28th October 2017
A couple of weeks ago I mentioned a deal that we had agreed, which was a freehold pub in central London, Shepherd’s Bush in fact. Prior to this I wrote an article titled The Indians Are Coming, which was regarding the rising interest in UK property by Indians based in India, driven by the current geopolitical and economic landscape between the two countries.
The two articles have now been connected. The pub was presented to a group from India one afternoon last week, and the matter was placed in the lawyer’s hands there and then. The property was exchanged on the same day, at about 9pm. Kudos to the lawyers who worked hard to get this done on the same day. It demonstrates where there’s a will, there’s a way. Deals can be done very quickly when there is a focus. If you give lawyers too much string they will use it. The threat of other buyers at higher prices, ready to execute the deal, always helps to fine tune the will.
The planning team have been appointed and are in full flow to get this deal over the line in terms of planning.
We successfully completed a similar pub deal around the corner from this site. That pub was called The Underbrook, and was bought as a ‘going concern’ as it was a functioning pub when we purchased it. This means it did not attract VAT.
That deal was done at £1.25m and sold in just under nine months later for £1.75m. It went cheap looking back, but it allowed our client to move on to other deals.
This property we have just exchanged on, consists of 4,300 sq. ft., and it is not listed, which means it can be knocked down and rebuilt.
With a development site the square footage is less important than the listing of the building and the floor plate.
With a knock down and rebuild there are tax advantages, and you will get a better proportioned product to resell or rent.
Currently, we are exploring whether it is worth spending some money to do a quick internal refurb, so the property can be rented on a room by room basis whilst the planning is coming through. This should be allowed under the current planning the building has. This will turn the project into two phases, with both running in parallel from the start.
When you have an income coming in, you can afford to be a little more relaxed if the planning takes longer than expected, or requires further tweaks. An empty building not only doesn’t bring in income, it actually costs money, from insurance, security and council taxes etc. This is a drain, and the longer it takes the deeper the hole you’re digging.
The building was purchased for £1.75m which represents a purchase price of £405 per sq. ft., in an area where the square foot price floats around the £1,000 per sq. ft. mark. Shepherd’s Bush is a strong area, where property prices have increased by over 13% over the last year.
We are confident this project will yield a strong return for our investors.