Why the right advice can be worth its weight in gold
We purchased a prime trophy asset in Portland Place in W1 next to the Langham Hotel, just north of Oxford Street. The property consists of 13,000 sq. ft. and has a grade two star listing. I have been told this is the equivalent of Buckingham Palace in terms of listing.
It was therefore essential to select the right architect to tackle this project. It is always best to go by recommendations, and so I harassed a good building firm who have been in the game for over 40 years and deal in this location and this level of buildings. After several phone calls and chasing I finally managed to get a contact.
I assumed half the work had already been done purely via the recommendation; I met the gentleman in a coffee shop in order to understand his background and experience. He had been involved in some large projects in Mayfair digging out basements and sub basements and I was talking to the principal who will be dealing with the project from the outset and all the way through to completion. He also had experience of dealing with the listed buildings.
I got a quote from him for the planning side, which was around £15k. I was happy with the selection, he had the experience, it came through recommendation, and I had met the man who would be doing the job all the way through to completion.
A good selection – or so I thought. However our in-house project manager wasn’t so sure. His suspicions were aroused by the small fee relative to the building and the amount of work involved.
He had a phone conversation with the architect and asked how he planned to submit the application for the property, online was the answer back, in short he had no connections in the council or rapport with anyone there. When our man pressed whether he had any experience dealing specifically with grade two star listed buildings the answer was a negative.
To be frank I never even thought to even ask these questions, hence there’s no way I would have got these answers.
Our project manager recommended another firm of architects whose fee just for the planning was £125,000. We invited them to come over and present to us and make the case why they should be selected. This firm clearly was on another level, they came equipped with plans already drawn up and aerial pictures of the property; they had several dealings specifically with these types of buildings, and they knew the right strategy to get planning.
The key to this was in the research and ground work for the building prior to application. The team they had in-house ensured unnecessary time was not wasted in appointing other experts outside who may not necessarily give the same attention.
What impressed me most was how they made use of the internal space. There is a huge winding staircase and a grand entrance, these are no doubt listed and therefore untouchable, so how to make a scheme of flats without losing this square footage?
The building is 13,000 sq. ft. but the internal area will be roughly 9,000 sq. ft. this is the area you can actually sell. Hence there was a lot of wastage going into communal space which we cannot sell. We had resigned ourselves to this space being lost though it would add to the grandeur of the entrance to the flats it would not be a direct benefit.
The architect’s rough initial scheme showed how we could incorporate this entrance and stairs into one of the flats by making it larger than all of the others and create a separate entrance for access to the other flats, thereby integrating another 1,000 sq. ft. from communal space and adding to the sq. ft. which can actually be sold. At resells of £3,000 per sq. ft. this adds £3m to our resell price. Needless to say we were sold on appointing these architects. However, being Indians there was no way we were not going to bargain on the fees. We proposed £75,000 and dangled the carrot of more business in the future as we were going to launch a fund soon and they would be on our team, then agreed to settle on £95,000. We promptly agreed and signed up.
I nearly missed a trick here. I’m sure our first choice was competent, and would have been good, but good wouldn’t have been good enough. When dealing with these levels it needs to be the best. And perhaps 85% of the work is standard and could have been done by any competent architect but it is the other 15% which would have made the difference.
It is for this reason we insist on using component and expensive solicitors for our conveyancing. Much of the time the work admittedly can be done cheaper by someone outside of London, but when you get stuck on a complex issue you will appreciate you have solid expertise behind you and someone who will talk to you on the other end of a phone.
This was how I first came across the multiple dwelling relief which a Jewish lawyer pointed out to us when we were purchasing a freehold block of three flats. From this one piece of advice he managed to save us £21,000. We were purchasing a freehold block of flats for £700k which without the flats would attract a stamp duty of 4% at that time, however with the flats we would only pay 1% as you only pay on the average value, meaning £700,000 divided by three, subject to a minimum of 1%. And from this one piece of advice we were able to save our clients even more in subsequent transactions. Many lawyers did not know this relief even existed.
The Real Deal
St John’s Wood, London Purchase Price: £3.3m
- A large block of four flats on a beautiful street
- Two gardens
- Planning in place to convert into one house and to create a new mansard floor
- After extension the area will be around 3,350 sq. ft.
- Scope of adding another 200 sq. ft. area by rear extension
- Located within the popular and fashionable residential area of St John’s Wood
- We expect value of this property after conversion to be around £4.5m
Call us now to secure this deal!
Sow & Reap
A Property Investment Company
!Tips of the Week
The mantra for property is always Location, Location, Location! Property in a good location will attract quality tenants and strong capital growth
Ex Local flats are excellent for income, with low service charges and long leases they generally won’t eat into your rent unlike many other flats