A recent news story involving the sale of three London lock ups has shown Simon Morris that investors are snapping up ‘Cinderella’ properties, so they can sell them on to London property developers.
London boasts one of the most profitable housing markets in the UK. According to the BBC, new figures from the Land Registry show the average London house price rose 1.7% in the year to the end of August 2015. It’s still possible to buy a London house for under £500,000, but it’s getting harder.
So obviously it’s expensive to buy a house in the UK capital. But it’s becoming increasingly clear that even ‘Cinderella’ properties, those properties residential property developers buy specifically to turn into houses, can provide great returns for investors. As an example, back in 2013 the Daily Mail reported that two garages in Highgate, London, had been sold for over £250,000.
Turning a profit
News has now come to light of a similar deal involving three locks which are located near Wandsworth Common, in South West London. The Western Daily Press wrote that the lock ups were put up for auction in 2014 with a guide price of roughly £130,000. Unbelievably, they were eventually sold for £500,000; despite the fact that they were put on the market without planning permission.
It has now emerged that the buyer has received the planning permission needed to transform the site into a two-bedroom ‘Grand-design’ type home, but won’t be doing the work themselves. They’ve put the site back on the market, this time for £675,000. Estimates suggest that if these lock ups are sold for their asking price, they’ll have earned the investor £3,000 per week in profit.
Expert Henry Pryor commented on the rise of these ‘Cinderella’ properties. He said: “Until recently you only had to own a property to make money – or so it seemed. Now, with transaction costs and a slower market it’s harder. It is possible to make money in property in 2015 but you have to add value.
“Change the market for a property by getting planning consent for change of use. Refurbish a tired and unloved property to appeal to a different audience or simply upgrade accommodation designed for the Victorians for 21st Century living. Today, look for the Cinderella properties who with the help of a Fairy Godmother can be transformed into something dazzling and desirable.”
Property investment potential
The sale of three lock ups for £675,000 has illustrated why investors are flocking to ‘Cinderella’ properties in the UK capital. If they add value to the properties, they can sell them on to London property development specialists who crave new space to turn into residential property, and make a significant profit.
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