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Raising the roof

7th October 2021

Only yesterday I went to see a small commercial property in a leafy upmarket area, just outside of London, which is described as commuter belt.  The idea being, you get to experience you’re in the country but can dip into London as and when you need to; you are not cut off from the action.  Having studied Mortality as a standalone subject, I know there are statistics which confirm a longer life expectancy when you live outside of urban areas and in the country side, this is reflected in lower life assurance premiums.  This is no wonder why pockets such as these are extremely popular, and therefore demand a premium on the property values.  

 

This is an empty well done up property marketed for circa £300K; originally for rentals but it has recently come up for sale.  It doesn’t appear the rental market is buoyant in this particular area, hence the reason for the sale.  

 

The property as is with a little adjustment and tweaking would easily convert to a one bedroom flat, valued at say £350K.  This can even be done post exchange, so that by the time completion comes you are no longer completing on a commercial property but on a residential one.  

 

Once this has been done it can be financed on a residential BTL basis at 75% LTV at reasonable rates of interest.  This would leave very minimal funds in the property, and the loan would be serviced by the rental income.  The ideal product would need to be a no penalty product for the reasons given below.  

 

This is not the end of the deal but just the first step into it.  There is a bigger game to be played with this deal.  The roof is a pitched roof with plenty of headroom.  Neighbouring properties have pushed through the roof with a mansard, therefore adding a large chunk of square footage to the property.  

 

On the surface this planning permission does not look contentious, and hopefully will come through without a hitch.  There is also further potential to extend to the rear, taking up some of the garden space.  

 

The next question to address is whether this property would lend itself to one residential dwelling or two flats.  Intuitively, I would say one dwelling, however, I’m not best placed to answer this with any authority.  

 

One would need to see which segment the local demand is coming from.  This question would be best answered by a getting a couple of local agents to give their opinion.  If it was central London, the answer would probably be flats, but here the demand for the area seems to be from family units. 

 

This is a small deal, with little down side but plenty of upside; if it whets your appetite why not give the office a call to find out more.  

Suresh Vagjiani

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