Episode 64 Homes Under the Hammer

Hello and welcome to the show. Developing property is an absolute

dream job for a lot of people,

but before you go handing in your notice,

make sure you've done your research.

Yes, because it isn't for everybody.

Yep. For those of you that are up for it, it can be a great career,

so where do you start?

Well, how about buying your home under the hammer?

It's an amazing feeling,

transforming a derelict, old building

and breathing new life into it,

but, believe me, it can be hard graft.

Yes, I can certainly back you up on that one, Lucy.

But how did today's buyers get on?

I think we should find out.

In Cheshire, I'm banking this property will keep your money safe.

# Money, money, money. #

While safety is definitely an additional feature

in this Carlisle house.

Tread carefully cos there's no flooring in this front room.

And in this southwest London flat,

Lucy could really do with a hard hat.

The ceilings are sloping and they're quite low in here.

All these properties have been sold at auction and we'll find out who

bought them and what they paid when they went under the hammer.

Final time.

Yours, sir.

The Cheshire town of Crewe

is synonymous not only with trains but with luxury cars, too.

The sort that can leave you with empty pockets.

So, maybe it's just as well that the auction lot

I'm about to deposit myself in

is a former bank.

Just a stone's throw from Crewe town centre, a former bank building.

Guide price was £45,000 plus.

HE GROANS

# Goin' to the bank

# She got me

# Goin' to the bank. #

Well, without stating the obvious, the first thing to note is

it was a former commercial premises.

You've got the old night safe there,

place where the cashpoint used to be,

probably tellers round there, all these little rooms.

But that does throw up some issues because the first thing is,

it will have a commercial classification in terms of

its specific use and, if you're going to change it from that,

you're going to have to apply for planning permission

just to do something else with it.

And so that, of course, throws lots of issues into the equation.

But let's look at what we've actually got here.

Certainly, quite a large area and, obviously,

if you were thinking about using this as a commercial unit again,

a very enviable location, right on the high street there.

As you walk down through the building,

lots of space and you can imagine this as a working bank.

Little interview rooms,

all these walls, of course, just stud partitions, if that.

So, easy to take down

and I think that's what you'd have to do before you did anything.

Clear it out, give yourself just a blank canvas

and then start thinking what you might use this for.

But you could be limited,

as the building has an A2 classification,

which only allows for financial and professional services to operate.

For example, it could be an employment agency

but not a payday loan shop,

so you need to speak to planning as a priority.

Don't just assume it's straightforward.

When it comes to planning, it's never safe to assume anything.

So, upstairs, amongst other things, this,

which I imagine was the old green room canteen

for the staff that used to work here.

Funnily enough, disappointingly smaller amount of space up here

than there is downstairs

but the reason for that will be revealed in a second.

Loos up here,

this large sort of landing area at the top of the stairs

and then, through this door...

..the reason why it feels smaller on this floor than downstairs,

because there's this huge, great basically open-air terrace.

Now, it's very nice,

a nice place to come out and admire the views over Crewe,

however, it's a bit of a wasted space, isn't it?

So I wonder if, in any master plan,

you could look at creating more space up here,

maybe with some kind of extension.

Something to contemplate and put into the general mix of

possibilities that is this property.

One thing I haven't shown you is probably the most interesting room

and it's deep in the bowels of the building.

# I found the secret The key to the vault

# I found the secret The key to it all. #

Well, down in the basement of the bank, as you might have expected,

it's dark and dingy and there is...

CREAKING

Love that. ..a creaky door,

leading to a vault and what you've also got is all these safes.

So what could this be in your plan?

I don't know.

The mind boggles but the issue is

you've got to somehow either use these or actually get rid of them

and actually moving these out is going to take...

well, a lot of effort

but, of course, the good news is that whoever buys this

gets all these with it...

and whatever they might contain.

# Money, money, money

# Must be funny

# In a rich man's world. #

Looks like this place really could be a gold mine.

# Gold! #

Well, you know what the saying says - all that glitters...

So, assuming downstairs will remain a commercial property,

what could be done with the upstairs space?

We've asked along a local estate agent to see what he thinks.

There's very little demand for first-floor office accommodation

so I would be looking at doing a residential conversion.

Obviously subject to planning

and also a little bit of a reconfiguration

of the internal accommodation to provide a separate stair access,

but there's enough space upstairs,

there's generally an appetite for it from the planning perspective,

so it's quite a possibility.

The agent thinks a one- or two-bedroom apartment

could sit comfortably above the retail unit

and that the combined rental could bring in

as much as £10,600 per year,

which means that the £45,000 guide price looks pretty tempting.

How much should it all be worth if sold together?

From a valuation point of view,

if the property was converted and it comprised a self-contained

ground-floor commercial potentially retail unit

with also a one/two-bedroomed flat above, I would see the value of that

being in the region of between £90,000 and £100,000.

Well, I can TELLER you that this place has piqued my interest

and I reckon you can bank on good returns

if you get this one sorted out.

HE INHALES SHARPLY AND CLEARS THROAT

Anyway, yes, it's a good project with some caveats about planning.

Let's see who fancied a challenge when it went under the hammer.

Lot 46. We now go to Crewe in Cheshire.

It's a two-storey former banking premises.

I'll take 40 to start.

Unfortunately, our cameras didn't catch the bidders on this occasion.

42, 43, 44.

£45,000 twice, third and final time.

£45,000.

You've bought it, sir, on the front.

But the person who paid bang on the £45,000 guide price for this

was Steve.

Steve is local to Crewe and came along with his wife, Catherine.

Steve has been registered blind since the age of seven

and was also accompanied by his guide dog, John,

but John took a break

while we chatted about what they had planned for this property.

Steve, Catherine. Good to meet you both.

Hi, good to meet you.

Congratulations!

-You've got yourself a bank.

-Yeah.

So, tell me why you wanted to buy it.

Well, it was there, it was empty, no-one else seemed to want it.

Right, possibly a reason for that, do you think?

No.

Crewe has got quite a few empty commercial properties -

I guess like many towns these days.

One strategy that I have learned works really well

in most town centres is to keep the front portion

of the property as a commercial unit

because that keeps the town looking like a town,

and then convert the rear areas

and the downstairs areas into residential.

However, my idea is to put studio apartments in here

for people living singly, over 35, who need to be in the town centre.

So, Catherine, what do you think about it?

I'm really excited. I think it's an amazing project.

We've got a couple of other projects on the go, so it's scary.

It's a huge thing,

it's the biggest project that we've undertaken ourselves, but wow!

This will be quite a challenge for Steve and Catherine

because, even though they've got

years of property developing experience behind them,

this is the first time they've had to go through the planning process,

which can be daunting.

But they will be hiring the right people and plan to spend

£80,000 to £90,000 on turning this project around in,

I'd say, quite a tight eight-to-nine-month timescale.

The planning could really hold them up but Steve isn't the type to let

obstacles get in his way.

So, what challenges, if any,

does being blind give you, and how do you get over those?

Loads. I've got lots of bruises!

THEY LAUGH

But... There ARE challenges

but, then, there are challenges whatever you do.

Everyone has challenges.

I've met hundreds and hundreds of people now who are challenged

in the whole issue of becoming property investors at all,

and I, maybe because of being blind,

am a lot more courageous than a lot of people I know,

so I'm not afraid of working out

that it's going to work and go for it.

On the practical side, yes, of course,

I don't know if there are cracks in a property above my reach.

I can feel around as far as I can reach, which is not very far.

And I do eventually need a pair of eyes

but I can go on an initial viewing and detect things like damp...

HE SNIFFS

..because that stands out a mile.

In fact, I often have this conversation with surveyors

because one thing that surveyors are taught to do is to close their eyes

and jump up and down on the floor boards

to find out whether they're safe.

-Right.

-That takes courage.

But I can quite often detect that a floor is not even

just by walking across it because another thing they are taught to do

is to put their back against a wall and walk across a room

to detect whether it slopes at all.

I do that naturally so I actually turn

what a lot of people would think were disadvantages into advantages.

Steve has adopted great techniques for getting to grips with property

but, when it comes to more crowded quarters,

wife Catherine plays her part.

In a house that's occupied and people with thousands of ornaments,

then it's hands in pockets

and me getting to practise using adjectives a lot.

Oh, she's good at adjectives.

And watching from the outside, well, inside and outside,

-what do you think?

-It's fantastic.

Sometimes I get a little bit nervous about the money, about the figures,

but we've got an income from the properties that we're renting out

at the moment and it's just exciting.

Property is exciting so I'm all for it and all behind him.

Phew!

Listen, in this case, I really do hope you break the bank!

And it turns out fantastic for you. Congratulations. Good luck with it.

-Thank you.

-I look forward to seeing how you get on.

Thanks very much.

Well, Steve clearly knows his stuff and he's a pretty inspirational guy.

Taking on a fairly difficult project with this one, though.

I am very concerned about the whole planning-permission issue,

even with this still being a commercial unit.

How will it go? It's 50-50.

You can find out later in the show.

Carlisle is at the northern extreme of north-west England

and is only ten miles from the Scottish border.

Its geographical position has meant the city has been at the centre of

many conflicts over the years while, in more recent times,

its location has been the cause of severe flooding -

the last being in 2015.

So, not far from the centre of Carlisle

and, as I walk down this busy main street, I can't help notice

that there are a few skips that are full of rubbish and rubble

and that's because this area was hit pretty bad by the floods,

as was the property that we're here to see today.

It's a five-bed terraced house

with a guide price of £100,000 to £125,000.

It's a beautiful-looking building.

What's it going to be like inside? Let's have a look.

Anyone who has suffered the devastating effects of flood water

will be all too familiar with the aftermath.

Ah. Not a great start. As soon as you come through the door...

..yes, you can see the water damage has really taken its toll here.

Fortunately, it hasn't damaged these beautiful stained-glass windows

either side of this porch way, but the walls, the plaster has all gone,

it's gone back to the bare brick, which isn't brilliant.

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

It's a huge hallway but there's no flooring in at all.

OK, follow me into here.

I've got to tread carefully

because there's no flooring in this front room.

It's a really good-sized front room but look at the damage in here.

Again, everything has been stripped back to the bare brick

but if you can see beyond that, lovely high ceilings,

really nice cornicing as well all the way around the room.

Nice, pretty ceiling rose as well, and an original fireplace.

Nice, big window.

Gah, it's proper devastation in here.

I hope this is the worst of it.

It's worth noting that once the flood-damaged property is sold on,

the insurers are under no obligation to provide flood cover,

which can cause issues when you're trying to get a mortgage.

OK, through to the back of the property

and it's the same in here as well -

everything's been stripped back to the bare brick and no flooring.

Again, a lot of work to be done and you're probably thinking,

"Let's just crack on and start."

Unfortunately, it's not that simple.

There are a few steps you're going to have to take -

one of them being getting a drying-out certificate

before you do anything.

And there's other steps as well you can take

on the external of the building.

Maybe trying to stop the water coming in in the first place -

watertight external doors, a water alarm.

They're going to help but if the water does get in,

you might want to think about using waterproof materials on the inside.

Maybe some waterproof plaster

and little things like moving the sockets just that little bit higher,

just to help in case it does come in.

There's lots of advice out there.

Do a bit of research, ask around, ask the right people -

I'm pretty sure they'll want to help -

and maybe even a grant or two if you're lucky.

Continuing to the back of the house, there is evidence of a downstairs

bathroom and a long room that was presumably the kitchen area.

The rooms in the upper floor of the house

have escaped the same distress of downstairs.

Starting at the very top floor,

there are two bedrooms of decent size -

one overlooking the front and the other overlooking the rear.

On the middle floor, there are two huge bedrooms.

The family bathroom is down half a landing,

where you'll find the final of the five bedrooms.

Water damage aside,

we have got a really good-sized five-bedroom family home

with lovely high ceilings and some really nice period features.

This could be a beautiful family home.

On the other hand, I'm thinking,

it sort of lends itself to be an HMO -

a house of multiple occupancy.

There are steps you would have to take in order to create that.

Change of use, planning permission and fire safety regs as well -

fire doors, fire alarms and fire exits as well.

For me, that would be the way I would go

if you wanted to maximise your investment.

We called in a local estate agent - who has sadly had lots of experience

with flood-damaged properties - for his opinion and valuations.

When you're thinking of buying a flooded property,

before any sort of major works

can start to actually reinstate the house,

you need to have a drying-out certificate

which has been signed off by qualified builders

and local councils.

Once you've achieved that and you've got that

then the property, you know, you can start refurbishing.

One good reason for this being,

there is no point in replastering a wall if there's still flood water

lurking in its cavity.

Assuming the house is eventually refurbished, what could it be worth?

Once the renovation has been completed on a property like this

in this location, you should be able to market the property

somewhere in the region of £250,000 to £260,000.

And on the rental market?

As a standard rental for a one-off property

just for one family to live in, I would imagine that the rental return

on a property like this would be somewhere in the region of

between £650 and £750 per calendar month.

And if adapted and rented as a house with multiple occupancy,

what would the rent be like then?

As an HMO, this property would rent out room by room for between

£75 and £90 per week,

depending on whether the rooms were en suite or not.

It goes without saying

that this is not going to be a straightforward project.

Especially on the ground floor, with that flood damage.

But this is a beautiful five-bed property

with a huge amount of potential.

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

The last lot of the day, then.

Eyes down.

Got a telephone bid on this.

We're in. Don't let them have it.

Need a bid. 100.

Start me. At £100,000.

90, then?

If not, I'll take it away.

At £90,000.

100 here. 100 on the phone.

105? 105 bid.

1-0-10. 1-0-10? 110.

After a hesitant start, bids built to where we re-join at £128,000.

128, 129.

I'll take it. 128 and a half.

129.

129. Half.

130. 130 bid.

Half.

It could be yours at 130 and a half.

131.

131 and a half.

It's against you, sir.

It's with you, madam.

At £131,000.

Half.

Two.

32.

32 and a half.

At £132,000, all yours.

First time. Second time.

Selling away, then,

for the third and final time at £132,000.

All done.

Well done, madam. 48.

The successful bidder was Alison,

bidding on behalf of a social enterprise she founded in 2011.

We met to discuss the future of her £132,000 purchase.

-Alison, nice to meet you.

-Hi. Nice to meet you.

-Congratulations.

-Hm.

-You've got yourself a bit of a monster.

-How did you find it?

-We'd seen it advertised

and it was up at auction so we thought, "Hmm."

Shall we or shan't we? Tell us a bit more about what you do.

We're a social enterprise.

Initially, we were set up to provide recovery

for people coming out of addiction.

So, that's how it started.

We wanted to be more self sustainable so we thought

we could get some housing and look at rents to house homeless people.

You've got yourself a very large building.

Well, it's residential at the minute

and we want to turn it into a house of multiple occupancy. So an HMO.

So, what have you got to do to make it into an HMO?

The first thing we have to do is get planning permission

to change of use. We'll have to have building regulations in

to make sure that we're complying.

That's complying to make sure that you've got enough bathrooms,

enough space for the amount of people.

We're looking at five people,

but it'll be a six-bedroom

-cos there'll be an office space for support staff.

-OK.

I need to get a fire risk assessment. That's the first thing.

So I'm looking now out there to see ex-fire officers to see if they can

-come and do us a favour.

-"Would you mind?"

-"Would you mind?"

-So, five separate bedrooms.

-Yes.

-And an office.

-And an office.

-Tell us how you're going to configure.

Where's the office going to go?

It's going to go in one of the bedrooms upstairs.

It's a very large bedroom. It looks like it's already had

a doorway through where I want to knock through.

So we're just going to split that.

It'll still be a large bedroom but a smaller office.

We're only talking two members of staff at any one time

are going to be here. Because we've got staff on site,

we don't want to impede on the residents that live here

so we're going to put an extra toilet and sink in.

It's already got two showers and a bath.

I think that's ideal for the residents

but it'd be nice to have a toilet that staff can use,

and the residents, if they wish.

But at least the staff will never be bothering the residents

when it comes to the bathroom.

You've got planning, you've got building regs,

you've got security regs.

All those kind of things you have to overcome and then

you've got to start spending a few quid on it to get it right.

What is your budget to turn this place around?

I think it would cost about 30,000

but I'm hoping to come well under that by using volunteers.

The community's good. Carlisle community is really good

-when there's been a disaster like the floods.

-OK.

-30 grand, you said, budget-wise?

-Yeah.

-What about your timescale?

-How long's it going to take?

-Two months, I think.

I hope. Two months.

-Really?

-I've got an electrician coming in tomorrow.

-OK.

-Getting it rewired tomorrow.

-It's very tight, Alison.

-It's very tight but I think,

with all the help in the community and people willing

to drop down tools and come on board, I think we'll do it.

-Great adventure here.

-Yeah.

-I'm pretty sure you'll get it right.

-Good luck.

-Thank you.

-Hope it works out for you.

-Thank you very much.

-Take care, Alison.

-OK.

Now, that's a huge project

but a very inspirational lady

and she's doing it for all the right reasons.

£30,000 budget and two months, I'm not too sure about,

but, with the help of the community

- they're all going to pull together -

I'm pretty sure she's going to get this exactly how she wants it.

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

Still to come, things are getting colourful in this London flat.

A rather interesting colour combination

of a pink ceiling and egg-yolk-yellow cabinets.

And, back in Carlisle, Alison has a slight problem.

We couldn't even get people in to give us quotes,

they were so busy for the flood zone areas.

It's time to head back to Crewe

and the former bank premises I visited earlier in the programme.

The first thing is, it will have a commercial classification,

in terms of its specific use and, if you're going to change it from that,

you're going to have to apply for planning permission

just to do something else with it.

The likelihood of having to spend time and money

on planning permission might not appeal to everyone.

# I'm gonna spend, spend, spend. #

And with more and more shops being vacated on Britain's high streets,

the question is, how do you repurpose these empty premises?

Steve thinks he has an answer and, after paying 45 grand at auction,

he and his wife, Catherine,

accompanied by Steve's guide dog, John, came to tell me about it.

My idea is to put studio apartments in here for people living singly,

over 35, who need to be in the town centre.

A full-time property investor,

Steve's plan was to convert this into a nine-bedroom HMO,

together with a small retail unit to the front of the building.

And he was hopeful that £80,000 and an eight-to-nine-month timescale

would be sufficient for him to complete the job.

Well, 15 months later, we're back and...

..it looks like there's been a bit of a hold-up at this former bank.

# I ain't a-wastin' time no more

# Cos time goes by like pouring rain. #

Yes, Steve's had a frustrating time with delays and design problems.

He's here to give us an update and is joined by his new architect, Tom.

Since the last filming, we've put in the planning application

which originally was to create nine beds as an HMO.

Been quite a few changes since then but...

..at least we did get the planning permission, which was great news.

The original design didn't take into account some of the issues,

in terms of moving one of the walls downstairs.

We've since done a proper survey of the building

to discover just exactly how thick some of the walls are

and, in actual fact, some of them are a metre thick

and they're reinforced concrete.

And, in fact, the original plan meant that we needed to move

one of those walls just a few inches,

and it just isn't worth the cost.

# To be thick as a brick. #

Being unable to move that metre-thick reinforced concrete

meant dropping the two basement bedrooms from the original plan.

With all the previous design problems,

Steve employed Tom to take over the project

and his new design has been approved

by both planning and building control.

We've got a shop/office area on the ground floor,

which Steve's planning to use as a letting agency.

We've then got four equally sized bedrooms, all with en suite,

and a small brew station

just for making cups of tea, coffee, and a microwave.

Going up to the first-floor level,

we've then got three equally sized bedrooms, all with en suite,

another kind of brew station.

And, then, in the basement area,

what we've done is put the kitchen area in that space

because it's not a habitable room

and therefore it doesn't need a window.

# Nothing ever goes to plan. #

And in the process of clearing out the old bank fittings,

they came across another problem.

The wall just behind me,

there was a big cashpoint machine

and downstairs in the vaults, there were two large safes...

..which had to be removed and the vault doors had to be removed.

And then, in the process, we discovered that we'd got asbestos

to deal with, as well.

Once the asbestos was cleared, it was safe for contractors to move in

and strip out the interior fixtures and fittings.

But have these unforeseen obstacles impacted

on Steve's budget of 80-90,000?

We're just putting the build contract out to tender now.

So we'll see how close to budget we're hoping.

I've had various conversations with Tom,

hoping that we can keep it under 100,000.

That would make it very manageable.

We're expecting about three to four months on site construction,

so we're hoping there shouldn't be any real delays

or unforeseen circumstances.

This bank job has been 15 months in the planning

but how much cash can Steve get away with?

We have asked two local property experts

to take a look around but, before they give us their valuations,

what do they think of Steve and Tom's revised plans?

I think the idea of turning the place into studio apartments

is a fantastic idea.

It's really close to the town -

in fact, it's in the town.

You've got all the local shops within a few hundred yards,

so it's ideal from that point of view.

A lot of local businesses, so it's a great idea to do the apartments.

The rooms are adequate, they are single rooms,

a little on the small side

but, nonetheless, they will cater to the local market.

And what about the all-important room rental?

I would estimate that each room will be capable of generating

a rental of about £80-£90 per week on an all-inclusive basis,

without the tenant having to pay any additional bills.

We'd be looking around about £80-£85.

That's pretty much the figure that I've been working on all along.

At full occupancy, a room rate of £90 a week

would generate an income of £2,500 per month.

That's a whopping 20.8% yield,

based on Steve's estimated spend of 145,000.

How much do they think the building could be worth

on the resale market once renovated?

I think, for seven apartments,

once it's all completed and all nicely finished,

we'd be looking around about £175,000 to £185,000.

I would estimate that, once the property is fully let,

it would command a value

of somewhere between £150,000 to £200,000.

I haven't really focused on the commercial value

because that's not what I do.

Fair enough, Steve, but a resale value of 200,000 means that,

assuming costs of 145,000,

there is a pre-tax profit sitting there of 55,000.

So, despite the delays, has Steve enjoyed this project?

I've learned so much.

So, looking forward to taking that knowledge on

to bigger and more exciting projects, quite frankly.

This is southwest London. Tooting, to be exact.

So, what does Tooting have to offer?

Well, it has plenty of open space with its common,

it has lots of shops and restaurants,

including excellent curry houses,

there's a lido for whenever you fancy a dip outdoors,

there's good transport links into the city

and lots of period architecture.

You also get more for your money round here

than in nearby areas such as Balham.

So, it's no wonder that Tooting is considered a very tempting prospect

when it comes to buying property.

And the property in question is in a great location,

just a few minutes' walk from the Tooting Bec tube station.

The property I'm here to see is a leasehold flat

and it's in this Victorian terrace.

Now, the flat has got two bedrooms.

It went up for auction with a guide price of £300,000.

Now, my first impressions are that the outside - look over here -

needs a little bit of work.

The windowsills - look - they're crumbling, and the roof, well,

it looks quite old and I've seen a few missing tiles.

So let's hope inside is in a little bit better nick.

Well, this is a split-level flat

which is spread over the first and second floors,

so you can go up or you can stay down.

Now, down here we've got the bathroom, just there,

and right at the back is the kitchen.

Lovely pineapple. It's very dated in here.

A rather interesting colour combination of a pink ceiling

and rather nice egg-yolk-yellow cabinets.

But it is a good size

and the great thing is you've got enough space here

for a sit-down table, so you can eat your dinner,

which is a real bonus in a kitchen this size.

# Pink, it's my new obsession

# Yeah, pink, it's not even a question. #

Up a few stairs, and you have one of the two bedrooms.

It's a really good-sized double, actually.

And then you have - well, this huge, lovely, light living room.

Straightaway, I'm thinking,

is there room to move that kitchen in here?

You could then turn the kitchen into another bedroom

and, especially in London, more bedrooms adds value

and, in effect, well, it will make this house more saleable.

So, there is a chance to rejig the layout and add value

in this spacious flat. And there is still one more room to go.

Up on the top floor and you currently have the second bedroom.

Now, as you can see,

the ceilings are sloping and they are quite low in here.

Surprisingly, in England, there is no legal minimum for ceiling height,

except over stairways.

But there practical considerations, of course.

Now, you don't want to be constantly bent over and banging your head.

Now, the usual standard is 2.4 metres -

that's about 7½ foot - floor to ceiling,

and with sloping ceilings, well, it's recommended that at least

50% of the floor space should have at least 2.1 metres in height.

So, I think this room does work perfectly as it is.

Of course, the thing you need before you rejig the flat is the permission

of the freeholder and, if you've got permission,

the work could cost a fair bit.

But I think it could make this place very profitable indeed.

But, before you get carried away

and you start thinking about how you can renovate and improve this flat,

there's one future expense you are going to have to take on board.

The lease on this flat - wait for it, you know what I'm going to say.

It's only 66 years in length.

Now, mortgage lenders, they hate short leases,

so if you intend to sell this on at some point in the near future,

it'll be worth paying to extend the lease as soon as possible

because the shorter the lease, the more expensive it tends to get.

And, in this case,

you're already looking at tens of thousands of pounds.

Time to turn to a local property expert to find out how much a lease

extension could actually cost.

Having a short lease can be an issue,

especially cost-wise to renew the lease.

I mean, I dealt with one recently that was about a 59-year lease

to extend and we were looking at about £60,000

is what the freeholder was asking for to extend the lease.

So it's quite drastic at this point.

So, what rent could you achieve on this property?

You'd be looking round about £1,500 to, let's say, £1,600,

depending on the level of standard of the property, per calendar month.

However, that potential third bedroom makes the numbers

even more interesting, as the agent thinks that could rent

for as much as £2,100 per calendar month. What about resales?

This flat as a two-bed,

you could put it on the market at around £650,000.

As a three-bed, you'd be then looking at a lot higher than that.

You'd be looking around the £700,000 mark, effectively.

Maybe 725.

This Tooting flat.

Well, it needs refurbishment and it also has that short lease.

But don't dismiss it out of hand because there is potential here

to make this property better, bigger, and worth more bucks.

Let's find out who spotted this one at the auction.

300, I'm bid. 305, do I see?

£300,000 I have.

305 now?

Yes, 305. 310.

307, I'll take.

310.

After a lukewarm start, the bidding heats up

and we re-join it at 350,000.

£350,000.

351. 352. 353.

Are you sure?

Selling to the gentleman at £352,000.

353. 354, sir.

355, madam.

No? With the gentleman at 354 for the first, 354 for the second,

third and final time.

Yours, sir, at £354,000.

That final bid of £354,000 was made by Jez, here on the right,

and his business partner, Carl.

Regular viewers may recognise property developer Jez

as he appeared on Homes Under The Hammer back in 2013

when he bought two flats in Streatham, London.

Jez had hoped that the sale of that Streatham property

would also help fund his wedding.

So, let's find out what Jez and Carl

have planned for their latest property purchase.

Jez and Carl, congratulations.

Now, Jez, we met, gosh, was it about a year ago?

And you were saving up some money to get married.

-That's right, yes.

-So, what has happened?

Did you end up getting married?

We've got married, we've had a baby son.

-Oh, wow!

-Moved to the countryside to one of the loveliest villages in

-England.

-So you've been extremely busy.

-Extremely busy, yes.

So, this is your next venture.

Are you doing this as a joint venture with Carl?

That's right, yes.

Carl was actually a tenant of mine six years ago.

We've since become friends

and I've been trying to persuade him to get on the property ladder.

What was he like? Was he a nightmare trying to talk you into doing this?

He's been on the phone to me for years for this.

So, finally, I'm just going to go for it.

Now, Jez is really experienced, he's done it quite a few times before,

haven't you? Why do you think having Carl on board is going to be an

-asset?

-Well, Carl is a boiler engineer, for a start.

-Wahey.

-So, he can handle all the plumbing side of things and,

as you know, London, having a plumber who's going to turn up

for sure is a very valuable thing.

So, how long have you been a plumber for?

About 15 years now.

So, hopefully, I can get back here some evenings and weekends,

during the day, even. Just get it done.

With Jez's property-developing experience

and Carl's plumbing expertise,

this should be a winning combination.

But what do they plan to do with the layout of the property?

Well, there is a plan to put it to the freeholder

to ask to buy the loft space

and, assuming we can get to a reasonable figure on that,

we'll convert the loft into an extra bedroom.

So, how much would you be prepared to pay, first and foremost,

for that loft space? Because a lot of people don't realise that

when you buy a top floor flat, you don't actually always own the loft.

That's right. Yeah. It'll come down to negotiation but I think we'd be

prepared to pay between 10,000 and 20,000.

OK. Wow. Wow. That's quite a lot of money, then.

Well, we want to tuck in an extra toilet

so that there's two in the property

and we want to actually move the wall back by 40 centimetres or so

in the lounge, to increase the size of the space

and run the kitchen in there

which will actually give us an extra bedroom.

So, it will become a three-bedroom property even without the loft done.

So, if you do get the loft, it'll be a four-bedroom property.

I don't know whether it'd be better for you guys just to keep it as

a really good three-bedroom property

with a bigger lounge and dining area.

Well, that is the other option and, once we've got the shell,

if we get the loft and if we get permission to put a dormer up there,

once we've got the shell up, we can sort of feel what space we've got

and make a decision accordingly.

Well, I've got to ask this all-important question.

The budget. How much do you think you're going to spend here

-with the loft?

-With the loft, £90,000 to £100,000.

OK. And what about without the loft?

Without the loft, 50,000 to 60,000.

Now, that's not all you've got to lay out for, is it?

Because you've also got to think about this lease.

You bought this property at auction with a fairly short lease.

-Is it 66 years is left?

-That's correct.

So, how much do you think you might have to pay to renew?

We've offered 40,000 but I think they wanted 60, didn't they?

Hopefully, we'll end up around the 40 mark but it's always plus costs,

surveyors and solicitors, so it might end up costing us 45.

So, this budget could reach some dizzying heights.

Quite apart from the renovations, they could be looking at something

around 75-80 grand for the loft and the extended lease.

The guys have already started negotiating the lease extension but,

with so much to sort out, what kind of timescale are they looking at?

We would like to get it done as quickly as possible

but, unfortunately, we're now in the hands of the freeholders

to give permission and in the hands of the planners

to get planning profession.

So we think it'll be about a four-month timeframe to do the work

but we don't know when we're going to be able to start.

So, who is the one doing all the legwork?

All the phone calls, planning applications, who's doing all that?

You're doing all that. But you can do that from the comfort of your own

-country house.

-That's right.

Can't you? And you can be here.

Yeah. That's right.

I mean, any kind of labouring, helping the guys out and, obviously,

doing any plumbing and heating.

Access for other trades, etc.

Guys, congratulations,

and I really hope you get the permissions you need.

-Well done. Lovely to see you again.

-Thank you. Cheers.

-Thank you.

Jez and Carl have known each other and worked together for years

and now they're going into business together

and they're buying this flat.

Will they be able to buy that loft space?

Will they agree on a fee for the new leas?

And will they get planning permission?

Earlier, we saw how they got on in this first property.

But what about the other two? How did they get on?

Well, let's find out.

Back now to the northwest of England

and the historic city of Carlisle.

It was here I explored this grand five-bedroom townhouse.

Unfortunately, the property had been devastated -

like so many others in the city - by flooding.

To let the house dry out, the ground floor had to be gutted.

Follow me into here. I've got to tread carefully

because there's no flooring in this front room.

It's a really good-size front room

but look at the damage in here.

The flood had totally ravaged that ground floor

but upstairs was untouched

and was a reminder of what a great home this was and could be again.

It was Alison, chief executive of a social enterprise,

who purchased the property for 132 grand,

and she had some very worthy plans for her acquisition.

We were set up to provide recovery for people coming out of addiction.

So that's how we started and we wanted to be more self sustainable

so we thought we could get some housing and look at rents

to house homeless people.

So, once renovated,

Alison planned to turn this large house into a five-bed HMO.

She had a timescale of two months and the budget of £30,000

but, with the promise of volunteers lending a hand,

she hoped it would be less.

So, has something good come out of those awful floods?

We returned four months later and there's a real change.

The walls have all been re-plastered and painted

and the flood damage is nowhere to be seen.

It's had a full rewire and, in case of future flooding,

all the sockets have been raised.

That dead space at the back is now a fully working modern kitchen.

Here's Alison to tell us what's been happening.

Well, on the ground floor, obviously,

the last time you were here, all the floor was up

and there was no flooring down,

and there was a shower room with a toilet into it.

We've now make that a shower and toilet and a separate toilet

for the staff to use.

We've also made the front sitting room into an office.

The back room, which is a lovely sitting room, as well,

we've used as a communal area for our residents.

The residents are, of course, what this project was all about.

So the upstairs has been reconfigured.

They've split that large bedroom into a smaller bedroom

and a second staff office.

One of the concerns was that planning issues would cause delays.

Well, actually, in the end we didn't need planning permission because,

even though we've made it into a six-bedroom,

we're having one as an office

so there's only going to be five residents living.

If we went over six,

then we would need planning permission of a change of use,

but as it was just a five-bedroom and we're keeping it to only five

residents, we were able to not need planning permission

or building regulations, which was a good saving.

While luck went their way with planning,

initially they weren't so lucky on another front -

finding people to do the work.

We couldn't even get people in to give us quotes,

they were so busy for the flood zone areas.

So that's been the biggest challenge,

but also the most rewarding.

Because we couldn't get the tradesmen in, we had to

rely on our residents and volunteers and they've all come in and they've

really got stuck in and it's wonderful to see.

We got 50% off paint,

we just went out there and I rang round and went, sort of,

cap in hand, begging, and they've been really generous.

I have to say, the community has been really, really good to us.

So, with the exception of an electrician, a plumber,

and plasterer, Alison's volunteers have come up trumps.

So, with all hands on deck, how has the budget held out?

We've spent £25,432 and that's all the invoices in

and we're hopeful that we'll get a £5,000 grant resilience

back from Carlisle City Council.

So, in all, we've come in at 20,000.

Alison has clearly been watching the pennies,

coming in much lower than her 30 grand budget,

but how long did it take her and her volunteers?

Well, it's taken us about 3½ months

to get to the stage where we are now.

Obviously, for an HMO, we still need the fire doors

and the fire alarms, which is getting put in next week.

However, considering we didn't have the tradesmen,

I think we've done pretty well.

The team have done a really good job.

Alison has managed to create a home for five people in need,

and they will all be moving in within the next two weeks,

and all for a total cost of £157,500.

However, Alison's enterprise is investing in property

as well as people

so we've asked two local estate agents to give as their thoughts.

First, the agent who saw it before.

You know, they've done a very nice job of the refurb after the flood.

Downstairs is a good standard.

They've kept parts of it to run for the business

and, overall, you know, it's a good property.

The layout of the property works well

and the subtle improvements that have been made,

including splitting the bedroom and

the ground floor bathroom work well, certainly if the property

is going to be is going to be used for multiple occupants.

The agents seem pleased with the standard of refurbishment

but will the risk of flooding affect the property's value?

With the properties in this part of Carlisle, obviously,

a lot of them flooded and, as yet,

we're still not seeing any of the refurbished houses coming back to

the market. Pre-flood, this house would have been, in this condition,

certainly, somewhere in the region of £250,000.

But until the confidence returns,

and people start buying houses again,

we see these prices rise, we have to go with, you know,

stripped-out flood values, plus the cost of a refurbishment.

Clearly, it's going to take a while for this area to get back to normal

and both agents agree - valuations are tricky.

But both thought it would sell for around £175,000 to £180,000,

which means the property is worth 22,500 grand more

than Alison has spent on it.

As far as rentals go,

the estimates from the agents were around £90 per week per room,

which would be a decent yield of nearly 13%.

I think 180 is a fair price

and that makes the company that we've made a profit.

However, because we're not selling,

I'm not really interested in that side of things but it's always good

for the future and, depending on what happens to

Carlisle's flood defences, hopefully, the property market

will go up in value over the years.

So, what's next for Alison and her business?

I would love us to become a registered social landlord.

That's maybe the next step but, from what I'm gathering,

it's quite difficult to get there.

So, anybody out there that wants to help, here I am!

Back now to Tooting in London,

where Lucy gave this flat on two floors the once over.

Straightaway, I'm thinking,

"Is there room to move that kitchen in here?"

You could then turn the kitchen into another bedroom and,

especially in London, more bedrooms adds value and, in effect, well,

it would make this house more saleable.

The downsides were the short 66-year lease

which could cost a lot to extend

and possibly the extra expense to develop the loft,

as it didn't belong to the auction lot.

And, of course, all the permission and building plans to get through.

Property developer Jez and his new business partner, Carl,

who is a heating engineer, paid £354,000 for it -

£54,000 over the guide price.

So, what is the big, grand plan here?

Well, there is a plan to approach the freeholder

to ask to buy the loft space.

We'll convert the loft into an extra bedroom and we want to actually

move the wall back by 40 centimetres or so

in the lounge to increase the size of the space and run the kitchen in

there, which will actually give us extra bedroom.

Jez and Carl were relying on getting a lease extension and planning

permission before starting work but estimated the work would take

approximately four months with a budget of 90,000 to 100,000.

Well, we've returned 17 months later

and, well, outside doesn't look much different.

Let's see if anything's been going on inside.

# Everything changes but you

# We're a thousand miles apart but you know I love you. #

The kitchen units have been replaced but, apart from a clean-up

and coat of paint, not much else has changed.

But someone has moved in

and the spacious sitting room is serving as a bedroom.

Come to think of it, that's quite a few changes.

Not least a change of plan,

and that short lease was the main reason.

Over to Jez.

It was going to be a drawn-out process extending the lease.

Carl and I decided jointly that I would buy him out and I would

sort of take the long-haul approach to this project.

So my brother came in and helped me freshen the place up.

We actually changed the kitchen completely and three guys came in

and rented it off me for a year and it's actually worked very well.

So, the old plan has gone out of the window.

But Jez has been working on a plan B.

In conjunction with the leaseholder downstairs,

I actually bought the freehold from the freeholder and then,

about six months later,

persuaded the leaseholder downstairs to also sell his flat to me.

So, I've actually ended up with the whole building top to bottom.

I subsequently went to the council and applied for planning

to turn it from two flats in the building to three flats -

one on each floor - and it came through straightaway,

which we were really pleased about.

Well, I was not expecting THAT.

So, with three flats being in the plan now, what's he going to do?

Starting at the top of the building,

the main body of the house will have a mansard extension.

The rear addition here,

we're actually going to increase the height of the roof

by about 40 centimetres or so, keeping the same slope of the roof,

and, here on the ground floor,

we're actually going to do a four-metre extension

from this wall outwards, which will come to about here,

and that extension will actually also wrap around

into the alleyway there, leaving a skylight,

so we've still got light into the back bedroom on the ground floor and

that will actually - once we take out these two walls -

give a really big space of something like 30 square metres,

which will have lovely glass bifolding doors going out

into the garden and be a really great entertaining space.

Well, it looks like Jez has found

a very clever way to keep this project afloat.

How is he going to use the space on the first floor?

The first floor will become a self-contained flat with

the living room and kitchen at the front,

main bedroom at the back

and a dining room/second bedroom in the middle.

Up in the loft, we're going to have a one-bedroom flat,

again using the rear second floor as its living room kitchen

and the loft space itself as a bedroom and bathroom.

Jez had expected his total refurb costs,

including that loft extension, to come in at 90,000 to 100,000

but, of course, that wasn't including the new plans.

What kind of budget is he looking at now?

I've actually invested about 850,000 here so far.

To implement the planning permission that we've got, at the moment,

our best guess is about £350,000 to do the whole job, top to bottom.

Crikey! With this project spend now looking like somewhere

around the £1.2 million mark,

it's time to find out what two local estate agents

will make of Jez's plans,

starting with the agent who saw the flat originally.

The plans that have been passed for the building are brilliant.

I mean, in this location, with Tooting Bec station

just around the corner, the plans and what they've done is actually

properties that are well sought-after, I would say.

I think they're really good plans and I think they're going to

work well to the kind of demographic for this area, as well.

Well, the plans have impressed.

And both agents agreed that, in its current state,

the building could be worth a combined total of £1 million

and, less the freehold purchase price of 50,000,

that's a pre-tax profit of £150,000.

So, what are the valuations once the work is complete?

He could be looking anything from around the £700,000 mark

for the ground-floor three-bedroom flat, with the garden.

The first-floor flat is a one-bed

and also the top-floor flat is a one-bed.

He would be looking, I would say,

probably around the £425,000, £450,000 mark.

The ground-floor flat would sell for in the region

of £680,000 to £700,000.

The upper-floor flat, in my opinion, would sell for in the region of

£400,000 to £420,000

and the top-floor flat, in my opinion

would sell for £400,000 to £420,000.

If Jez were to achieve those top valuations, that could be a total

of 1.6 million, which could mean a pre-tax profit of around £400,000.

And, if Jez were to make that first-floor flat a two-bed,

both agents agreed it could be worth around £600,000.

That would give him a very healthy pre-tax profit of £550,000.

So, what does Jez think of those valuations?

Yeah, they're really encouraging.

My own view was actually pretty similar to those.

I'm still keen to sell at least two,

maybe all three of them when the project is done.

And has he got his eye on any other properties?

This one's actually quite a chunky project so

I'll have to get this one done, hopefully sold,

and then go back into the market.

Now I've got a kid, I've got quite a few bills to pay

so I've got to keep earning money.

But I love what I do, so that's not a problem.

Well, if you're thinking about buying at auction,

hopefully we've given you some useful hints and tips.

And maybe we've even inspired you to take the plunge.

Yes, and even if you'd rather sit on the side-lines and watch from there,

we don't mind cos we've got lots more stories where that came from

-here on Homes Under The Hammer. Bye-bye.

-See you soon.

-Goodbye.