This is a property we purchased in September last year. It was a particularly sad situation for the owner. The property was trashed by a former tenant and then suffered from significant water ingress from a failed roof (this is a top floor flat). It had remained like this for approximately 3 years because the owner couldn’t face dealing with it but also because it had a short lease and an outstanding mortgage on it. The sale price achieved at auction or cash only sale on the open market would have been unlikely to have been sufficient to clear the outstanding mortgage. We were able to offer a solution whereby the property could be sold at full market value and made mortgageable.
We structured this purchase as follows:
- The owner had owned the property for in excess of two years so had a right to extend the Lease due to length of ownership. The Freeholder wasn’t particularly aggressive and agreed to a Lease extension without the need to issue a Section 42 notice. We guided the owner through a voluntary lease extension process and how to negotiate a Lease extension with the Freeholder. We even drafted the various emails to be exchanged with the Freeholder and managed to negotiate a fairly sizeable discount on the original lease extension premium offered by the Freeholder.
- The owner didn’t have any funds for the lease extension but we arranged for this to be extended on completion of the sale to us so that we were buying with an extended lease.
- We arranged for all of the works to be carried out so that the property was completely refurbished to a high standard prior to the sale of the property to us. We arranged with the builder that their bill for the costs of works would be paid by the owner once the sale had completed. This meant that the owner didn’t need to find the funds (they didn’t have them) to pay for the refurbishment works.
- We purchased the property for £110,000.00 with a mortgage fixed for 5 years at just over 3%. We did put a 25% deposit into the transaction so money was left in the deal but we’re happy with that, we have a flat with a very long lease that achieves £795.00 per calendar month (on an unfurnished basis) which is about 15 per cent above market average for flats in the block, thanks as always to our finish.
- The refurbishment work was carried out by our chosen contractor (Mr McCutchion of McCutchion Davis properties ?) so we know that everything has been done well and we have another let and forget property for the portfolio for the next 20 plus years. It’s very well located near University Hospital in Coventry and is also close to the main motorway links in Coventry. We were also able to lift the property from an EPC rating of F (?) to C which is often difficult with flats and is of course important given the government’s intended changes to the minimum EPC ratings that must be achieved in order to allow a property to be let.
More updates on our ongoing projects to follow!
Remember, Buy to let is dead, long live buy to let!!!!
