Want to buy a wreck and do it up?

How paying rock bottom prices for project properties is a thing of the past

• Auctions are a great place to source renovation projects
• Do your research first and take someone with you who can spot work that needs to be done

You would think decrepit paintwork, ancient fittings and a wild garden would put some people off. Not at all. This sort of home is attracting fevered interest from buyers.

Delightfully delapidated: Buyers are increasingly attracted to homes that need fixing up

While taking on a wreck is not for everyone, it can be the answer for those who want to buy in areas where the premium for modernised houses is beyond their reach.

But such is the popularity of wrecks, agents report that sealed bids are becoming the norm.

Those downsizing will find that a property in the same area half the size isn't half the price. First-time buyers who want to live in fashionable areas with easy access to work who can't afford oven-ready homes can consider buying a project.

Young families might be willing to take on something needing work in an otherwise unaffordable area to be in the right catchment area for a good school.

With more buyers bidding for homes in desperate need of modernisation, paying rock bottom prices for a project property is a thing of the past.

'Renovation projects are proving very popular,' says Katie Baldwin, of Savills in Henley-on-Thames. 'We frequently go to sealed bids on these properties as buyers can create the home they have always wanted.

'They know they will get their money back eventually as, with the right renovations, they can add huge value.'

Needs work: Grade II listed Rothwell House in the Lincolnshire Wolds is for sale with Savills for £595,000

Tom Goodley, of Strutt & Parker in Norwich, agrees. 'We sold a wreck in south Norfolk for £650,000 that could achieve well over £1 million if the renovations, which may cost upwards of £250,000, are completed.'

Baldwin recalls a home in Henley-on-Thames with a guide price of £225,000 that had 61 viewings and 22 offers, and sold for £276,000.

In London, the competition is particularly fierce. Knight Frank sold a property in Chelsea in need of complete modernisation. The guide price was £2.85 million.

The property had 104 viewings, leading to multiple offers, and it was eventually sold for £3.4 million.

Work out a budget from the outset. There is money to be saved on buying a wreck compared with the purchase price of a finished home.

Bargain Bath: A two-bedroom ground floor apartment on Landsdown Crescent is for sale with Hamptons for £575,000

This is particularly so for those with deeper pockets looking at the £1 million-plus market as at £925,000 and beyond, stamp duty rates soar. Buy below that and the saving on stamp duty can be put towards renovations.

Julian Bryson, from unmodernised.com, says: 'Get quotations on the works prior to exchange of contracts, and don't forget to factor in 20 per cent VAT plus a 20 per cent contingency in all of your calculations.'

Bryson warns that the recent fall in the value of the pound could make renovations more expensive. 'The cost of imported materials including sanitaryware, tiling, kitchen and bathroom appliances and designer furniture will increase as a result of the weak pound.'

Experts report that the hottest properties - and those most likely to sell for more than the asking price - are those where value can be added with reconfigurations and extensions.

Chris Romer-Lee, of Studio Octopi, an architect firm, says: 'If you want to change the square footage, do your homework. Don't believe everything you read in the particulars. Find out the planning history for the property as well as similar properties in the area.'

Barn-storming: This five-bedroom farmhouse south of Holt in Norfolk has an adjoining barn and is for sale with Strutt and Parker for £700,000

Auctions are a great place to source renovation projects. Properties in desperate need of work are flying off the shelves for more than the guide price.

A Savills auction this month in London saw unmodernised houses far exceeding guide prices. A three-bedroom house in Rickmansworth, Hertfordshire, with a guide price of £300,000 sold for £391,000, while the hammer went down at £295,000 for a three-bedroom property in Newbury with a guide of £150,000.

It's important to prepare before you set foot in an auction room. Take someone with you who can spot work that needs to be done.

And remember, auctions require a 10 per cent deposit on the day and you are legally bound to buy the property. You'll usually have to pay within 28 days or lose the deposit.

The Government added a 3 per cent stamp duty charge to investment properties, so there might be fewer developers bidding in the auction room.

 

source http://blog.evolutionproperties.co.uk/2016/11/20/want-to-buy-a-wreck-and-do-it-up/