A city based solicitor came to see me to pitch for some business. They gave the usual spiel on how good the firm is and how committed they are to conveyancing. I mentioned we have tested many firms and have only ended up being happy to work with two to three; and not because they’re the cheapest, on the contrary they charge through the teeth or at least attempt to.
The main issue with taking on new firms is the partner comes and does a good pitch and then when it comes to the actual transaction we are allocated some fresh just qualified conveyancing lawyer, whom we have to very often coach through the transaction, and too be frank it’s very annoying. This was a common problem we encountered when we started dealing with new firms. The partner assured me she was very much desk based and hands on with all the cases her firm undertook.
I explained to her that the other issue was that there was a real lack of expertise and knowledge with some of the firms we have interacted with. I then asked her a question: ‘if a case was put through where someone was purchasing a house for £1.1m which contained ten flats, what would the stamp duty be on this transaction?’ She asked ‘would this be on a freehold title?’, I replied ‘yes it would’. Her answer of 5% put the nail in the coffin of any possible future business.
When I told her this transaction would attract a stamp duty of only 1% she tried to dig herself out of the hole and replied that this was very interesting and many of her clients would find this information useful! Then claimed they always check the transaction by HMRC anyhow.
A poor come back and needless to say they won’t be getting any business.
A few weeks prior a client asked my advice on the purchase of a block of flats, I mentioned to him to make sure the lawyer charges only the 1% stamp duty and no higher, they emailed me to ask for firm confirmation this was the case as their lawyers hadn’t heard of this. So I supplied it from the HMRC website. It is frightening how many lawyers are unaware of this and are overpaying stamp duty on behalf of their clients.
On another topic we have recently exchanged on a beautiful building on Portland Place, this is a road which runs off Regent Street and is in very close proximity to Langham Hotel. The property is currently used as an office building though according to the lease it can be used as residential too. The building is a long lease property which has over 900 years on the lease, it consists of 13,000 sq. ft., and is Grade two listed externally and internally. This road is also home to both the Russian and Chinese Embassies. Notably the Chinese Embassy always has a protester for the persecuted Falon Gong Movement doing their qigong practice opposite the embassy.
Recently Galliard Homes has sold off all of its new build flats for around £2,500 per sq. ft., probably the majority to overseas buyers.
The building has a lot of character with extremely high ceilings on a couple of floors. The pounds per sq. ft. doesn’t always do a building justice, as the heights are ignored as well as the other attractive features of which this building has many.
It would make an ideal embassy, office or house. With recent trade press articles of companies guzumping each other for office space this seems like it will attract a lot of attention if it hits the open market even as an office building without consideration of the development angle.
The property was acquired in a totally off market and discreet deal, it was offered through a private contact whom we have done a fair amount of business with previously.
Given our low buy in cost of £14.75m which equates to £1,134 a sq. ft. for this building and the prime location and grandeur of the building, it is anticipated those who have invested in this building, and the fund which is already 18% up since December 2013, will gain much from this deal.
Using this as a house is also an option, the original property was built as a house hence the lease already allows for this possibility. Planning will still be required from the council though.
The interesting angle for someone using this as a home will be the freehold of the property, if planning is granted by the council for a home after a two year period the leaseholder will have a right to purchase the freehold of the property. Given the already long length of the lease, it will not cost much more. The cost of the freehold is worked out partially on what the freeholder will lose as a consequence of giving up the freehold. The freeholder will lose the ground rents which get paid annually, they will also lose the premium due at the end of the lease period. In this case this will be a lump sum paid close to the end of the lease to renew the lease.
The present value of a string of ground rent payments and the lump sum at the end of the lease will be used to work out the cost of the freehold. Payment for the renewal will be almost negligible as it is almost 1000 years away. So in this scenario it will only be the present value of the ground rents which will carry the weight in deciding the cost of the freehold.
Incidentally our lawyer wanted to charge us £44k just for this transaction; I think he wanted to upgrade his car just from this one deal.
Served on a silver platter!!
Kensington, London, W14
Purchase Price: £2.1m
- An end of terrace three storey building
- Around 4,300 sq ft area
- Planning permission in place to convert into three 2 bedroom apartments with lower ground floor and ground floor as public house
- End value after works expected to be around £3.2m
Call us now to secure this deal!
Sow & Reap
A Investment Company
!Tips of the Week
Warren Buffett says: “Be fearful when others are greedy, and be greedy when others are fearful.” Right now the market is fearful, it’s the time to strike if you get the right deal.
Investing in bricks and mortar means the investment is real, hence it cannot simply disappear like non tangible investments such as stocks and shares.