Episode 45 Homes Under the Hammer

Hello, welcome to the show. Now, if you're looking at property

as an investment, or maybe just somewhere to live,

then an auction is a really great place to start.

Yes, why not start by just flicking through that auction catalogue?

You might even find a little hidden treasure.

Yes, and then you head down to your local auction house,

make a bid, and the property is yours, if you buy under the hammer.

One of the great things about buying at auction -

a few weeks after that winning bid, you could legally be the owner.

Yes, and if you're keen to get on with a project, that is good news.

So, what got the buyers bidding on today's show?

Lucy finds the gift of original features wrapped up in panelling

in this cottage in Seend, Wiltshire.

I just want to unravel it all.

Good things come in small packages.

Not so at this semi in Neath, South Wales.

I don't know if you realised that, but I've gone from lounge to kitchen

in two steps.

And a guide price of 20-25 grand sounds like a gift

in Wolverhampton, West Midlands.

So there must be a catch.

55, proxy bidder is out.

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.

Lucy is in the picturesque village of Seend in Wiltshire.

With a mix of grand houses, idyllic workers' cottages,

and road links to please any commuter, it's an ideal location

for those looking for that country living lifestyle.

Walking up to the property, I've got my fingers firmly crossed that

I'm going to be viewing something special.

And do you know what? I think I am.

This - it was built around 1815 as a factory for local weavers,

but the row was turned into housing when the industry died down,

and unsurprisingly, you are now looking at a Grade II-listed

property with a guide price of £70,000.

And I'm looking at an exciting afternoon.

I'm going to have a look around.

Ooh! Now, I think I gave this house a bit of a big introduction.

It's actually quite disappointing when you get inside.

And once you've looked past all this awful panelling, I think the

good thing is, if you come over here, look at that, behind it,

there's some lovely big wide wooden panelling there.

Now, that will be fantastic.

It doesn't take you long to realise, once you strip this place back,

there's a lot of potential here.

And I'm pretty sure that this is a false ceiling, and once you pull it

all down, you will find some amazing beams underneath.

That would be quite an exciting find. And also,

I'm just wondering if, under here, you've got a lovely original...

I think you have, yes. A nice fire surround.

So somebody's got to get in here, get all this yucky wood panelling

off, and try and reveal the true beauty here.

Do you know? It's almost as if this cottage has been wrapped up

in lots of cladding.

I just want to unravel it all, go back 200 years,

and then I think you'd have a pretty stunning little home to live in.

# Let me see you stripped down to the bone... #

The kitchen certainly needs stripping back.

The layout between the gallery section and the pantry and lean-to

off it needs completely unravelling and opening out.

Now, one idea would be to knock down this horrible old lean-to.

You could extend outwards and create a lovely open-plan kitchen-diner

with views out onto this garden.

But at this point, you just need to hold your horses and remind yourself

this house is listed, and to alter its appearance inside or out,

you will need listed building consent.

It's all to do with maintaining the property's character,

and although in this case you could only improve its looks,

you'll have to convince the conservation office first.

There's scope, but there's also plenty of hoops to jump through.

There are also plenty of stairs to hop up in this cottage.

On the first floor is a bedroom to the front,

and a large rundown bathroom that must have been a former bedroom.

There are even more stairs to an attic floor,

but this level required us to take several safety precautions,

including a hard hat for Lucy.

# Save the dance, I wanna save the dance... #

Oh, my goodness!

First of all, I can't get over what an absolute state it's in up here.

And secondly, how big this room is!

But it's clear to me that obviously this ceiling wouldn't take a lot

to completely collapse.

You can see it's gaping everywhere. There's holes over here.

It's a good job I've got my hard hat on.

It doesn't surprise me that a house of this age,

there are structural problems with it.

But the good news is, you've got all this space to play with,

and that puts a big old smile on my face.

# You make me smile

# Oh, make me smile, make me smile... #

The state of the ceiling and potentially the roof could be more

likely to make you frown than smile, but a character Grade II-listed

cottage like this can't come on the market that often.

We've asked along an agent from the auction house that sold it

to tell us what he thinks of the property.

When I first saw this house, I realised there is obviously

quite an extensive amount of work needs doing to it.

It needs a kitchen, obviously refitting the bathroom,

but there's good potential to add maybe a third bedroom.

Since a lot of structural work needs doing on that top floor,

it makes sense to try and get more out of the space,

but there is a lot of work and planning detail needed.

So, what could this cottage, guided at 70 grand plus,

make on the resale market as a three-bed?

I think the ceiling on a property like this would be around 185,000.

That is if you were carrying out an extension to the kitchen and putting

new bathrooms, creating that third bedroom upstairs as well.

On a rental basis, I would guess maybe

you would be looking at around 650-675 per calendar month,

if it was created into a three-bedroom.

Whoever takes this on needs to love this house.

It's a demanding property that could be extremely expensive to restore,

both inside and out.

But what a project!

Let's see who took it on at the auction.

There we are. We've got the hang of it, I hope, from the last lot.

It's in Seend, plenty of room.

Needs a lot doing to it, we know, hence the price.

There we are. Start me at 80.

70, then, if you like. Plenty of character.

At £70,000. 72. 74.

At £74,000. 76.

78 down here.

There were a few interested parties battling to bag the cottage,

And we rejoin the bidding at 115,000.

Deep breath, sir. 115.

OK, 115. And a half. 116 to the glasses.

Otherwise the bid is over there. at 115 and a half, OK.

£115,500 for the first time.

£115,500 over there, then, for the second time.

Last time, are you all done?

Your number, sir, is... There we are.

The successful bid of 115,500 was made by John,

a part-time property developer with a difference.

There's no quick two up two down projects for him.

This is the type of tumbledown wreck John gets excited about.

Lucy met him to find out more.

-John, congratulations.

-Thank you.

-I love this little cottage.

So, what was it about this place that made you want to

stick your hand up and get that winning bid?

Well, we'd like to sort of transform it into a sort of beautiful period

sort of cottage, if we can.

And very little has been done to it over the years.

And when we peel it all back,

I think a lot of the original features will be here.

And hopefully we should be able to transform it into something

-of a bit of beauty.

-So when you start peeling things away,

what are you expecting to find in here?

I think we can't really work out what we're going to do

with the house until we've peeled everything back,

we've talked to the conservation officer, and then we're going to

sit down and work out our plans for sort of

making the most of what we've got.

There will be a lot here of... There'll be some beautiful beams,

beautiful oak floors. They're all here,

we've just got to bring them out and sort of put them on display in a

sort of contemporary, modern way.

So, tell me - I want to get to the bottom of all of this -

what is it about you that makes you want to buy a house like this?

I have generally done up period homes and I enjoy doing period homes

because you start with a house that is virtually unliveable in,

and although the sort of process is painful and quite difficult

and there's a lot of nasty surprises along the way,

when you've finished it and you are done and you've done a good job and

a good restoration, they make the most sort of delightful houses.

And you have this sort of transition from houses that are virtually

unliveable in to houses that are beautiful and very desirable.

So what was your vision when you first walked into this room?

I just saw a wall that I want to take down.

-Yes.

-A ceiling that I want to knock out.

We'll end up really predominantly gutting the whole house.

-Really?

-Rewiring, replumbing, replastering.

We will talk to the conservation officer and obviously a lot of the

period features, we'll keep. It's currently two-bedroom,

and it would be nice to make it three-bedroom.

There's enough space in the attic to do that.

That was a nice surprise, I have to say.

Yes. And it's... We'll try and put an extension out the back

for a kitchen, which will be nice. The neighbours have an extension,

so we should at least be able to go as far as their extension.

And just turn it into a sort of modern home with a nice period look.

So who is going to get the benefit of living in this beautiful property

once you've finished it?

I don't know. Hopefully it will be three bedrooms,

it would be nice to think a family could live here.

Or rent it. I'll only sell it if I really need to.

Is there anything you're worried about,

with having bought this at auction?

Yes! The sort of...

The process is fraught with difficulties,

and in the middle of it, it can sort of slightly overwhelm you, I think.

There's a lot of work that needs doing.

Yeah, it will take us a year or so to do all the work.

It is all exciting at the beginning, but after about three months in,

you can get a bit worn down. You've just got to keep going.

-So you haven't got over that shock yet.

-No. No.

There is plenty to worry about, but you just... You can't...

You can't let that affect you.

Also, you've got an awful lot of structural work to do upstairs.

Now, what's going on with that top room?

Well, I think what's happening is that the roof is leaking,

and the water is damaging the sort of Victorian lime ceiling.

And the ceiling is basically collapsing.

Or in the process of collapsing. And we basically...

One of our first tasks is when we have cleared the house is to go

and get up into the roof and fix all the tiles

that are letting the water in.

So how does that stand with your budget?

I mean, how much money have you got to spend on this now?

We have a sort of £70,000 to £90,000 budget.

Basically, there's quite a big contingency section in there because

until you can start to pull all the walls away, get rid of the...

..Some of the features, you don't really know what you've got.

And you don't really know what the cost is going to be.

So it has been a sort of like the purchase of passion with you,

-hasn't it?

-Yes. Yes. I mean, period houses are kind of...

You have to love to do them. I know a lot of builders hate them

because everything is non-standard. Everything has to be custom made.

They come with a lot of problems more modern houses don't come with,

damp, and other issues.

but even if you sort of take that into account,

you still start with a house that is unliveable in and end up

with a house that is potentially very beautiful, and in a way,

nicer than a modern house.

John, it's so nice to meet somebody so passionate about period property.

-Good luck with this project.

-Thank you very much.

-Thank you.

John has got the passion this place needs.

Thank goodness it fell into the right hands.

But I do wonder what he'll uncover when he peels off that old paper

and panelling. And will his budget match his vision?

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

South Wales is synonymous with wonderful singing voices,

and mezzo-soprano Katherine Jenkins OBE is definitely one of them.

Not only a singing star,

she's notable for her charity work as well.

Katherine was born and raised in Neath,

a town that has relatively recently had its town centre redeveloped.

It's also where we are today,

so let's hope today's property hits all the right notes.

I'm just a stone's throw away from Neath town centre in a sort of

cul-de-sac dead-end. Now, in the auction catalogue,

it is stated that our property was an end terrace.

I want you to make your own mind up - what do you think?

Is it an end terrace, or is it a semidetached?

How many houses do you need to make it an end terrace?

Anyway, it's got two bedrooms, and a guide price of £40,000 plus.

Cameraman, wait, there's a road to be crossed.

OK, we can do this.

This is our property.

Start off by getting that window changed, and make the property look

a little bit prettier. Let's hope it's pretty on the inside.

Is that it?

I can actually see the back of the house from the front of the house.

This is a very small downstairs.

Unless there's a sneaky door under those stairs...

And there isn't at all. Wow! This is tiny!

And it's not in great condition, either.

It looks like it hasn't been touched in some time.

I'm now just coming to the kitchen.

I don't know if you realised that,

but I've gone from lounge to kitchen in two steps.

And I'm about four steps away from the front door as well.

Very tiny downstairs, and the proportions are all wrong.

The kitchen doesn't need to be bigger than the lounge.

Make it a bit smaller, add some space in there.

But there's got to be...

Right, let's have a look outside, see if we can add some...

OK. See if we can add any space.

Wow! This is massive.

How come the garden is this big and the inside is really, really small?

I'm sure we can nick a bit of space out here,

a bit of an extension downstairs.

Next door have done it. It seems perfect.

And you'd still have a bit of back garden right at the end.

That would be the way I would go.

Too small in there.

Of course,

you'd have to weigh up all the costs of adding an extension.

With the potential end value of the property,

it might not make financial sense,

but definitely an option worth thinking about.

# All the small things # Truth care, truth brings...

Right, what have we got up here?

That's what we've got - some really bad mould.

In this corner as well.

As you get upstairs, you can feel the air change slightly.

It feels like there's been no airflow.

It feels like stagnant air.

Family bathroom is just here, and there is more mould in the corner.

I am a bit concerned about the mould.

I'm even more concerned about that hole just there.

The whole ceiling seems to be bowing.

As you come down the corridor, you've got the two bedrooms.

This is the smaller of the two.

Again, I hate to say it, more mould.

Single bedroom there.

And follow me into the larger of the two bedrooms,

I can see this ceiling is bowing as well.

Somebody fancied putting a hole in the door just there as well.

But another hole in the ceiling here.

There's got to be something going on above here and above the hole

in the hallway. Check the roof, see if there's any water coming in.

Just do a little bit of maintenance,

roll your sleeves up, make it a nice family home.

# Baby's got the bends, oh, no... #

Now, if you don't do your maintenance, bills will grow,

a bit like this ivy.

Letting it climb up the downpipe is not great.

The weight might pull it off the wall in time, and while the roof

looks in good nick, it's connected to those bowing ceilings.

And here's a health warning for you for when you pull them down -

textured materials for walls and ceilings were still being

manufactured with asbestos up until 1984,

so this material is not to be messed with.

Take professional advice,

and I'm not done with the health warnings yet.

Mould can be bad for your health,

with breathing problems, rashes, itches and other symptoms.

Plenty of products will get rid of it,

but make sure you wear a facemask, and cover any exposed skin.

Always think about health and safety.

And that brings me onto, how healthy is Neath's property market?

Who better to ask than a local estate agent?

We're having a really good time at the minute

in the housing market. A lot of investors buying in.

A lot of first-time buyers.

We've seen good competition for properties, and actually achieving

very good prices at present.

So the market is good at the moment,

but does he think adding an extension will add value?

With this property, I wouldn't recommend an extension or adding any

other bedrooms. It's pretty standard for what you're going to get.

The resale value wouldn't warrant adding one,

so we'd recommend to leave it as it is, and a basic refurb.

That's probably spot on, if you are an investor,

but if you want to make this a home, I think you might make some space.

What does the agent think the values are?

We've got plenty of properties let down here,

it's a really popular area. I would expect it to achieve

anywhere from £395 to £425 per calendar month.

And for sales?

Providing the renovation is done to a high standard, and we get a good

finish, the property should achieve around the

£85,000 to £90,000 mark as a two-bedroom.

Yes, it's small, and it's shallow,

and the proportions downstairs aren't great.

You would have to do some investigation work to find out

how those holes in the ceiling came about as well.

That said, below the surface,

there's a small but very nice home to be had here, and don't forget,

you have got room to extend. Let's see who's seen that potential

when it went under the hammer.

Guided at 40. Can we see 40?

Can we see 35 on this? 30,000 to start me.

Way behind at 30.

30, somebody, surely. 25 then, if you like.

Thank you. Too quick to go down, wasn't I? 25, then, if you want.

Six now, can I see from somebody?

At 25. 26. 27.

Business was brisk for this auction lot. We rejoin at 47 grand.

46 and a half.

47. And a half.

48. And a half.

49. And a half.

49 and a half.

50. And a half?

No? At £50,000, on my left-hand side, then, for the first time...

Second time... Third and last time, then, at £50,000...

Yours, sir, well done.

Unfortunately, our camera didn't catch the successful bid of Mike.

He paid 50 grand to add this to his portfolio of rental properties

in the area. Mike and son Lloyd met me back at the house for a chat.

-Mike, nice to meet you.

-Nice to meet you.

-Lloyd.

-Nice to meet you.

-Nice to meet you too.

Start at the beginning. Auction - how was it?

-No, I think I paid a bit much for this one.

-Oh, dear.

Yeah, I got into a bit of a bidding war, and I got carried away.

But I paid probably about 5,000 more than I wanted to.

OK. But there's still a bit of profit in it. So I'm not too...

There was five properties I was interested in,

and this was the last of the five.

And I just felt I didn't want to go home empty-handed!

-If I can say that, yeah.

-You wanted to get something...

-I needed something to do.

-Yeah.

-In the days.

-In the days? So what...?

-I work nights.

-What do you do, by the way?

-Railtrack welder.

OK, so you do that at night.

Travel, yeah... Travel round the country.

-I'm working tonight in Southampton.

-Are you? Southampton?

-Southampton, tonight.

-When we've finished pestering you here

-with this interview, you're going to go...

-I'm going to bed.

I'm going to bed for an hour, then I'm going down south.

# Too much, too much, too much for me

# It's hard work... #

Mike's a hard worker all right.

By night, he's welding railway tracks, and by day,

he's property developing.

He's gathered 15 rental properties in 15 years.

Thankfully, he's not a one-man band.

So, do you have a team, then?

Yeah, I've got a couple of people.

-That you use all the time?

-That I use all the time, yeah.

And Lloyd will be an addition...

-Yeah, Lloyd is going to join the team now.

-Oh, fantastic.

And what's your attraction then to getting involved with this?

I like all this. I've grown up with him doing it as well.

So I've helped out a few times. But I recently got a job

as a carpenter doing this sort of work as well.

So this is exactly the same as what I do in my daytime job as well.

OK. And what kind of things are you wanting him to do, Mike?

He can do all the woodwork, all the skirtings,

maybe have a go at fitting the kitchen.

-OK.

-Jobs that I don't want to do.

DION LAUGHS

It's great that Lloyd is getting involved, and he appears to have

two jobs as well. They plan to make this a straight refurbishment,

having the boiler and wiring checked, replacing that kitchen,

bathroom, floor coverings, and so on.

But what about that worrying issue of...?

A lot of mould, a lot of moisture upstairs, and I have seen

some quite significant sized holes in the ceilings.

Any concerns there, Mike?

Yeah, well, obviously I'm going to check the roof.

We're going to tear all the ceilings down because they're all artex,

and probably reboard all the ceilings, skim them,

and just give them a lick of paint, and they'll be good to go.

Outside, out the back, you've got a lot of space.

Have you thought about maybe extending? Because next door have.

Yeah, we have seen the extension, and looking at the legal pack,

it did have plans for an extension on here.

But I don't think... For a quick turnaround, quick rental,

I don't think I'm going to be putting an extension on.

What's your budget?

I think roughly I can get this done for about 8,000.

-OK.

-Cos it doesn't need nothing major.

It's got all the windows, doors, so I haven't got to put them in.

Hopefully the boiler's OK, but I'll get it checked out.

But I think 8,000 should do it.

And how long is it going to take?

I think four to five weeks.

And how long are you going to spend on it, Lloyd? Have you got...?

Any extra time I get from work, whether it be weekends...

He's not looking for mates' rates, is he?

-No.

-No chance!

It's not mates' rates, it's son rates. Yeah.

Even more competitive rates than that.

Listen, good luck. Mike, I wish you all the best.

-Lloyd, good luck to the future, mate.

-Thank you.

-Cheers.

So, there's no substitute for experience,

and Mike's got 15 years of it.

And he's not work-shy.

He's got a night job, and he does his property throughout the day,

so that four-week timescale should be fine.

Their eight grand budget might be stretched, though.

New kitchen, new bathroom, making more space in the lounge,

and if he finds any problems with that roof,

I think the eight grand could just be nudged to maybe nine or ten.

We shall find out. Later in the programme, all will be revealed.

Coming up, you can't even step inside this fire damaged property

in Wolverhampton, West Midlands.

It's probably not a project for a first timer.

And the experienced Mike is having trouble with his team.

Monday mornings, it was hard to get some of them in.

On a Monday morning, after the weekend.

Earlier, Lucy was in Seend in Wiltshire to see a three-floor

Grade II-listed property, guided at £70,000 plus.

# With the houses in a row

# On the streets we used to know... #

But it seemed like someone had taken away all the character inside.

# You take away where you're from... #

And upstairs wasn't much better.

# I've had a pretty hard life... #

I can't get over what a state it's in up here.

# And if the money isn't right... #

£115,500.

# Can I be yours tonight? #

But the money was right for John, who paid just over 115 grand.

This was someone who was passionate about period properties,

and loved restoring them.

When you've finished it and you're done and you've done a

good job and a good restoration,

they make the most sort of delightful houses.

And you have this sort of transition from houses that are actually

unliveable in to houses that are beautiful and very desirable.

# Easy house! #

It won't be easy. He thought it would take £90,000 and up to

a year to bring this property back to what it was.

We are now coming back to see the changes.

John has certainly had time.

It's been nearly eight years since we were last here.

Has he stripped the house back to what it was?

# I'm born again

# Get born, get born, get born again

# Get born, get born, get born again... #

Absolutely astonishing.

This isn't just a property restored with the original wood,

flagstone floors and beams, better yet, it's reborn as a bigger house,

as John has built an extension.

This is a brand-new extension, new kitchen,

and there was an existing downstairs toilet, we kept that.

It's sort designed, really, to balance the house up.

So, nice new kitchen. Enough space for a dining table.

I had to go through planning, it's a listed building,

so I had to get listed building consent.

So, yes, it just sort of completes the house now.

Upstairs on the first floor, there is now a bedroom in keeping with

the house's history. And that canary yellow bathroom

is now classic and classy.

But the top floor is the peak of the project.

It's gone from open-plan to two beautiful bedrooms,

and a roof no longer with some dodgy props.

This was originally sort of open-plan.

There was a sort of ceiling that was falling down here.

It was one room, we created a sort of single and a double.

We moved a window to help make the single room.

We opened up to sort of expose the beams.

The old floor, we used elsewhere.

I think this was all covered in lime, which we took off,

and left the brickwork.

Trying to keep as much of the old part of the house still on show.

I'm very pleased with it. I think I've done a good job.

It makes a great open space and master bedroom.

Love that led lined stained-glass, and seasoned developer John

has thought to introduce a modern touch outside.

Car parking out the front was slightly marginal. I spoke to

the neighbour, and they very kindly sold me a bit of their garden.

Dug out the bank and put in a parking space, and then bricked it.

And it gives a sort of fully functioning parking space,

which is quite useful.

But renovating the period properties John loves isn't cheap,

and this is Grade II listed.

Did he go over his maximum £90,000 budget?

I have spent 190,000.

15 - 17,000 of that was on the car parking space.

About 8,000 on council tax, 3,000 in insurance, and on the extension.

So, a bit more than I budgeted.

Yikes, it is indeed!

That brings John's total spend to 305,500.

Now, when we saw it nearly eight years ago, the ceiling price

was around 185,000, which would mean a huge loss.

So, let's hope time will be his friend here, and show a significant

growth in the market. So, why did it take so long?

A few months after I bought this, another property became available.

My wife is a farmer,

and an old farm cottage got vacated, and it was sort of closer to home.

That was quite a lot of work.

More than here. That took two and a half years.

And then I sort of decided about a year and a half ago that I wanted to

sort of stop, and so this was the last house that I completed.

And what a swansong for the development career this is.

Well done, John.

Unsurprisingly, John doesn't want to part with this place.

I mean, who would?

So, he's decided to let it out and have secure tenants.

So, to find out if he's getting the right rental amount, and to have

other people fawn over this property as much as I have,

we called in two local estate agents.

I think they've done a beautiful job renovating it.

Retaining the right amount of character features.

In fact, it's oozing character features,

which tenants and buyers will fall in love with.

But at the same time, it provides those sort of modern comforts

that people expect from a refurbished property.

It's a beautiful property, stunning renovation job.

The kitchen is fabulous.

The stripped wood floors are certainly a very plus factor.

The cottage has got parking, which is again very, very useful.

And we obviously have a south facing rear aspect.

The agents think it could sell for a top figure of 280,000,

which against John's spend of just over 305,000,

would mean a loss of £25,000, which is why the rental figure is crucial.

The rental that could be achieved on this is something around

£800 per calendar month.

If we were going to market the property to let,

then we would advise a price of £850 per calendar month.

850 is what I'm getting tomorrow, so the tenant is starting,

I am pleased with that. 850 is a good rent.

It gives John just over a 3% yield but let's be honest -

nearly eight years in the making, this wasn't about money.

It was John's last hurrah to his love of period properties.

Surely being this passionate about restorations,

he's got another one in him?

Well, I think with the sort of tax changes,

it's harder to do this kind of thing.

I'm going to have a rest for a bit.

I probably will get tempted back in at some point.

I like my period houses, so if I find something I really like,

I will probably get involved again, but not for probably a year or so.

In the West Midlands is the city of Wolverhampton,

but its name has got nothing to do with wolves as in the animal.

It's derived from Wulfrun, who founded it in 985.

Since then, Wolverhampton has been at the cutting edge of many

industrial changes, from the 14th century wool industry

to the current aerospace age.

I'm in Whitmore Reans in the north-west of the city centre.

Well, £20,000 to £25,000 as a guide price for a three-bedroomed

end terrace is pretty low by anybody's standards.

So there must be a catch.

Not in a very good state.

In fact, so bad has this place been fire damaged,

we can't actually go in.

# I hear you knocking

# But you can't come in... #

OK, so, what shall we do now, then?

# I hear you knocking

# Go back where you been... #

Hmm... Cup of tea, anyone?

What's that? Go round the side? Oh, all right, then.

Clearly, when it comes to assessing whether or not you should

take this project on,

properties like this, you just have to assume the worst, I guess.

Possibly a structural engineer could help you with the exterior of the

building, but you're looking at some interesting options here,

aren't you? Either try and do up what's there or knock it down

and start again, perhaps.

A new build in this place... I don't know.

Either way, it's probably not a project for a first timer.

From a safe distance,

it's easy to see that this is essentially just a shell.

It's suffered vandalism and fire and water damage.

I'm thinking knocking down and starting again -

that's an option for this one. But then, there's this.

So, just behind the property is this building here,

but obviously used as a garage or storage.

Well, there's the thing, you see -

because recently the planning regulations have changed,

which means it's a given that you would be allowed to convert this to

residential, so suddenly, you've got the property there, you've got this,

with a reasonable access to it that you could convert it into a

separate dwelling, that guide price is sounding pretty good to me.

So, with a new possibility on the horizon,

I'm sort of thinking differently.

Let's regroup - What have we actually got?

Well, the auction house isn't entirely certain because of

access issues, but they think it's a two reception, three bed house.

And then, of course, there's this garage workshop.

As I said earlier, it has, and is still suffering,

from ongoing vandalism, which can be a nuisance and is very disheartening

for neighbours in the local community.

Possession was taken over by their local council,

who are now selling it.

However, there are a few caveats attached to that sale,

one of which is that whoever buys it exchanges, pays 10%,

but then doesn't complete on the purchase until all the work to get

this back into habitable condition has taken place,

and there's a limit, a time limit of doing that, of 12 months.

You buy it, you do it up, and then you pay the rest of your money.

Interesting. Again, it's one of those things,

it's fine as long as you know about it,

but you need to know about it before you buy it.

Someone in the know about this property is an agent from

the auction house which sold this lot, guided at £20,000 to £25,000.

So, what can he tell us about this location?

For a number of years, it's been a somewhat downtrodden area.

However, the local authorities have modernised a lot of the properties,

and it's gone through a bit of a renaissance.

Well, whether the same can be done for this house is

up for exploration, but first, is demolishing a better option?

It might be a better option to demolish the whole thing.

That would of course entail building up a party wall for the one that

you're coming away from, and then getting planning permission

to maybe build a pair of semis in place of the one house.

The agent thinks it might be 150 grand plus demolition costs to build

two semis here. He thinks they might sell for around £100,000 each,

so not a huge amount of room for profit.

What if they were to do up the existing structure?

If they were to renovate the property itself, I would imagine

that they would be likely to achieve in the region of 115, £110,000.

Something like that. But the problem is going to be

how much it's going to cost. It's in such a state.

The only thing they are going to walk away with is probably the walls

and to be quite honest, looking at them,

I would imagine that they'd be very dubious as well.

Well, at first glance,

you probably wouldn't touch this auction lot with a barge pole.

However, think about it a bit more, and suddenly...

You know what?

I think somebody will have spotted its potential

when it went under the hammer.

It's fair to say, if you look at the photograph, that it's in need of

a bit of renovation and a bit of refurbishment.

I am in receipt of a proxy bid.

So let's see if the room can beat the proxy bidder.

I'll start it on proxy at £20,000.

Can I have 25?

25, who is the first?

25? 30, is it?

30. 35. 35.

720, do you want 40?

-40.

-It seems a number of bidders saw the potential in this lot.

We rejoin the bidding at 90,000.

90. 95, is that?

95. 95.

Do you want to fill it up at 100, sir?

100. At 100.

You couldn't be further away, sir. At 100. 105, gentlemen?

No? Mr 267, at £100,000...

One, two, three...

The successful bidder tucked away at the back was Wayne,

who was bidding on behalf of his boss, Jim, who is a landlord,

whose company owns and runs over 100 rental properties.

OK, let's give up trying to see Wayne at the auction.

Ah, yes, that's better.

Now, Wayne went over his set budget of £80,000 for this

very demanding lot. So, will he be getting into trouble

for spending £100,000 on it? Let's find out.

-Wayne, good to meet you.

-Hiya, Martin, good to meet you.

Congratulations, sort of. Interesting this, really, isn't it?

On closer inspection, it is a bit outside our usual league.

When you say, "closer inspection,"

how much did you look at it before you bought it?

-We drove past.

-Oh.

So, is it better or worse than you thought?

Well, it's obviously a lot more derelict than we expected.

But we can work magics with all sorts of properties.

-What are you going to do to it?

-We are planning to turn it into a

five-bedroom HMO, so a shared house, communal lounge, communal kitchen.

And charge rents from maybe £80 a week,

and that is how it will generate its return, and that's why we're not

particularly worried about the starting price because we will

get the investment back in the form of rent.

Give people a decent standard of living inside an HMO,

-and you'll keep your tenants for a long time.

-For sure.

I'm sure the other people on the street will be delighted that

the house has finally come to some good use.

What do you know about its history?

From the auction pack, it apparently had been left to rack and ruin.

There had been a fire. The council had either taken over it through

compulsory purchase or just adverse possession, we're not too sure.

But we just keep an eye out for an opportunity

- we don't worry about what went before - and we step in.

Now, there is a caveat on the purchase that you have to do it up

-within 12 months, don't you?

-That's right, yeah.

And that was part of the attraction of buying it.

We only needed to pay 10% down, so £10,000 today.

Our normal build would probably be 12-14 weeks,

so we could have this in productive use in less than three months,

producing money, and then we have to pay the bill

in eight or nine months' time after that.

So, you know, it's a good opportunity.

Why do you think the price went such an astronomically large amount

-above the guide? Do you think the guide was unrealistic?

-Oh, yeah.

In this particular case, I estimate there was 1,000 people

at the auction, of which 600 people had bidders' paddles.

And when this property went above 50,000,

the collective gasp in the audience was practically, you know...

Raised the roof. People walked away in shock and horror.

So I think most of the people there were there from the guide price...

-Right.

-..and expecting to get it cheap.

So, yeah, unrealistic. And that's why we went a bit mad.

There was so much fever in the room to get their hands on the property.

And we thought, "Well, another £10,000, why not?"

When it's done up, then, how much do you think it'll be worth?

Well, we'll take it as... We work it on its investment value.

So if we have five en suite rooms, £80 per week,

that will be £400 per week income, £20,000 a year gross.

And then what our banks generally do is lend on the basis of a multiple

of that 20,000. And if they offer us eight times that,

it'll be worth £160,000 and therefore, it will repay all

our investment of the purchase price and the conversion costs.

You go about valuing in a very interesting way there.

-Yeah.

-What about comparable houses in the area?

Well, that's the strange thing about valuing HMOs is that, generally,

there won't be a comparable HMO.

And the way that the banks like to look at this sort of thing

is a business, and it's a fairly straightforward formula,

generally about seven or eight times the gross rent per year.

Right. Well, that's really interesting stuff.

Houses of multiple occupation are quite rightly strictly regulated

and licenced by the local authority.

And while they can be a lucrative investment,

they need to be compliant to ensure tenant safety.

Wayne will get some security on the site until his building team

are ready to start, and he hopes they will have five lettable rooms

in the three months he mentioned, and for a budget of 80,000.

And he's taken an optimistic view on the state of the building.

I've been inside. It's quite manky.

Yeah. There are better words for it, I'm sure.

No floorboards, no roof. You can see out,

at the sky. It's less work to strip down for our builders.

He may have seen inside,

but the thing he did miss on his drive-by viewings was the workshop,

so what's the plan for that?

Worst-case scenario, we will probably rent it out for storage.

£200 a week.

£10,000 a year.

Even if you said £100 a week,

it is £5,000 a year for doing absolutely nothing.

Congratulations. Good luck with it.

-Thank you very much.

-Can't wait to see the difference you make.

Yes. Thank you.

Well, it's interesting, isn't it?

Sometimes the most...

On the face of it, undesirable properties get the most interest in the auctions,

but there's probably a very good reason for that.

And certainly Wayne and his team have recognised the potential of

this property. What a change we will see, I'm sure,

when we return later in the show.

Well, buying at auction can be very straightforward but that's not

always the case when it comes to the renovation itself.

We've seen how one buyer got on, how about the other two?

Yes, will it be worth it?

Will it be worth all that hard work when they get those valuations?

Let's find out.

Back to South Wales and the town of Neath.

It was here we saw this end-terrace property.

This two bed house was guided at 40 grand-plus.

It looked a bit battered and bruised on the outside, and on the inside

it was very underwhelming.

Is that it?

Very small downstairs.

I wasn't exactly blown away and upstairs,

there was the old health hazard of mould,

along with a few holes here and there.

Another hole in the ceiling here.

There's got to be something going on above here and above the hole in the

hallway. Check the roof.

Not put off by the state of the semi - or was it a terrace -

were Mike and son Lloyd. Mike works a punishing schedule,

not only with his property portfolio but his day job as well,

or is it a night job?

A Railtrack welder.

OK, so you do that at night...

Travel, yeah... Travel around the country.

I'm working tonight, Southampton.

Son Lloyd also had a full-time job as a carpenter.

When do these two sleep?

50 grand he paid was five grand too much.

He hoped to pull it all back with a budget of eight grand and an amazing

timescale of four-five weeks.

Eight weeks later, we are back.

Wow! Relatively simple changes have transformed this pokey property into

a plush pad. New flooring,

lighting and a rejig of the kitchen area has proved really effective.

Upstairs, the bowed ceilings and the mould are a thing of the past,

with brand-new ceilings and an excellent paint job throughout.

The bathroom suite is now modern and contemporary, ideal for new tenants.

The back has been tidied up and there is also space for the extension,

if needed in the future.

Mike and son Lloyd have clearly been very busy but how has it been working

together?

Lloyd done quite a bit.

He done really well. It's the first time he's worked with me.

And to be honest he done a lot more than I did,

to be honest with you. He done really well.

I did a lot of the work in here, most of the general work.

Everything you can see basically is a lot of my work.

But I did a lot more work than just carpentry.

I done a bit of plumbing as well.

And stuff like that. And just anything.

All over, everything.

Plumbing is not my strongest point.

So I had quite a few leaks and I actually hooked the toilet up

to the hot water, so I was sent to change that.

# Sons and daughters

# Don't fall in

# In hot water... #

Whoa, whoa, whoa.

Talk about hot flush?

Seriously, though, Lloyd has really enjoyed this project.

But do the sums add up for Dad?

It's about £250 over.

I think it's come in at 8,250.

But I'm quite happy with that.

It's probably the tenth property that I've done.

But it's knowing where to buy the right bits and pieces and internet

is a great option if you want to buy things.

And get them delivered. It takes a bit longer to get them, you know,

in your hands, get them delivered. But you do save quite a bit of money.

Of course, father-and-son team did have some help from Mike's usual squad

but they pretty much hit the timescale.

Well, in a roundabout way.

If you add it up, it works out about five weeks, really.

Some of the workforce weren't showing up. Like, Monday mornings,

it was hard to get some of them in on a Monday morning, after the weekend.

But I suppose it's worked out as five weeks, really, but six weeks overall.

So, the job came in pretty much on budget and on time.

Very impressive.

But how has it been for Lloyd working with his dad?

Yeah, it was good.

We didn't argue as much as I thought we would.

But we got on great as well. It was good.

So, smiles all round.

But with a total investment of 58,250,

will they both be smiling after two local estate agents cast their

critical eye over their project?

On first inspection, the property is well presented.

I think the owner has done

a good job refurbishing it to a satisfactory standard.

I like the way that the owner has opened up the sort of living

and kitchen area. It provides a lot more light and it's a lot more

presentable and it will probably appeal to both buyers and potential renters.

The standard of finish is very good.

I'm quite impressed with it.

I see, obviously, quite a lot of properties

in the nature of my work and he's done a nice job on this one.

Well, the agents seem impressed.

But what about the valuations?

Sales first, please.

If the property was placed on the open market,

it is in our opinion that the property is likely to realise

a value in the region of £75,000.

So, with the agents agreeing that would mean a pre-tax profit of £16,750.

What do the boys think of that?

That's really good, yeah. I thought it would be a little bit lower, to be honest with you.

So... 75 would be great.

So, that five grand overspend at the auction is forgotten.

But what about the rental valuations?

If the property was placed on the market to let,

it is in our opinion that the property is likely to achieve

a rental figure in the region of £425 per calendar month.

Rental, I would think it would be very popular, very sought-after.

Probably put it out at £495 per calendar month.

And he would probably achieve close to that.

I think 495 is a bit much, I suppose, for this area.

But 425, that is what I was thinking.

Well, if they do achieve £425 per calendar month,

that would make a decent yield of 8%.

So, with their first project together a success,

Mike and Lloyd are keen to continue but there's a couple of things they

have to iron out first.

Having my dad as a boss is different, yeah.

-But you can get away with a lot as well.

-No.

We returned to Wolverhampton in the West Midlands.

This auction lot was so badly fire-damaged, we couldn't go in.

But with a lot of space and a large garage at the back,

it felt like a good deal for 20-£25,000.

That guide price is sounding pretty good to me.

# You get danger money

# Danger money, danger money... #

But it wasn't just the danger the property presented.

The purchase came with a number of caveats from the local council.

One of which is that whoever buys it exchanges, pays 10%,

but then doesn't complete on the purchase until all the work

to get this back into habitable condition has taken place.

And there's a limit, a time limit of doing that of 12 months.

# You know a man's gotta do what a man's gotta do... #

90 right at the back.

In a crowded auction, Wayne bought the property on behalf of his boss,

Jim, paying 100 grand, four times the top end of the guide price.

The company had 100 properties and planned to turn this into a five-bed

HMO, while using the caveats to their advantage.

That was part of the attraction of buying it.

We only needed to pay 10% down.

So £10,000 today.

Our normal build would probably be 12-14 weeks.

So we could have this in productive use in less than three months,

producing money, and then we have to pay the bill

in eight or nine months' time after that.

So it looked like the relaxed and optimistically minded Wayne

was confident that this place would be put right in just 16 weeks

on a budget of £80,000, and the tenants would be in within a year.

It's been longer than that!

In fact, it's been 15 months and while the outside is clearly done,

what's it like inside?

From near-derelict to HMO-perfect.

And the best news is they've managed an en-suite in every room.

# Super-duper... #

And wait, there's even better news.

He managed six rooms instead of the planned five.

# The fantastic six... #

But it also took 15 months, so what happened?

Has it impacted that caveat with the council?

Company owner Jim has come along to explain.

There's always challenges when you convert a building.

Rarely do you finish on time or on budget.

And with this one,

the state of the building was far worse than we ever expected,

so we had problems with stabilising the building.

We found there was a well at the back,

so the building control were very keen to ensure we got that secured.

The work had to be done within 12 months but we ran into lots of problems,

so it's taken us much longer,

so we approached the council and they have been very helpful.

They have extended the period.

They are keen to get this property into useful use.

And they have given us an extension.

Thank goodness.

But despite the problems, Jim's team has exceeded expectations.

When we do building work, I tend to leave it to the builders.

I don't use architects or designers.

As they started on the job,

they realised they could get six rooms out of the property,

mainly because they built an extension at the back of the property.

We have made this a little bit better, we made them en-suite.

People prefer to have their own bathrooms.

They don't want to share.

So that has made things a little bit better for us.

That extension, created under permitted development,

has pushed the budget up from 80 grand to 100 and Jim,

who knows a thing or two about HMOs by now,

knows that such a set-up requires a lot of additional work inside.

When you create an HMO,

there's a lot more that the councils like to see in the properties.

They are very keen on making sure there is adequate fire protection,

so you need to have a fire alarm system.

They want to see fire doors.

They like to see emergency lighting.

So it does add considerably to the cost if you convert a building,

but if you do it at the design stage,

it doesn't add that much to the building costs.

Worth checking with your local council about HMOs,

as each have different requirements and regulations.

One bonus is the garage at the back.

Jim is exploring the option of knocking it down

and building a bungalow on it.

That's one for the future, I think.

But we are interested in the now.

Overtime and over-budget, can Jim and the company make a profit

having spent over £200,000 here?

We called in two local property experts to give their thoughts and

valuations, including the agent who saw the lot before the renovation.

This is the second time that I have visited the property.

The first time was one that

we just poked our head through the front door

to have a look. There was nothing but the four walls.

And I must admit the vendor has made an extremely good job of modernising

the place and kitting it out with six apartments for letting.

The standard of finish is very good.

I expect that to appeal to anybody

that is looking to rent accommodation in the local area.

So, what kind of monthly rent could Jim expect for the building

if it were fully let?

If the property was fully let,

then I would envisage an income

in the region of £2,700 per calendar month.

With full occupancy,

the monthly income would be in the region of £2,700 per calendar month.

£2,700 a month is absolutely right.

I think that would be, if it was fully let,

we would be able to get that.

And with such a good-quality property, I wouldn't be surprised

if we let it very quickly and we don't have too many voids on the property.

Against that 200 grand spent, a fully let HMO,

£2,700 per calendar month gives Jim a HM-mungus 16% yield.

See what I did there? With over 100 properties under their belts, Jim,

Wayne and the team have become dab hands at the renovation and HMO game.

More to come, Jim?

Very privileged in being able to carry on doing what I like doing,

and I'm doing what I like doing, it's bringing derelict properties back into use.

I consider myself very lucky and I will carry on doing it for as long as I can.

Well, as you can see, property projects don't always turn out as you expect.

But we'll have lots more to watch unfold.

Yes, join us for more auction action and tremendous transformations here

on Homes Under The Hammer next time.

-See you.

-Goodbye.