Nicholas Pine's Property Extra

15 February 2010

In the London area, local authorities are continually selling off council owned properties when they become vacant. These are almost always already converted into self-contained flats but need improvement. Most inner-London authorities continually sell properties and I suggest you look at the following auctioneers: McHugh and Co, Allsops, Savills, Barnard Marcus, Clive Emson, Harman Healy and Athawes Son & Co.
 
For example, in McHugh and Co's sale on 23 February, lot 34 is 11, Bridge Court, 340 Lea Bridge Road, Leyton, E10 7JS. This is an ex-local authority mansion flat over a shop, 99-year lease from 1984 and with a guide price of £115,000. This two-bedroomed flat is let on an AST of £9000 a year. Therefore the yield is approximately 9% with virtually no maintenance costs. 
 
Of course the most money is to be made from more complex deals. In the same catalogue, Lot 35 is 662, Holloway Road, N19 3NU, where two adjoining three storey buildings comprise shops on the ground floor and three-storey upper parts. One upper part has been sold off on a long lease and so is now a ground rent, but the other half has planning permission for a two-storey extension to form a total of four flats. The price guide is £580,000 and in Islington, this represents good value in a good letting area.The McHugh catalogue is full of such deals and by far the majority of buyers are dealers, builders and developers. So definitely worth a look through.
 
Many ex-council flats in tower blocks are also for sale. In Allsops Residential Auction on 17 and 22 February, lots 81 and 82 are two similar blocks of flats in Camberwell where two-bedroomed flats are guided at £80,000 - £90,000 each. These should return a 10% yield.  However, you must check carefully with other residents as to what condition a tower block is in. Many blocks have defects and expensive repairs are looming. So do not only rely on your solicitor but also ask other occupiers about the history of the block you might be buying.
 
If you like gambling, how about Lot 42 in Allsops Residential sale. At Horton, near Epsom, is a five story stone built former water tower with planning consent for conversion to provide four two-bedroomed maisonettes. The guide price is only £100,000 and it could be the bargain of the year. However, it does require a 13 storey attached lift and staircase and four storey extension. Make sure you do your costing accurately but this is a very expensive area and there could well be a healthy profit. There are numerous sites containing lock up garages which are sold with our without planning permission for residential redevelopment. Obviously the bargains are ones without planning permission and you should look out for these.  There is a block in Lower Feltham, Middlesex, Lot 143, to be offered without reserve and the site is almost ¼ acre and fronts onto Chertsey Road. Whoever buys this will almost certainly redevelop it profitably.
 
There is another bargain in Bognor Regis. In Allsops' February Sale, Lot 166 is a 3 storey semi-detached house which has been converted into two flats, one of which is occupied. The auctioneer states that the work to convert one large flat into two small flats had not been approved by the local authority. The owners mortgagee has foreclosed and the building is being sold be the receiver and is guided at only £75,000. The flats are worth more than that each so there is definitely a good profit here, however, Bognor Regis used to be home to 15,000 Poles, half of whom have now returned home and there are dozens of empty properties to let which are currently un-let. So until these are occupied the market is bad, however, the time to buy is at times like this as long as you only pay the correct market price.
 
Nicholas Pine

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