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TBS in The Times – What you need to know before you buy a fixer-upper

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Knight Frank
London and Country specialist property buying agents
04 Dec 2020  |   Harry Gladwin

Wrecks in the country are having moment. Many people selling up in London looking for a slice of the good life are keen to secure a project that they can put their own stamp on.

Harry Gladwin, Head of TBS Cotswolds Region, says;

Half of the country house buyers I encounter would consider a wreck.

The advantages being;

  • Lower cost at the outset (and therefore lower SDLT etc).
  • An opportunity to create your dream, rather than inheriting someone else’s.
  • A chance to add value well beyond your expenditure. On this point, buyers 10 years ago would often talk about the rule of 3: £1m to buy a wreck, £1m to do it up and ultimately it’s worth £3m. With demand in the prime country postcodes, this figures are now unrealistic, with wrecks sitting in a few acres in the best locations likely to cost £2-3m, with another £2m to spend, although the end result is likely to be worth £5m+ at the end of the process.

In terms of what to look out for in a wreck purchase:

  • The obvious rules still apply ie road noise, public rights of way, encroaching development by third parties, all clearly have an impact on current and future demand and value.
  • Timing – most major projects take years rather than months to complete. With a planning system straining under surging demand and most staff working from home or furloughed, a planning consent will usually take at least 6 months to secure from start to finish and is many cases, can take far longer.
  • Ecology – an ecological report will be required for most projects and these are dependent on when bats etc are active / hibernating. This can easily result in a further 6 month delay depending on the time of year in which you buy.
  • Cost – it is very easy to under estimate what a project will cost to complete and getting a good grasp of this before making an offer is wise.
  • A selling agent is not there to advise buyers – their obligation is to look after their selling clients’ best interests, not to advise a buyer as to how challenging a ‘project’ might be, what it will cost and what it might be worth at the end of the process.

Wrecks are properties which most locals will be aware of, with many deals for such properties taking place off market. Local knowledge is often key.

In the Cotswolds, we rarely see such properties selling at auction, as private treaty is the norm, with these properties frequently ending up selling after best offers have been invited. In this situation it is very important to do your homework at the outset, carrying out a survey in some situations, taking planning / architectural advice and discussing with your broker before making an offer. If you have been active in the market for long enough, you might also have a good idea about who else you are bidding against and what their strengths and weaknesses are. You will also need to be entirely confident about the value range for a property and only then can you calculate what a property is worth to you. Once you have been through that process, you can feel confident in making an offer which you know is your best and final bid.

Many high street lenders are looking for straightforward houses. Properties with over an acre of land or complex issues will tend to fall out of mainstream lenders requirements. This can often mean a buyer, acting in good faith, can make an offer for a property which they have been told they can get finance on, only to find weeks later that it does not meet the lender’s parameters. Getting the right broker on-board at the outset is again vital, as there are some properties which only a small number of lenders will entertain, albeit very few are genuinely unmortgageable.

We have helped many buyers to acquire properties which require major renovation / rebuilding projects. These opportunities are increasingly rare and I think it’s true to say bargains almost never exist, but with the right advice and a bit of luck, these properties can offer an opportunity to create a house which will make a fantastic home, fit for many years of modern living and perhaps a decent profit when you come to sell.

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