I viewed a couple of freehold blocks yesterday, they were diagonally on the other side of London from the North West.
One of them is more something which would suit an investor to park their funds, medium to long term. It’s a commercial with residential uppers, which requires full refurbishment. You could ascertain that the previous occupant was not only a heavy smoker but also an owner of a cat.
This property comes with the benefit of a tenant on the commercial ground floor and basement. They are in the kind of trade which requires an in person visit, and therefore cannot be replaced by the likes of Amazon. One of the few businesses which hopefully will not be going bust in years to come. Furthermore, it is run by an independent owner. There is a strong case and many live examples which would confirm why this is a more secure tenant than a corporate. In short, the corporates have the money and the in house expertise to duck and dive in order to get themselves out of lease obligations, including going into voluntary administration.
Therefore, this is a valuable tenant, which has both stability and longevity. The rent will be paid without any deductions, unlike a residential tenant where as the landlord you have to take care of all maintenance, void periods, agents fees etc for managing the let. Here you get the income straight into your account quarterly, without any hassle factor attached to it. This is something any landlord should consider, as there might be more dire times to come. The robustness of the tenant should be considered. The residential rentals for Central London have suffered during recent times, we have had properties drop by 30%; unsurprising when foreign visitors and students have declined massively. There are even reports of tenants moving in to the centre from the outskirts to take advantage of the rental sale. In contrast the outskirts of London have faired better, easy to see when you look at the tenants, typically they are builders, bus drivers, teachers etc.
The best way forward for this investment would be to do a quick refurb of the existing flat as is, and then rent it either as a 3 or 4 bedroom flat. You should be able to attract about £18K of income. Again, in order to be mindful of the residential rent it is worth getting a rent guarantee insurance on the tenancy.
When you have about £40K coming in from the commercial and the residential, you can then afford to take your time and work on the planning on the existing building and also a new build in the garden. The latter is not intuitively obvious, however, I cannot see why this would be disallowed, as this is a corner property and there is already access from the side street. A basement and ground floor unit would not affect any of the neighbours and therefore I expect there would be little contention.
Planning generally is best done in bite size chunks; you start with the easiest kills and then get increasingly more ambitious with your subsequent applications, which you can afford to do as you have the insurance of having bagged permissions already.
This freehold is in a brilliant location close to all amenities and in an area of London where there is still growth. It is available now and we are in the process of matching it to an investor.