

came with such a large flat.

-Basically, the building is bigger than what we expect.

-Oh, really?

Yes, yes. I mean, we didn't look at it before.

You didn't look at it before?

So going to make that, keep it all in one or maybe

separate two flats.

This is the idea, but we haven't exactly made our decision yet, so...

They plan to open a takeaway shop downstairs and weigh up the

costs of splitting the flat into two

before looking into residential rentals.

Well, ten months on, and there is certainly no free lunch here.

It looks like I'd have to comb the street for that hot food Aziz

promised because the space is now a barber's.

Now, I would be lion - ha -

if I said that this was anything like what I'd expected.

# See you laughing, but you're cutting it, cutting it fine

# Cutting it fine. #

But why has Aziz opted to eat his words on opening the takeaway?

We made the application for two flats and a takeaway for the shop,

and the first one, we've been refused by council.

85 licences have been refused by council,

the reason is the traffic and the road is busy.

It's going to cause a problem.

That's the reason why it has been refused.

We basically decided to open the gentlemen's barbershop,

and that is what has been decorated.

And we hope to open, in the next two months,

a barbershop in the commerce side.

# Louder than a lion

# And you're gonna hear me roar! #

So, that's the commercial side.

What about the flat? Well, despite planning permission

for a conversion to two flats, they have elected to keep it as one.

Aziz and Ozgur have sealed off half of the basement for storage

for the shop while they have cleaned up what was here and elected

to spend money on the central heating,

damp treatment and a rewire.

The cosmetic alterations involved changing all the doors

and replacing the carpet with new flooring.

The flat looks fresh and clean.

The bath and shower have been replaced in the bathroom,

which is much better.

But I think the jury might be out on combining those old pink tiles

with the more modern ones. And on keeping the pink sink.

But why have they opted to keep it as one four-bed flat?

We have decided to keep it as one whole

because the application going through, and we wait so long,

and then we just decided to keep it all in one and just start the work,

because it had been so long.

But we've got the application for two flats anyway.

We can convert it at any time.

So they can look at dividing the flat in the future.

And with an original timescale of two months,

they've just had to crack on with the work, as planning alone took

six months. But have they kept to their £10,000 budget?

We end up spending...

Converting the two-flat budget, basically,

it cost just over 17,000.

But end of the day, we've done a lot of changes in the property.

We hope it's going to be worth it.

Seven grand over budget, but a lot of hard work has

gone into the essential work this property needed.

After this long wait,

Aziz must be looking forward to his business opening.

I'm pleased about a haircut in a gentlemen's barbershop.

Hopefully. That is the big thing I'm waiting for, yes.

The budget and timescale weren't

so much short back and sides as a bit long on top.

But enough with those cutting remarks, ho-ho.

Can Aziz and Ozgur make some profit here that would put them

-on the road to being million-hairs?

-HE CLEARS THROAT

I'll try and make that the last one, but I can't promise.

Time to ask two local estate agents

for their thoughts,

starting with the agent who saw it before the renovation.

The change is very good, especially the heating system,

the electric's been good.

Some decoration has been brought up to standard.

The selling points would be the overall size of the property,

the amount of bedrooms,

the decoration

and the amount of investment that has gone into it.

It's obviously a very large property.

Offers good living space

as well as four really good-sized bedrooms on the first floor.

I probably would have modernised the property to a higher standard,

maybe put a new kitchen in, new bathroom

and just neutral redecoration throughout.

The business partnership have spent £55,500 here and the agents think

the business, were it to be offered for rent,

could pull in £4,000 a year.

How about the rental potential of the flat?

I think this property could achieve £450 to £500 per calendar month.

On the rental market, the overall four-bedroom property could

achieve in the region of £425 per calendar month

and £450 per calendar month.

Yeah, rental, that's quite exciting as well.

That's what we were expecting anyway, so that sounds good.

Including the shop that tops £500 per month for the flat

would give Aziz and Ozgur a whopping yield of 18%.

Alternatively, the agents believe that the whole building could

sell for around 135,000, giving them a potential £79,500 profit.

Hair-raising numbers.

Has the experience been a cut above for Aziz?

You know, I think it is been quite good and it's been really...

We learned quite... You know, a few things in here as well.

And there's always more to learn,

so we've just, you know, got to learn.

We love a good auction story,

and it's great to see a buyer get the bit between their teeth.

Yes, and there are plenty more auction stories

-where they came from.

-Oh, yes, there are, Martin.

So make sure you tune in next time for more Homes Under The Hammer.

-See you then.

-Goodbye.

-Bye.