Episode 66 Homes Under the Hammer

Hello. Now, nobody has a crystal ball, or one that works, anyway.

So, sometimes, well, it's quite difficult, isn't it,

to predict the property market.

Yeah, it shouldn't cause too much unnecessary stress,

but you should always be thinking, "How can I add value?"

Well, one way you could possibly do that is by heading down

to your local property auction.

Well, property auctions throw up all sorts of different lots.

Over the years, we must have seen literally thousands.

-Yeah.

-And they all have their own unique story.

Yeah, but what did the auction catalogues offer today's buyers?

Ah, let's find out.

In Surrey, this maisonette is ripe for reconfiguring.

Yeah. First thought for me is knock this through,

give yourself a nice big lounge.

Yes, the partitions are easy to remove, and in this house in Derby,

it won't take much to get rid of this wall.

And in Kent, Lucy explores a shop with a development opportunity

at the back!

If there's any way you could get planning on that plot, well,

it could be wheelie, wheelie good!

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.

Sold, 190.

This is the village of Ewell in Surrey.

It lies on the edge of Greater London,

so is very much a commuter belt territory.

The name Ewell originates from the old English word

for spring or river source,

and indeed, the village has the main spring and pond

which form the head of the Hogsmill River, a branch of the Thames.

Now, half a mile from the train station

down this very busy cul-de-sac,

and it just goes to show,

if you haven't got a lot of off-street parking in a cul-de-sac,

it can become an issue.

Property I'm here to see is that first-floor maisonette.

It's got three bedrooms and a guide price of £130,000.

Now, I do know after reading the auction catalogue,

there is the possibility of off-street parking to the left.

Let's hope upstairs is pretty.

The current paved parking belongs to the lower maisonette.

I reckon if you cut that hedge back,

lay down some suitable hard standing,

there'd easily be room to park a car in the section

that belongs to our maisonette.

Bit of a hallway as you come in.

You've got bedroom one there.

Good-sized bedroom one, double bedroom.

Down the hallway, kitchen.

It is a little bit tight, but it's what to expect.

Dated, does need to be changed throughout in there.

What else have we got down here?

Family bathroom in a similar condition to the kitchen,

would need to be changed.

Another bedroom there with fitted wardrobes,

so that's bedroom number two.

Into the main lounge.

So that would be bedroom number three, which is off the lounge.

So, hold on a sec, let me check this.

Yeah, first thought for me is knock this through,

give yourself a nice big lounge.

However, if you do need that third bedroom,

you could quite easily block that off

and put the door to that bedroom off the hallway.

Then you'd still have your three bedrooms,

you'd still have your lounge.

I don't mind it, actually. I don't mind the configuration at all.

It just needs to be modernised.

Don't be fooled by the radiators.

I suspect this is where the boiler used to be,

so a new central heating system is a must,

but there's no point in heating the house

if all the heat's going to disappear out the windows.

MUSIC: Cold as Ice by Foreigner

Now, what I have noticed through the whole of this flat,

behind these beautiful net curtains,

there's aluminium windows throughout.

Now, they would all need changing.

They're all dated.

They're not very pretty.

So for me, get rid of them.

But, and there is another bonus beyond the net curtains.

You actually get a bit of back garden.

That little bit at the back, that walled garden.

Got a bit of an outside space as well.

Bully bonus.

Access to the garden is through a shared gateway,

and a narrow path which is overgrown, as you can see.

The garden itself could do with a bit of a mow

and some green-fingered TLC. But that said,

it's a good size and perfect for barbecues on a summer's day.

Now, I think this flat is fine.

It just needs modernising.

But there is one big problem.

It has an incredibly short lease of around 37 years.

What that means is, lenders won't touch it.

And if you want to extend that lease,

it's going to cost you a lot of money.

You legally have the right to extend a short lease,

but you must have owned the property for two years.

And bear in mind, the shorter the lease,

the bigger the cost of extending it.

So this auction property has its drawbacks,

but there's definitely good potential here.

And what about the area it's located in?

We asked along an estate agent to tell us more about Ewell.

Ewell's a fantastic village.

Got some very, very good outstanding schools in and around the local

community. Got some great links in and out of London.

You're nice and close to Gatwick as well,

which is always fantastic for commuters.

Very nice village, very nice atmosphere. Very desirable.

What about the maisonette itself?

It would definitely need modernisation throughout.

So that would be new kitchen, new bathroom.

In doing so, you'd probably look at the decor as well

and then the major part would be to extend that lease,

to have a look at that. Other than that,

it's a very good-sized flat and will be appealing in the marketplace.

Can he suggest how much it could be worth on the resale market?

With an extended lease and modernised throughout,

we'd be looking to market the property anywhere

from £325,000 to £350,000.

And if put on the rental market?

We'd be looking to market it anywhere

from £1,200 to £1,300 per calendar month.

I actually do like this flat.

It does need modernising.

The windows need to be changed throughout,

it needs a new bathroom and a new kitchen.

And it has got that short lease as well.

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

Right, lot 59.

Three-bed maisonette.

Start at 130 on this one.

Gent standing up, 130.

You sitting down, 135.

140, sir.

There was plenty of interest from a packed auction,

and we rejoin at £188,000.

188. 189.

Yes. 190.

190. 191.

Yes, no?

No. 190, standing up.

Anyone else?

Another thousand? If not, 190.

First time, second time.

Third and last time.

Sold, 190. Well done.

Making that bid of 190 grand was building contractor Steve.

He bought this for his daughter Grace,

so I met him back at the property to find out about his new purchase.

Steve, nice to meet you.

-Good to see you.

-Congratulations as well, pal.

-Thank you.

Why this? What was it about the property that you liked?

It's really close to the mainline station,

and it's the last stop so that you can use your Oyster card.

Is it really?

-That's cool!

-Yeah.

-So the Oyster card,

your daughter will be travelling in and out of London?

Yeah, she needs to. She works in Pall Mall.

So she needs to be able to get there.

At the moment, we're just outside of that.

-OK.

-So it would be nice for her to be using the Oyster card.

And it's great, isn't it? It's the last stop as well.

-Last stop.

-How lucky.

-Yeah.

-So have you been into property a long time, or...?

What's your day job? What did you do before?

I've got a design build company.

Design. Will you be chopping and changing this a bit, or...?

I don't think there's too much options on this one.

-OK.

-And my daughter is going to be the project manager.

So she will be deciding what goes on in this one.

Really? That'll be fun!

-That'll be fun!

-I'll be the contractor.

Working with your daughter on a project.

-Yeah, exactly.

-Oh, my gosh. You're going to give her the reins?

Give her the reins.

But make sure it's within certain purse strings.

Yeah, of course.

# As long as I foot the bill

# I pay the cost

# To be the boss. #

Well, he's bought the house,

but I don't think Steve's going to be the boss on this one.

Daughter Grace is an interior designer,

and she's used to dealing with budgets

that run into millions of pounds.

Unfortunately, she's got less to work with on this project.

We hope to do it for 15,000.

But 20, absolute max.

Because it's for family as well.

-Yeah.

-You have to go that bit further, don't you?

Yeah. Well, at the moment, there's no parking,

so parking is an issue in this road.

So we've got to generate a driveway, which is going to take up, you know,

a fair bit of the budget.

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

Um, new windows. None of them are in keeping with the rest of the road.

There's a certain look that this road has got,

so we're just going to create that look with the same type of windows.

New central heating.

New bathroom, new kitchen.

Redec throughout.

The door behind me is going to be blocked up

and we're just going to create the third room.

-OK.

-The third bedroom.

So, rather than having it as a sort of a through lounge.

Gotcha. Do know what kind of finish Grace will be looking for?

I would imagine it'll be flat panel.

-OK.

-And just a matte finish.

-Modern?

-But I shall wait and see.

-Very modern, yeah.

-Very modern?

-Yeah.

What they call minimalist.

Yes. OK, that's cool. So, are you worried that Grace

is going to take over and just edge that budget too much for you?

We've got to make sure, and we've got to do, you know, a bill

of quantities and make sure that everything's within the price range.

Albeit that she's got four brothers,

-so those brothers are going to be asked to step in and help out.

-Ah!

This is a handy family.

Not only is Grace an interior designer,

dad Steve does high-end new builds for clients,

and the four brothers are no slouches either.

My oldest son works for me.

He's a plasterer and tiler.

The next son down is an electrician.

And the next son down is...

He's got a telecoms company, but he can... He can help.

And the youngest boy is going to be coming in and helping out

-with all the stripping off all the paper.

-See, honestly,

Grace has got everything covered. She'll be like that,

she'll be clicking her fingers saying, "Wrong colour tiles".

-Yeah.

-Good for her!

-She's looking forward to ordering her dad around.

-And her brothers.

-Yes!

MUSIC: Daddy Cool by Darts

There's no doubt Grace has got it made.

With dad Steve at the helm and four very useful brothers to call on,

this should be a hassle-free path to success.

Ah, I was forgetting one thing.

The property does come with a very short lease.

Which we knew that we only had a certain amount to spend on the basis

that there is going to be some fee to pay further down the line.

But as of yet, we don't know who the freeholder is,

so we haven't been able to even think about that down the line.

Steve needs to track down the freeholder to negotiate that lease extension.

If the freeholder can't be traced,

he can apply to the County Court for a vesting order.

This is an application to have the freehold

transferred to the leaseholder for a sum of money decided by the court.

The cash is put aside, should the freeholder eventually turn up.

If you find yourself in this position, get some legal advice.

So what about a timescale then, Steve?

At the moment, we've got around about six weeks.

Well, do you know the values in this area?

Do you know what you would expect to pay for a flat like this?

If it had a good lease...

-Yeah.

-..somewhere, 320-350.

-And you paid 1...

-90.

-That's good, isn't it? If you get it right.

I know it's going to be your daughter's home, but...

Yeah, if you get it right, it'll work out well.

If we don't get it right, we've got a property for a long time.

Yeah, exactly. Which is not a problem either.

-No, it's not a problem.

-Because you can keep hold of it.

-Yeah.

-I'm pretty sure your son will dive in there, if your daughter does one.

-Yeah, exactly.

Well, good luck. Grace will be taking over before you know it, pal.

-All the best.

-Thank you.

Take care.

Firstly, what a great dad Steve is,

helping his daughter Grace get on the property ladder.

He's given himself a decent budget of £15,000

and that short lease doesn't seem to bother him.

I think with Grace's interior design eye

and the brawn and muscle of her brothers,

I think this place will be bang on.

You can find out how they get on later in the programme.

Derby was first settled in the seventh century,

and the name's believed to mean "village of the deer" in old English.

It was a key area in the Industrial Revolution

and was granted city status in 1977.

It's now home to the University of Derby,

ranked in the top 100 universities in England and Wales.

History lesson over,

it's now time for a lecture in student economics.

Well, the property I'm here to see, it really is all about location,

because we are walking distance from the university.

So, the idea of a four-bedroom house, guide price of £100,000...

Oh, I'm thinking...student lets, yeah!

You can only spot these type of auction properties

by doing your research, and it can really pay off.

So if I am starting with that sort of student accommodation in mind,

I'm thinking about maximising the number of rooms.

So let's see what we can do.

Downstairs loo, which is quite useful,

and then stairs up to your bedrooms.

Now, here's the exact case in point.

That is under... I guess, normal circumstances,

some kind of a living room, maybe,

but, actually, if you're doing student lets,

that would be a bedroom for sure.

Because you come through into this room,

you've got what was the kitchen.

As you can see, it is in a terrible, terrible state.

There's sort of some things you take for granted when it comes to houses

and having fairly solid walls is one of them.

In this case...

It's not ideal, is it?

I didn't even need the BBC's comedy sound effects for that bit!

And what's definitely not tickling my funny bone is getting a mortgage

here, as that would be very difficult because it's non-standard

construction, and the construction bit is definitely suspect!

# You're not standing like you used to... #

The ground floor has ample space, but time to look at the first floor,

to see if the student let idea holds up better than that wobbly wall.

So on this floor, another bedroom there.

When I say another bedroom,

that's assuming the one downstairs is a bedroom.

And then into this room, which I guess is the lounge.

And I say that because, one, it's a through route to the stairs

which lead to more bedrooms upstairs,

and secondly, you've got this big window and then out

onto the balcony.

That's a really pleasant thing to have, actually.

That said, it doesn't look like it's in that good a condition,

and certainly could be contributing to the problems downstairs.

A balcony is a bonus, but the outside of this house

needs a lot of attention.

And to think about making this big room bedroom number three,

you would need to think about access to the stairs.

One more floor to go.

One thing you can say is that all the rooms are a really nice size.

I mean, look at the bathroom. It'd be nice if it had a toilet in it.

Well, it sort of has a sort of half a toilet,

so major redoing everything required.

But it's a good size, as I said.

Another bedroom there, really nice size double.

And then into probably my favourite room in the property,

only because it's so kind of like 1960s flower power, yeah, man.

One thing which isn't so lovable

is the fact that it hasn't got a ceiling.

Er...

Don't know why that's not there.

Weird!

MUSIC: Groovy Little Hippie Pad by ZZ Top

Even students with the most liberal approach to hygiene

might baulk at this 100 grand guided property, as it needs everything.

We asked an agent from the auction house that sold it

to tell us what else it needs to become an ideal home

for budding scholars.

This area's incredibly popular with students.

If you're going to rent to the student market,

once we get to three or more unrelated people,

then we need to take into account HMO regulations.

With regards to a HMO property,

you would certainly need to make sure

that a hard-wired fire alarm system was installed.

The doors would need to be up to a certain specification.

And again, most of these things are there for, quite rightly,

for the tenants' safety.

So to values.

Resale, rental, for a family tenancy and for my student let idea.

Once renovated to a good standard,

would achieve a sale somewhere in the region of £140,000.

And on the rental market, would anticipate a rent of £650 per calendar month.

If you were to offer this property to the student market,

once renovated to a good standard,

I would anticipate there being four letting rooms.

Four letting rooms at £70 per week over 48 weeks

would bring in an income of £14,000 per annum.

And that certainly would be the best way to maximise your investment.

Based on the agent figures of around £14,000 a year for a student let,

or just under 8,000 a year for renting it as a house,

it's a no-brainer.

Well, there is a lot of work to be done on this one,

But it's a good-sized property, and the main thing is its location,

so close to the university.

I think it could be a really good earner.

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

Lot number 20.

A large property. It's a popular rental area.

May I say 105 for it?

100? 100?

98. Bid me where you like.

98, 95.

Don't mind where we begin.

95 I've got here.

At £95,000.

There was no great rush to bid for this property,

so we rejoin the action with the price at 104,000.

104 is bid.

104 and a half.

105.

And a half? 106?

106?

Good house. 500?

107, it's your turn.

107.

£107,000.

500?

Yup, 500. 108? 108.

Five again. At £108,000, it's going to go, no mistakes.

At £108,000 for the first time.

For the second time. Third opportunity.

It's yours, sir, at £108,000. 158. Thank you.

Getting a congratulatory smile from his sister Ranju is bidder Mahesh.

He clinched the property for £108,000.

Mahesh is no stranger to Homes Under the Hammer.

I met him and business partner Mayur twice back in 2015.

First when they bought a four-bed terrace in Normanton,

and again when they purchased this detached house

to turn into a student let.

And now this is their third time.

As Mahesh owns several student property lets already,

I can probably guess what they're going to do with their new purchase.

Mayur, Mahesh, great to see you both.

Again, actually!

-That's right.

-Yes, the third time.

What is it about auctions that's really sort of rocking your boat

-at the moment?

-Opportunities like these.

You rarely get them on high streets.

There is... In the marketplace now, there is lots of gazumping as well.

So, you know, if you wait for something,

not sure whether you would get that, and then there is also

the long process of getting mortgages, this and that.

But this one is pretty quick, and you know that once the hammer goes,

-it's yours.

-Remind me of your relationship,

how it works between you, what you do.

We're just friends.

I started on the property side, and then this guy said,

"OK, I'm joining in." And then the next thing you know,

-he's overtaking me!

-Do you pay him?

-Er, no. We, we...

-What, what?

People need friends like you.

What do you get out of this?

Because you must put a lot of effort in.

I just enjoy it. I just enjoy seeing a property,

especially something like this, which needs everything doing to it,

and then seeing the end result.

But you won't make any money out of it whatsoever?

No, he's too tight. He's too mean.

I think, let me make the money first,

and then we'll discuss that!

Wow!

# Can you feel that, yeah

# We're paying with love tonight

# It's not about the money, money, money

# We don't need your money, money, money

# We just want to make the world dance

# Forget about the price tag. #

Well, no wonder Mayur is a popular fellow.

His expertise is really helping Mahesh grow his business.

But what do they intend to do to this house?

We're going to convert this into five en-suite rooms.

Downstairs, where it's the kitchen,

that's going to remain as kitchen-diner and lounge.

We are thinking of extending that by three metres.

-Oh, wow.

-So to make it a bigger kitchen-diner lounge.

Especially when there's going to be five students living here.

-Single-storey extension?

-Yes.

-Yeah, OK, cool.

And the room below us will be an en-suite bedroom.

This room here will be an en-suite bedroom.

The room next to us will be en-suite bedrooms.

And the three rooms we've got upstairs,

they'll be converted into two en-suite bedrooms as well.

Right. You get five nice-sized en-suites.

The pair think the work will take three months

to get the permissions to convert into an HMO,

but what kind of rental return do they expect?

We're aiming at £500 a week.

£2,500 a month?

-Close to that, yeah.

-Yeah, well, yeah pretty much...

I mean, you've got costs at the minute, but that's fantastic.

So, what's the budget for the work?

OK. The budget we are currently looking at is about £25,000.

Because everything here needs doing.

Starting from floors and decorations.

And some of... As you've probably seen,

some of the ceilings are missing.

So there's loads of work, and doing altogether, it would be about 25K.

So, a healthy budget and a positive glowing return.

If they do stick to their budget,

they could be looking at a potential 18% yield.

Well, listen, congratulations.

Lovely to see you both again

-and I'm sure we'll see you again.

-Good to see you.

-Thank you.

-Bye, Martin. Thank you.

Well, if things go to plan and this place is generating £2,500 a month,

it's a right little earner for Mahesh.

And I think I might have slightly put the cat amongst the pigeons,

because Mayur really should be getting something for his efforts,

shouldn't he? Lots of work to do to sort it out, though.

Will they get it done in time?

You can find out later in the show.

Still to come, has the buyer of this Rainham property

got his lots mixed up?

This wasn't a safe bet for you.

Not really, no.

-Why did you end up buying this?

-Because I wanted to get next door!

And there's a bit of confusion in Derby, too.

We spent about two weeks kind of putting...

starting work and taking it out, and then doing it again and again.

Time to return to the Surrey village of Ewell,

to find out how Steve got on with this three-bed maisonette

which he purchased at auction for 190 grand.

His plan was to refurbish it

and make it a home for his daughter, Grace,

and its location made it especially desirable.

It's really close to the mainline station

and it's the last stop so that you can use your Oyster card.

MUSIC: Groovy Train by The Farm

With Grace's transport to and from London taken care of,

it was down to Steve and his four sons to carry out and complete

a total refurb of this house.

Added to this, Grace's interior design expertise

would hopefully turn this into a dream home,

but Steve had some important business to take care of.

The property does come with a very short lease.

There is going to be some fee to pay further down the line.

But as of yet, we don't know who the freeholder is.

Realising that money would have to be kept aside to extend the lease,

Steve knew that a strict budget was crucial.

But with daughter Grace project managing,

might the purse strings be loosened slightly?

So, are you worried that Grace is going to take over

and just edge that budget too much for you?

We've got to make sure

that everything's within the price range.

We hope to do it for 15,000, but 20 absolute max.

Aiming to complete within six weeks and mindful of that 20 grand limit,

Steve set to work.

Nine weeks later, we are back to catch up.

Forget maisonette, this is now amazing-nette,

and Steve's been doing a spot of redesign.

So this room used to have a door here,

going through into what was the lounge.

This has been blocked off, and this has now become Grace's studio.

This door was an original door that had been blocked off,

so we've just reinstated it.

With the new windows, it's a nice, light, bright room.

And the lounge that was is no longer.

It's now Grace's bedroom.

And Grace is going to have some company too,

as youngest brother Joel is moving in.

Hopefully they can live together.

If they can't, then we'll have to make other arrangements.

As well as a new kitchen and bathroom,

a combi boiler has been fitted and a central heating system

which is completely renewed.

As for those old aluminium windows...

The original windows were in very poor condition,

so we made arrangements for new windows to be put in.

Fortunately, we'd already prearranged

for a conservation window to be put on the front elevations.

And as you look around the street,

it now looks in keeping with everything else,

rather than standing out like a sore thumb.

Although the six weeks' timeframe slipped by three weeks,

my fears that Grace might run over the budget

proved completely unfounded.

It was a lot easier than I thought.

She didn't go overboard.

I think probably the most expensive things

were maybe the tiles in the bathroom,

which were a little bit more than we'd budgeted for.

But otherwise, we've come in just under 18,000 at the moment.

Her brothers and the guys that work for us have come in

and done most of the work.

I've been involved in the design, and fitting the kitchen,

and, really, everything else has been done by the guys that work for me.

Outside, the wild, overgrown back garden has been tamed.

And in the front,

preparations are being made to lay a driveway

for some off-road parking.

Has Steve managed to make any progress on extending that lease?

They think they've located the freeholder.

But because I've been so busy doing it,

it's not something I've really pursued at the moment.

It's always been in the back of our mind that this may not come off,

so it's always going to be a long-term investment for us.

And if we have to give it back after 38 years, then so be it.

Well, after making such a nice job of this,

let's hope it doesn't come to that, Steve.

This is a gem of a property, and it's polished up nicely,

but what will two local estate agents make of the jewel in Ewell,

starting with the agent who saw the property earlier.

The changes they've made are great, especially in regards to the finish,

both in terms of the bathroom and the kitchen,

and the outside space that they've made good of as well.

That has really added in terms of value and saleability

of the property, without a doubt.

Absolutely stunning.

The owner's done a fantastic job.

It's exactly what buyers and renters are looking for.

It's all neutral and modern.

Kitchen and bathroom, absolutely stunning.

So far, Steve has spent a total of £208,000 on this lovely flat.

So let's find out how much it would be worth

if he manages to extend the lease.

With the lease extended,

you would be looking at £360,000 to £370,000,

and it'd be a lot easier to sell,

because you'd open it up to the full market.

We'd be looking to probably market the property

around the sort of £350-360,000 mark.

If those figures are correct,

then it's a really good purchase and investment.

Based on the highest figure, that's a pre-tax profit of 162 grand.

But, of course, he's still got to fork out for the lease,

so how much could that cost?

Different agents have said to me it might extend from 20,000, 30,000,

and the top end was 100,000.

So if Steve had to stump up as much as 100 grand for the lease

to add to his spend of 208 grand,

based on the agent's higher valuation,

the maisonette could still deliver a pre-tax profit of 62 grand.

Not bad for a worst-case scenario.

What about rental valuations?

In terms of the property's rental,

you're going to be looking now, with the changes they've made,

it would be around the sort of £1,300-1,400 per calendar month.

The flat could rent for £1,500 per calendar month.

If Steve were to forget about extending the lease in the meantime,

that top rental figure would mean a healthy yield of 8.6%.

How does he feel about that?

If I was renting out, that would be a good return...

but I suspect I won't get anywhere near that.

This time round, Lucy is in Rainham,

one of the smaller of the Medway towns in Kent.

Rainham has regular train services into London

that take less than an hour, although for today's property,

pedal power is the transport option of choice.

Well, this is a busy road right in the heart of Rainham.

And for the type of property I'm here to see, well,

I would say that is a good thing.

Because it's a two-storey retail unit

and it was used last as a bike shop.

Now, the guide price was £145,000-155,000,

so I'm going to step up a gear and head on in.

I hope I don't end up feeling a little bit flat.

Well, loads of passing traffic out there, which is good.

Ah, and look!

The hills are alive!

Not with the sound of music, I'm afraid,

with the sound of traffic out there.

But that can be a good thing.

And I know that the previous owners were here for over 30 years

with this bike shop, which is a good thing,

because obviously the retail business does work here.

You can still see, they've left some of the bike racks,

and you've got the cabinets here which would have been displaying

all their goods. And the stairs which lead up there two more space.

So this whole building was a commercial unit.

And then out the back here,

well, it was obviously a bit of a kitchen area,

maybe they repaired all the bikes out here.

It does need a bit of a spruce up, as you can see.

You know, lick of paint.

Could you turn this shop into something else?

What would be good here? A nail salon, perhaps.

A sunbed shop.

A sandwich bar! I don't know, there are lots of ideas.

You've got a little door which leads outside to the garden area.

But, look, you can see it's dirty,

it needs somebody to come in here and turn it around.

You've got strip lighting everywhere.

So there's work to be done, some money to be spent.

But it's not bad.

# I want to ride my

# Bicycle, bicycle, bicycle

# I want to ride my bicycle

# I want to ride my bike... #

Bunny-hop upstairs and you'll find plenty more reasons

to get pumped up about this property.

Now, I know this floor was previously used as storage,

but, well, I think it could be used for more than that, don't you?

How about converting this into a one-bedroom flat?

I definitely think that would work in this central spot.

However, before we get too carried away, there are a couple of things

you've got to bear in mind.

You're going to need planning permission from the council

for change of use, plus, to really make this work, well,

you're going to need to create separate access up here.

And luckily, I've just seen the spot where you could do that.

Lucy is not peddling you a story.

There really is a gate at the back under all this ivy.

There may even be stairs up to the first floor.

Who can tell?

On the outside of this ivy-covered wall is a pretty big surprise.

This is quite a big old back garden because this really big -

really, really, really big shed -

does take up quite a lot of the space.

But that's not all the space, because it just continues

to go on and on.

But to get there, you've got to go through another outbuilding.

A bit of a dark hole in there, but I'm going to explore.

So, it's spacious in here.

Look at the size of this!

And this is not where it ends, because there is another door,

and through this door is another outbuilding!

And it goes right the way back to that wall and then it continues.

More land at the back of there.

It's a really unusual way to access all the outside space,

through all these doors.

It's big, though.

This does seem to be a big waste of usable space.

And if you could get planning permission to demolish these units,

then, wow, things really could get interesting.

There's just one little snag.

You might have to walk one very fine line to get that planning approved.

This driveway here is owned by the neighbouring property

and this incey-wincey little footpath here

is the only access to the plot down the back there.

That means no rear vehicle access and no parking.

So, not an easy development and I'm pretty sure the planners,

well, they're not going to be a fan of these obstacles.

This one does offer some challenges,

so it's time to speak to an agent who knows the local market

and might be able to give us an inkling

of the planning possibilities in the area.

I think that planning for the land at the back is going to be

fairly straightforward because there are lots of little

one-bedroom apartments in the area.

If planning permission was forthcoming and obtained,

then four to five apartments would be possible.

Small, or two two-bedrooms,

so there's lots of potential there as long as access is available.

Well, this certainly is interesting.

There are a few different potential sources of income here.

The first is the retail unit,

which the agent thinks could bring in around £700 a month.

Then, if upstairs was converted into a one-bedroom flat,

you could get a further £575 a month which would be a nice income.

But the real money-maker here could be by using the land at the back

for new-build flats.

So, what could they be worth?

A new one-bedroom apartment would sell for £110,000

and a two-bedroom would sell for £130,000.

On face value, well, I think this former bike shop could be

a WHEELIE good one to go for,

but if there was any way you could get planning on that plot,

it could be wheelie, wheelie good!

Could you have a hybrid of retail and flats on your hands?

Time to find out who was ready to take the lead and win

the yellow jersey when this lot went under the hammer.

Lot 43.

We move now to Rainham, detached premises,

ground and first floor accommodation, the land to the rear.

What may I say? Start me at 145.

There's a lot of property there.

140? 140, then, I have, thank you.

At £140,000, the bid, 142 do I see?

142. At 145.

The auction took a while to get up to speed.

We rejoin at 165,000.

At 165, the bid, 168, do I see?

168.

At 170. 170 is bid.

172. 172.

At 175. 178.

At £175,000 the bid, anybody else can join in,

but directly in front of me at 175,000 for the first time,

175,000 for the second time,

175,000 for the third and final time.

At 175,000, are we all done?

Sold at 175,000.

The winning bid of 175,000 came from Steve,

who has actually appeared on the show before

with business partner Ian.

They bought a shop and offices which they then converted into a gym.

I wonder if this project will work out, too!

Steve, it's been a long time.

How many years since I last saw you?

Six or seven years, I reckon.

Tell me what you've been doing? You've been busy buying at auction,

-by the looks of things.

-We have. We got this last month,

completed yesterday. Plan was to buy this and get the next lot as well,

which is behind the working men's club.

Yeah, don't tell me, that lot came first and this lot came second.

No, it came second.

-That lot was second?

-Yeah.

We got this, paid a little more than we wanted to,

because we wanted to get that as well,

but that went for twice the asking price, or the guide price.

And it was actually bought by next door.

We did the numbers and I knew that we'd bought this top end

-of what we really wanted to pay.

-Yeah.

-Gambling for next door.

But, saying that, it still works out OK.

We should get a decent return on it, still,

so it's not as bad as it could have been.

So, Steve, tell me about that little pot of gold

at the end of the garden,

because I know there's a bit of a something, a plan of yours,

that you want to extend upon.

There is, there is. What it was, we bought this

knowing that we wanted to keep this as a shop and convert

-upstairs into a flat.

-Which is perfect.

Which is excellent at this end.

That works. At the end of the garden, there's a big,

derelict brick building which is actually bigger in footprint

than this shop itself, and we were hoping to get planning

to convert that into residential as well, fingers crossed.

But the problem is that the plot next door,

which was the other one we wanted to get,

had a right of way down the side of the property

which would have given us vehicular access to the back.

We haven't now got that,

and I've now got to speak to next door to ask really nicely

if they'll give it to us.

If you don't get permissions and it doesn't work your way,

do you have a plan B?

What, then, can happen?

Well, plan B, we'll still go for building in the back.

Not as many units.

Whereas I think we could probably get four one-bedders in the back,

I'll probably go for two one-bedroom apartments

and work on the assumption that we've got pedestrian access

in the back, build almost, like, two self-contained units

in the back garden.

So far, I've been talking to you and I'm hearing,

"A bit of a risk, a bit of a risk, bit of a risk."

You are really venturing into the unknown.

-We are.

-You've got no guarantees with this at all.

-Not really, no.

-This wasn't a safe bet for you.

-Not really, no.

-Why did you end up buying this?

I wanted to get next door!

Oh, well.

As someone once said, visions aren't changed, they are only refined.

Plans rarely stay the same and are scrapped or adjusted as needed,

which is a wise approach.

But was Steve wise to take such a risk,

even if it was a calculated one?

We've done the sums on it.

If we only got this, say we only got the shop

and we only converted upstairs and did nothing out the back,

return on investment, we'd still get about an 8% return.

So it's not too bad, so we can cope with that, that's fine.

So we're hoping, with the conversion for this,

just the shop and the flat, if we can do that for about 20, 25K,

we've done the whole lot for about 200.

-Wow.

-And that works for us.

That's not too bad. If we can get the back bit,

that's the Brucie bonus and that's what makes the difference.

That's the pot of gold.

That's where the rainbow ends!

-Exactly, yes.

-How long do you think it's going to be before you get

any answers on the back plot?

Well, the plan is, a bit of a risky plan...

Another risk?! Not another one!

We'll start this, we'll convert this.

Hopefully, by the time it's finished, we should get planning

approval for the flat upstairs. Once that's been done,

we'll then put in planning again to convert the back.

And then we'll see. But in the interim,

I've still got to speak to next door to see if I can get

vehicle access for the back.

So what sort of budget have you got to oversee all of this?

I reckon the back, we're probably looking at spending about 150.

And that's for three flats?

Probably 150 would be two or three flats, yes.

And this flat upstairs?

Upstairs and to convert the shop, about 25.

So you've got quite a busy few months ahead of you, really.

We want to do this in two months if we can.

We've already got guys put by ready to start it a week Monday.

-Wow!

-You're wasting money, otherwise.

If you buy something like this at auction,

until you can get someone actually living in the place,

it just sits there. You're paying interest on loans, etc,

so you want to get someone in as soon as you can,

so hopefully within two months, the shop, from today,

will be marketed from today, and the flat upstairs,

once we've done a little bit of jiggery-pokery up there,

hopefully that'll be on the market in about three or four weeks' time.

Steve, it's fantastic. You've got such a positive stance on this.

-Good luck with that.

-Thank you.

And I really can't wait to find out the outcome.

Nor can we!

Oh!

Yes, it's a real nailbiter, Lucy!

But, has Steve bitten off more than he can chew?

Join us later in the programme to find out.

We found out how one property's got on, but we're not done.

There's still two more to go.

Will we see beautiful bathrooms or catastrophic kitchens?

Yes, will they be happy campers

or whatever the opposite of happy campers is?!

Let's go back and find out.

Well, what's been happening in Derby?

It's time to find out. It was this four-bedroomed terraced house

that I visited earlier, with a guide price of 100 grand.

With the university in close proximity,

there was only one thing on my mind.

Ooh, I'm thinking...

student lets! Yeah!

But before the prospective buyer lined up some student tenants,

there were just a few minor issues to address.

As you can see, it is in a terrible, terrible state.

# You shake me up

# You shake me down... #

Now THAT'S what I call shaky!

It was Mahesh who was the successful bidder at auction, paying 108,000.

Together with friend Mayur, they plan to convert this house

into a five-bedroom student accommodation.

Mahesh is the money man and Mayur comes up with all the ideas

for design and layout, for free.

-Do you pay him?

-Er, no.

-We...

-What?!

What do you get out of this? Because you must put a lot of effort in.

I just enjoy seeing a property, especially something like this,

which needs everything doing to it, and then seeing the end result.

Aiming for a turnaround of two months

to catch the new student term,

and with a budget of no more than 25 grand,

we're back four months later to see if it's all gone to plan.

Well, what a difference!

Goodbye, dilapidation, hello, modernisation.

And by the looks of it, hello, student tenants.

We caught up with Mahesh to hear what's been going on.

There's been lots of work gone in.

We brought the whole house back to bricks.

Then we started with new plumbing, new electrics.

We helped put in new kitchen, we have done new flooring.

Each bedroom comes equipped with an en-suite shower room

and a new kitchen-cum-dining area

provides a communal space for get-togethers.

But reconfiguring the entire house turned out to be a bit of a headache.

One of the problems was to find out exactly what is the best way we can

create these en-suites and still retain a good shape of room.

We spent about two weeks putting... start work and taking it out

and doing it again and again.

But Mahesh thinks the effort was worth it.

Nowadays, students have got high standards as well,

and they like to live in a good space.

And I'm sure that once they start staying in such a place,

they probably become, well, better students as well.

Well, we can only hope.

To obtain a licence for a house of multiple occupation,

Mahesh has had to show that there is sufficient space and facilities

for the occupants to live comfortably and safely.

Fire doors, smoke alarms and emergency lighting

have been installed throughout the building.

We actually put in lots of modern touches.

We put in occupancy sensors in the communal areas so, when you walk in,

it just switches on, and also, it switches off,

so it's also environment friendly.

# Five, four, three, two, one... #

But that's not the whole story.

There's been a change of plan.

We were initially thinking of having five bedrooms.

But then we changed our minds and did an extension at the back,

so increased it to seven bedrooms.

As well as two new en-suite bedrooms,

the new extension also holds the kitchen-diner.

It's taken four months to get to this stage,

and Mahesh reckons another month will see the extra two bedrooms completed.

I'm guessing this modification has also impacted on the budget.

Our top budget initially was 25K,

but we ended up spending 52.

That's us up to speed with the house,

but the question on everyone's lips is,

whatever happened to Mayur?

Mayur is now off to India.

He is writing a book.

He's not here today because he's in preparation for that,

but he has played a significant role here in this building.

He's created all these bedrooms, designed them,

also designed the en-suites.

He's not here, not because I have not paid him,

we are still good friends and we have some other projects in mind

which we are going to follow on.

With this project almost completed,

we invited two property experts to visit the house

and give us their impressions,

starting with the auctioneer who sold the property.

First impressions are that it is extremely clean and tidy, well-equipped.

It's obviously been adapted for a specific purpose

and I think it fits that very well.

The selling point for me would be the fact that every bedroom

is a good size, they've all got an en-suite shower room and, of course,

the location. It's close to the city centre and the university.

Do their positive comments reflect on the valuations?

How much could each room earn in rental income?

On the rental market with students,

I would expect £90 per student per week.

I would say a serviced house like this,

so all the bills are included in the rent,

you'd probably get something in the order of £90 per room per week.

Based on 44 weeks full occupancy,

seven rooms bringing in £90 per week

means an annual income of over 27,000.

Given that Mahesh has spent a total of 160,000 on this project,

that would give him a whopping return of 17.3%.

I think the rental values are a little bit on the low side.

We are currently receiving £95 per room for five rooms

which we have rented out.

Next year, the price will be about £110 per room.

And if this house were to be put on the resale market,

how much could it achieve in its current state?

On the sales market, I would market this property for £200,000.

It would have an open market value as an investment property

in the region of £200,000.

£200,000 for this particular property in the given area,

it probably is correct.

But there are no examples of seven bedrooms in this area

in this standard, so I think that's something new.

But this property's not for sale anyway,

because we are there to generate some income

for the next number of years.

Mahesh has had a busy few months and he plans for some well-earned rest.

I'm actually going to follow Mayur.

He's gone to India for about six months, so, once this is all over,

I'm actually going to go and join him

and have a short break with him.

It's time to get back to Rainham in Kent where, earlier,

Lucy took a spin around this former bike shop, which had hidden depths.

It's spacious in here.

Look at the size of this.

And through this door...

..is another outbuilding!

Well, this space proved too much of a temptation for Steve

and his silent business partner, Ian, who paid £175,000 at auction,

a bit more than they would have liked.

The first of Steve's plans was to refurbish the shop

and convert upstairs into a one-bedroom flat.

But the real potential was in the back garden.

At the end of the garden, there's a big, derelict brick building

which is actually bigger in footprint than the shop itself,

and we was hoping to be able to get planning permission to convert that

into residential as well, fingers crossed.

Fingers and toes, because obtaining planning permission

would be no easy ride, particularly since right of access

to the back of the property belonged to next door.

Now I've got to speak to next door to ask really nicely

if they'll give it to us.

First things first,

Steve had to get the shop and the new flat

earning income as quickly as possible.

The partners set aside two months and £25,000

to update the shop and convert upstairs.

Four months later, we're back to see how phase one is getting on.

The tired upstairs accommodation

is now a bright and cheerful one-bedroom flat,

almost ready for a tenant to move into.

Steve's awaiting delivery of glass panels which will add

a classy finishing touch to the stairway.

It's been a simple conversion process at the front of the building

but trickier at the back.

This was probably the most challenging area in the flat conversion.

Main reason was because it was so tight for space.

We had before a little office area over here and in the back, here,

it was just a fireplace, an old toilet and a basin in there.

I had to make sure we utilised the space enough to get a kitchen in

which you could use, but also

that you could at least swing a cat in the bathroom area.

Get the shower and toilet in and it just about fits.

It was really, really tight but we think it's worked.

Downstairs, the shell of a retail unit is finished

but the new tenant is currently fitting out the shop to their requirements.

Once everything's done, Rainham will have a smart new tea shop.

The shop was in a bit of a mess when we moved in,

so we completely gutted it, re-stripped it, new electrics,

new plumbing, new kitchen, new bathroom.

Basically, we just gave it a white canvas.

Steve comes across as a pretty organised sort of chap,

but when it comes to planning permission, he doesn't half cut things fine.

Planning permission for the flat and development as a whole,

we've put in for, as we started the works.

We completed the works before we actually got planning permission,

so we got planning permission five days ago

and the works were completed about six days ago,

so it was done on risk, but fortunately it paid off.

Steve had a need for speed,

but we would never recommend you do work without having planning

permission granted. There's a danger the council could come back

and make you undo some or all of the works.

Despite Steve's fast-track approach,

his timescale slipped by about eight weeks.

But what about the budget?

We've gone a bit over budget, probably about 30,000, maybe 32,

which brings us to about 205, 207.

So far, so good for Steve and Ian,

but phase two of their grand plan could be the biggest challenge.

But, for now,

we've invited two local property experts to have a look around

at what's been done so far and tell us what they think.

Having had the opportunity to look around the property,

I think they've done a good job.

They've done exactly what they need to do.

Not too much and not too little.

The standard's right.

Actually perfect for the location and the type of property.

I actually like the property.

I think it's in a good location and I think they've done a good job

dividing the two units.

Steve thinks he just about got away with the compact kitchen upstairs,

but will the experts agree?

The layout of the first-floor flat is...

interesting. It has resulted in a very small kitchen.

The agents feel that demand is high in this area for this type

of accommodation, and, since Steve and Ian plan to rent out the flat,

they suggest a rental income of between £650 and £700 per calendar month.

And both agents agree that the shop should rent

for around £750 per calendar month.

They've already been signed now so we know exactly what

we're getting, so we are getting 700 for the shop

and we are getting 650 for the flat.

That combined monthly rent of £1,350

means that Steve and Ian are currently getting a return

on their £207,000 investment of just under 8%.

But, of course, that's all phase one.

How are plans for the rear development progressing?

We are hoping to get planning for four more one-bedroom flats.

When we bought the property,

we wanted access to the rear so we could give a parking space

for the flat we're standing in now and also for

a potential new development at the rear.

It all helps with planning if you can get parking spaces

but it's not a necessity. I've been round to see the working men's club.

They've been fantastic, by the way. They really have been helpful.

But, through conversations with them,

it was crystal clear that they didn't want us to have any access

on their land long-term whatsoever,

so we basically had to throw that away, that idea.

So we've now gone down the route of saying we'll go for flats,

and the flats won't have any car parking whatsoever.

And, at the end of the day, not everyone's got a car.

So it doesn't really matter, to be honest.

And how long does he think the process could take?

Fingers crossed, if you come back in a year's time, we've got planning

out the back and we've started the development

and hopefully finished it by then as well,

you'll see a plot that's got four flats and one shop,

hopefully all rented out.

Well, all over the UK pretty much all year,

there are property auctions going on.

Yes, that's right, that's why we always try and catch the action

-wherever we go.

-Yeah, so join us next time here

-on Homes Under The Hammer.

-Goodbye.