20th October 2018
Last week I wrote about a deal we were expecting to close. This duly exchanged yesterday, albeit at a higher price than we were anticipating to purchase it at.
The client in this case took it upon himself to go to the auction and bid. Dangerous, as I know from previous experience that he doesn’t let deals go, irrespective of how high the price goes. This is the equivalent of letting a person with a gambling addiction into a casino. There should be an injunction placed on such people.
But go he did, and a fellow bidder helped to drive the price up, to £705K. Way above what I would have wanted my client to pay. There are many unknowns with the property, as there have been no internal viewings allowed due to the unsafe works carried out in the property.
My local investigations revealed that the previous owner decided to work on the property without taking permissions, e.g. scaffolding went up illegally, and was taken down in three days due to action from the council. He also managed to annoy all the neighbours in the process with various other bits of work.
This means any work we do we will need to be extra mindful of the neighbours’ sentiments. The property is in a conservation area, where judging from first sight there are restrictions from doing any kind of extensions. This is apparent from looking at the street, no one has done any work. If it was allowed, the owners would have extended their properties.
This is good in one sense, as it preserves the character of the area. This street is a quaint street which leads up to the prestigious Harrow Boys School.
The aim for this property is to utilise the concessions around the regulations for HMOs and focus on yield. Basically, turn this into a cash cow and hold the asset. This is the plan, we will see how it transpires once we start the project.
We have just closed another smaller deal. This one is interesting. The property is very close to a station, only a couple of minutes away. In line with the stream of deals we have been doing, it is a probate deal, where the grant of probate was granted in a British Colony, and then was transferred over to the UK.
We have knowledge that despite the grant of probate, there are other parties who wish to put a claim on the asset. For this reason the deal has had to be structured in a way which provides some measure of safety. The property will be exchanged for only £1 and completed in an SPV, Special Purpose Vehicle, set up for this purpose. This then can be folded, should the unforeseen happen between exchange and completion.
This property is worth £325K. As this is towards the bottom end of the market we are confident of being able to sell this on quickly without too much of an issue. If not, its vicinity to the station will ensure it is never without a tenant.