Our fund is looking to resell a block of five flats in Earls Ct in Nevern Sq. The purchase price will be £6.05m, this equates to £1,300 per sq ft. The closest evidence we have of price is next door which is selling for £1,528 per sq ft. You cannot get a closer comparison. There is still a lot of juice left in the deal, furthermore prices are rising steeply.
This project will be a purchase and resell over the period of a year, to benefit from the price rise, which is occurring in this location.
If you’re itching to release your money sooner the other option is to refinance the property after a 6 month period. This will release most, if not all of your initial capital subject to valuation. Six months is the time imposed by lenders, where they will take the valuation of the property into consideration as opposed to the purchase price.
A long term hold is also an excellent option due to the regeneration in the local area the prices will be lifted naturally. We are looking at a steep rise in prices for the next couple of years. In Earls Court this will be compounded by the local regeneration going on in the area.
The property can also be split, and part sold and part kept.
The stamp duty payable on this transaction is not paid on the total purchase price. In the course of doing such transactions I have come across two lawyers, one of whom is a large firm who got this wrong. Naturally they both tried to save their reputations by wrapping their replies in diplomacy.
On one transaction they were about to charge £40,000 on a deal which only attracts a rate of 1%. This was for the purchase of a block of 10 flats in Surrey for £1.1m. The buyer was a seasoned investor but even then didn’t think to question the lawyer acting for him, as you would expect to trust your lawyer’s advice right?
It always pays to use professional firms and not to cheap out when it comes to good advice and service. This is not an Indian trait unfortunately. Generally Indians are happy to pay good money for a piece of gold or a Mercedes but they do not value the importance of paying for good advice.
The stamp duty is payable on the average amount calculated by dividing the purchase price by the number of flats. In this scenario it will be based on £1.21m, this will attract a stamp duty of 5% as opposed to 7%, which represents a saving of £121,000; not a small amount of money. Better to pay a few thousand more to get a good lawyer.
Earls Court has a colourful history. It used to be owned by a noble family called the De Veres for a period of 500 years. Though owned by them, it is doubtful it was ever visited by them. Instead it was governed from a court house. Hence the name Earls Court.
Since then it has had many illustrious people residing in the local area, such as Mahatma Gandhi who lived in 20 Baron Ct whilst studying to become a barrister at University College in 1888; and Marcus Garvey who lived at 53 Talgarth Rd from 1935 to 1940.
What’s more important than the history is the future of this area. Earls Ct has been designated as an opportunity area in the Mayor’s London plan. The intention is to develop this area in phases to minimise disruption to the residents.
The Earls Court Masterplan has been created by renowned architect Sir Terry Farrell and Partners. Farrells are considered to be the UK’s leading architect planners with offices in London, Hong Kong and Shanghai.
The plan proposes the transformation of the Earls Court Project Area into four new urban villages and a 21st century High Street, blending the spirit of the past with the best of tomorrow. The villages will include around 7,500 much needed new homes for people on a range of incomes and new work spaces and offices will generate thousands of new jobs.
The London Borough of Hammersmith & Fulham (LBHF) and The Royal Borough of Kensington & Chelsea (RBKC) formally granted outline planning permission for the Masterplan for the Earls Court Project on 14th November 2013.
The project will bring huge benefits to the surrounding area with an extensive retail high street, business and residential accommodation, healthcare and educational facilities.
The Earls Court Project Area spans 77 acres of land, and along with the homes and offices it will include tranquil public squares and gardens which will be a haven from the hustle and bustle of the city.
The property is situated on the eastern side of Nevern Square with direct views westward across the communal gardens.
The area is very well connected and is located at a point where Kensington, Chelsea and Fulham all meet, therefore providing great potential for value increases throughout the area. You are purchasing in the bulls eye of the regeneration plan.
The property benefits from excellent transport amenities with Earls Court Underground Station (Piccadilly, Circle and District lines) located approximately 300m to the south east and West Brompton Station located approximately 600m to the south (District Line and London Overground Trains). Road links are also good with the A4, a main arterial route into London from the west, accessible approximately 250m to the north west.
The shopping facilities on the Fulham Road, Kings Road, and Kensington High Street are all within easy reach, while Westfield Shopping Centre is located approximately 1.5 miles to the north west.
The property is an attractive mid-terrace Victorian block which extends to approximately 5,317 sq ft (GIA)/4,660 sq ft (NSA) and is set over lower ground, ground and 4 upper floors. The building has a red brick façade, timber sash fenestration and is set beneath a part slate mansard part flat roof.
5 self-contained apartments are arranged over lower ground to fourth floors.
At the time of sale three of the flats will be let on AST agreements, while two, which are currently owner occupied, will be provided with vacant possession.
The building is accessed via a main entrance leading from Nevern Square which provides access to a central stair core that serves all upper floors.
Each of the five flats benefit from the right to Royal Borough of Kensington & Chelsea residents parking permits. This is becoming a rarity as councils are reducing the number of permits they issue to reduce parking congestion in the area.
The property has a private garden to the rear, accessed from the ground and lower ground floor flats and a good size roof terrace from flat 3.
All of the flats have access to the 1.15 acre private garden which the property benefits from direct views across.
The building is presented in good order, but with potential to reconfigure, refurbish and possibly extend subject to the usual consents.
Earls Court, London, SW5
Purchase Price: £6.05m
- An attractive freehold building comprising of 5 self-contained apartments extending to 5,317 sq ft (GIA)/4,660 sq ft (NSA) of residential accommodation.
- Located on a prime garden square in Earls Court, with in the Royal Borough of Kensington and Chelsea, close to the Earls Court Regeneration Area.
- The building benefits from a private garden and roof terrace to the rear and access to the private 1.15 acre communal gardens
- This property is coming at around £1,300 per sq ft.
- Comparable properties on the market are priced at £1,500 per sq ft and above.
- Potential to reconfigure, refurbish and possibly extend the accommodation subject to the usual consents.
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Sow & Reap
A Property Investment Company
!Tips of the Week
Define the type of return you would like from property; for example there is no point going
for a high income property when you will be paying 50% tax on the income. It may be better to aim for capital gains instead and make use of your yearly capital gains allowance.
Look for properties which have a problem such as short lease, unknown tenancies etc. It’s rare a property deal will be given to you on a plate, often you need to work the deal.