Beeny’s New Property Developers
From property boom to the dramatic consequences of the huge crash we are in right now, our favourite reality TV property programme Channel4’s Property Ladder is back on our screens – now in its eighth series – and with a new recession-friendly title: Property Snakes And Ladders.
This series has seen a roller coaster of emotions as many of the couples set off on their property developing dream before the market crash. And it was during filming that they realised that due to the economic downturn, they’d be unlikely to make a profit and may even make a loss – not something they’d anticipated at the outset.
Here we take a look at Nigel and Jilly’s venture into property developing without the help of a rising market..
Using all their savings, Nigel Gough, a self-employed bookseller, and his wife, Jilly, a furniture restorer, have bought a three-bedroom Victorian property in Henley-on-Thames in Oxfordshire. Their intention is to clear the mortgage on their current home with the profit from the new house
Nigel and Jilly paid £527,000 for the property, in July 2007, which was right at the top of the market. They’ve got
a £100,000 budget which, according to Sarah, is small for such a big project. However, they hope to sell for an optimistic £675,000 which would make them a £33,000 profit. But that’s just a 5% return on their investment. ‘But because you have to put so much money into developing property, it is normal to aim for a 20% return on your investment,’ says Sarah.
The house has two floors and an uncoverted roof space, which has a large chimney breast in the middle. On the ground floor there are two reception rooms, a very small kitchen and a bathroom at the back – a hugely inconvenient position. On the first floor there’s a master bedroom with en suite and two more bedrooms.
Nigel and Jilly’s vision
The couple want to demolish the old bathroom and extend to the side to gain more space. They want to take out the entire back wall of the house to join the rear reception room and create an enormous kitchen diner.
Upstairs, the loft is to be converted, which should add real value but they’re only adding one bedroom and also want to put the family bathroom up here, which means people having to tramp past the bedrooms to use it.
However, Sarah feels they should keep the second reception room as a playroom and put in a downstairs loo, which she thinks is essential in a large family home. She also thinks that if they took out the big chimney in the loft they could get a second bedroom into the space and, on the floor below, they could turn the rear bedroom into a more convenient family bathroom.
Sarah’s concern mounts as Nigel and Jilly still refuse to put in a downstairs loo. She’s conviced that this addition (or lack of it) could make a big difference in being able to sell the property in the now declining market. She persuades them to visit three local estate agents to ask them how important it is to have a downstairs toilet – all three agree it is a must in a family home. Finally, Nigel and Jilly are persuaded it will be a good idea.
Meanwhile, their money pot is running out and they are seriously over budget. Because of the recession, the banks are refusing to lend them any more cash and they are both feeling the stress of the project, which is now taking over their lives. When it comes to furnishings they should now be looking at buying as cheap as possible, but furniture restorer Jilly finds a massive dining room table – and it is so expensive she won’t even tell Sarah how much it costs!
The finished project
Nigel and Jilly have created two bright and spacious top floor rooms in their loft conversion and downstairs there’s a master bedroom with en suite, a further bedroom, and that crucial family bathroom.
On the ground floor, the front reception room is spacious, the kitchen is bright and modern, a perfect space for a family get together. And their home also benefits from a downstairs toilet, much to Sarah’s relief.
THE FINAL NUMBERS
|ORIGINAL HOUSE PRICE:||£527,000|
|PROJECTED HOUSE VALUE:||£675,000|
|ACTUAL HOUSE VALUE:||£620,000|
THE FINAL ANALYSIS
Nigel and Jilly went over budget by £20,000. And the property crash means they can kiss goodbye to the £675,000 sale price they’d anticipated – they need £647,000 to break even. Two estate agents value it at £620,000, a £27,000 loss; a third feels they can get £650,000 – giving them £3,000 profit.
Nigel is convinced bad timing was their major mistake. But Sarah thinks that their margins were just too small.
The couple decide to sell their more expensive family home and move into the developed property with the plan to sell it when the prices go up again.
Snakes and ladders
The winning and ‘losing’ developments from the show to date..
|Who?||Chris and Jules|
|The property?||400-year-old cottage in Shere, Surrey|
|Over budget by?||£26,000|
|Converting the basement means pricey underpinning; and the couple have to have their bathroom floor reinforced to support a brand new roll top bath.|
|Six months after putting it up for sale at £550,000 they rent it out for £1,600 pm|
|Who?||Sean, a jobbing builder, and wife, Nicola|
|Property?||Three storey house in Newport, South Wales|
|Over budget by?||£33,000|
|The couple decide to turn it into a two-bed maisonette and one-bed flat.|