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IN THIS ISSUE ADVERTISERS KDB – Building Design p.6 Infinity Property Solutions p.7 Elite Visions p.8 Caveat Solicitors p.9 Hertfordshire Mortgages p.10 Vascroft Construction p.11 Hiway Hifi p.14 Energy My Way p.15 KP Engineering p.18 Zoom Finance p.18 Dasani Property p.19 MPI Investments p.19 Zimba Enterprise p.21 Major Estates p.21 Mark & Co p.24
CREDITS Editor/Publisher: CB Patel Managing Editor: Kokila Patel Associate Editor: Rupanjana Dutta Consulting Editor: Jyotsna Shah News Editor: Kamal Rao Chief Operations Officer: L George Chief Financial Officer: Surendra Patel Accounts Executive: Akshay Desai Business Manager: Alka Shah Advertising Manager: Kishor Parmar Business Development Manager: Rovin George, Nihir Shah & Urja Patel Customer Service: Ragini Nayak Graphic Designer: Harish Dahya & Ajay Kumar Asian Business Publications Ltd Karma Yoga House, 12 Hoxton Market (off Coronet Street), London N1 6HW. Tel: 020 7749 4085 Fax: 020 7749 4081 Email: email@example.com, firstname.lastname@example.org www.abplgroup.com ©Asian Business Publications Ltd Editorial Board Asian House and Home: Suresh Vagjiani, Kish Bhudia, Mitesh Vakeria, Vijay Chandras, Anna Patel, Nish Dattani, Manish Popat, Satish Patel Identity Concept and Design: Mo Luthra Branding Consultants www.moluthra.com
COVER STORY THE AUCTION UNCOVERED Auction with Caution p.6-7 Danger! Constuction Work Ahead p.8-9 No Refunds p.14-15 Funding for Auction Properties p.18-19 Auction List 2012/2013 p.21
Garden in Style p.4 At Home with Kish p.12-13 Your Big Borthers Kitchen p.17 Chairs that Inspire p.22
PROPERTY HELP Don’t Waste Your Energy p.10-11 How to Split a Million? p.16 Outbuilings and Outlaws p.20
ASIAN HOUSE AND HOME P.3| SUMMER 2012
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P.4 | SUMMER 2012
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WELCOME as property extensions, renovation, furnishings and housewares. This publication will also open avenues for trade and consequentially entrepreneurial activities amongst the community within the property sector. This magazine is the first of our quarterly editions and we have chosen the focus of this edition to be auctions, given the current popularity for purchasing auction properties. This edition is designed to guide you through the dos and donâ€™ts of purchasing a property at auction, and will serve as a reference copy for your future endeavors
CB Patel - publisher/editor
t is important to have a community based Property publication when you consider, from arriving on the UK shores only a few decades ago as immigrants, currently 85% of Asians
Home ownership for Asians, and aversion to mortgage finance has been stressed from the time of our forefathers and is a natural instinct are living in their own properties. The interest in owning property is clearly very strong amongst Asians living in the UK. This is the reason we have collaborated with Sow & Reap to bring out this publication. Getting on the property ladder results in huge financial benefits over a personâ€™s lifetime, according to new Barclays research that claims owning a home rather than renting will save a person ÂŁ194,000, over a 50 year period. Home ownership for Asians, and aversion to mortgage finance has been stressed from the time of our forefathers and is a natural instinct. Apart from the obvious economic advantage of home ownership and investment this publication will also be focusing on lighter subjects such
Suresh Vagjiani - consulting editor
ow & Reap has been writing in Asian Voice for many years now and we know the Indian appetite is whet for property. It is in trying to satisfy this demand further we had the idea to bring out a special homes and property magazine. The aim is to bring this feature magazine out four times in the first year, increasing to a monthly periodical the following year. In bringing out this edition we wish to increase cross business within the Asian community and also hope the edition will serve to educate its readers in a variety of topics related to property. In these editions you will get a broad range of editorials written by professionals in their respective fields which will give you a wider and more in depth understanding of what to look out for when investing in or purchasing property. This edition will be focusing on auc-
tions, traditionally this was the domain of investors and traders, now it has became a popular method of both purchasing and selling property even for the end user. This is due in part to programmes on TV which have normalised the purchasing of property in
You will get a broad range of editorials written by professionals in their respective fields which will give you a wider and more in depth understanding of what to look out for when investing in or purchasing property auctions. Herein lies the danger. As a consequence of new comers into the property market a lot of sellers are using auctions as a dumping ground for unsellable property. Consequently many people have been caught out when purchasing at auction, hopefully this edition will help guide one to avoid some of the pitfalls. Indians are one of the most dominant players in the property market in London, this is further increasing with interest from overseas Indians both from India and East Africa. Partly because London is perceived as a safe haven due to its transparency and partly for returns you can generate in the right locations even in this economic climate. The other dominant ethnic group is of course the Jewish community. Auctioneers are very mindful of Jewish holidays when setting the dates for their auctions, I think it is only a matter of time before they are forced to take note of Indian holidays too. This endeavour started off as an individual effort but now it has gathered momentum we would like to thank our editorial team not only for their contribution but for their active support.
ASIAN HOUSE AND HOME P.5 | SUMMER 2012
AUCTION WITH CAUTION Auctions have become ever more
popular, largely due to the speed and efficiency for all parties and also the net gains that can be made by prospective purchasers. But whether you are purchasing or selling at a property auction, it is imperative you understand how the process works and that you are alert to the risks. Auctions are sometimes known as the â€˜deadlineâ€™ method of sale. This is because once the auction is com-
The last thing you would want to do is invest your money in a property that is legally defective!
pleted, the property is sold and legal ownership is transferred to the buyer. This method bypasses the most common way of selling properties, which usually requires the appointment of a firm of solicitors who engage in the conveyancing process. Although this method takes longer, the purchaser is
P.6 | SUMMER 2012
more protected because of the due diligence of the solicitor involved. At an auction, the burden of investigating a propertyâ€™s suitability falls solely on the prospective buyer. It is important that as a potential purchaser you fully research the property. The last thing you would want to do is invest your money in a property that is legally defective! With lease-
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hold properties, you must be particularly cautious as there are often more complex problems involved such as missing freeholders, unbilled service charges for major works which may consist of repairs to communal areas, or disputes over billed service charges. Ensure that you obtain the auction pack as early as possible as this con-
tains various legal documents relating to the property. We recommend that you seek legal advice in relation to the contents of the pack, as the legal terminology often leaves prospective purchasers confused. It is advisable to view the property and obtain a survey to ensure you are fully satisfied as to its state and condition. Remember that there is always a reason why the property is being sold at an auction, so your investigative work will confirm whether there are any deficiencies in the property. Occasionally, there are sinister reasons such as boundary disputes which prevent the property being sold on the open market. In our opinion, it is also in your best interests to research similar properties in the local area so you have a good estimation of how much it is worth. This way you can also set yourself a maximum threshold, so when it comes to the auction you do not pay over the odds. Not all auctions provide bargains! In our professional opinion, the most important step you can take prior to
participating in an auction is to organise your finances. Whether you require a mortgage or not it is crucial that your finances are arranged. Typically, you are required to produce a 10% deposit on the day of the auction, and the remaining 90% is required within 28 days thereafter, although this may vary depending on the seller. When you arrive at the auction, ensure that you have the 10% deposit ready, together with your identification. If you cannot produce the remaining 90% within this timeframe your deposit will be lost and you will be left with nothing. Navinder Singh, one of our most experienced solicitor states that: “It is surprisingly not unusual for buyers at auctions to not fully think through their financing position, whether it be through cash funds, bridging companies or mortgage lenders. I recently had a client who failed to agree a mortgage on his auction property and unfortunately the client lost his deposit, in the region of £15,000.” It is important to note that obtaining
a mortgage for a property at auction differs to conventional purchases, as you are obtaining the mortgage after the exchange of contracts. The lender will require that a solicitor is appointed to act on their behalf in checking that the security is adequate for lending purposes. If there are any defects, the lender will not be willing to lend. You will therefore not be able to complete in time. To avoid this particular problem we recommend that you have cash resources in place. In summary, auction properties can be very lucrative. However, there are many serious pitfalls associated with them. When moving forward with any auction property, ensure you take the relevant legal advice and be clear on your methods of financing.
Property legal advice from Vijay Chandras of Mark & Co
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ASIAN HOUSE AND HOME P.7 | SUMMER 2012
DANGER! CONSTRUCTION WORK AHEAD A seasoned property professional or frequent auction attendee may well be buying property in an auction room based on ‘gut feel’ or a ‘hunch’. Most of these players in the market have been in the auction field for a number of years and can sniff out a good deal which others
the process that must be taken seriously from the outset. Aside from looking at the key issues that an independent valuer or surveyor would look for in assessing a property by way of its location, amenities and market comparables - an area that is often overlooked is the structural
you may feel rushed to change your diary commitments to make the predetermined viewing dates and times for the property and once you attend the viewing there may be a number of viewers who wish to inspect in a very short space of time (often only an hour), which all creates a hype
integrity of the building and its’ fabric. The reason this essential aspect of the building characteristic can be overlooked is due to the whole ‘speed of sale’ feel that the auction process encompasses. As a buyer
and distracts you from absorbing the key issues to check and satisfy yourself that the asset is sound. Despite the viewing timetable, did you know that you can arrange for a Chartered Surveyor to carry out a
An area that is often overlooked is the structural integrity of the building and its’ fabric
may well have missed, but it is not a guarantee to make money and many well established property traders have incurred losses on property due to an inherent defect in a property acquired by auction. This article examines some of the pitfalls in attending an auction without carrying out an inspection of the property to be purchased beforehand. An auction catalogue will usually be complemented with a viewing schedule and this is a key stage of
P.8 | SUMMER 2012
ASIAN HOUSE AND HOME
survey of the property on your behalf, at an agreed time with the auctioneers? This is an important aspect to consider on a purchase of a property as it allows the ‘buyer to be aware’ (caveat emptor) of what it is that he/ she is buying. Auctions are renowned for selling property quickly (as the exchange of contracts takes place on the fall of the hammer) and this environment is often used for a seller who is desperate to sell for many reasons. Sometimes the reason could be because they had acquired a property which needs essential building works to extend the remaining useful life of the building. The quick sale process is helpful to dispose of their interest as it is immediately binding and is implemented on the basis that the buyer has carried out whatever due diligence they require to do prior to the sale. A professional Chartered Surveyor would usually be a member of the Royal Institution of Chartered Surveyors (RICS) and is a mark of property professionalism worldwide. The surveyor could be from a Building Surveying discipline and advise a buyer
by undertaking a basic valuation, homebuyers survey & valuation or a full structural survey. The differences between the three types of surveys are pretty straight forward; each report gets more elaborate from each
Auctions are renowned for selling property quickly, they are used by a seller who is desperate to sell other. The full structural survey is the most elaborate report, but it comes at a greater cost than the other two options. However, a full structural report has the potential to pick on defects that the other two reports may not. If you are buying an old property, it’s imperative you loosen the purse strings and opt for the full structural option. If your property does not need a comprehensive building survey, but you need more than just a simple Valuation, then the ‘Homebuyers Survey & Valuation’ is what
you should require. If your intention at auction is to buy a property with a view to redevelop or extend the property it is also worthwhile asking a reputable firm of local builders to accompany your viewing as most builders would be able to provide you with a budget cost plan to implement your redevelopment plans and the timescales involved based on their property viewing. The builder may also spot conditions in the building that would flag up a potential pitfall in terms of onerous building works, damp conditions or even subsidence. This professional input and local knowledge of the types of buildings, their age, ground conditions and common structural problems in the area would only help you formulate your maximum bid at auction and prevent you from paying more in the auction room.
Construction expert Mitesh Vekaria Vascroft Construction
ASIAN HOUSE AND HOME P.9 | SUMMER 2012
DONâ€™T WASTE YOUR ENERGY One
of the main issues facing property owners today is for ever increasing energy costs. These high energy costs are especially acute for those with larger older properties and energy inefficient homes. Often purchasers buying property at auc-
A survey conducted by Rightmove found that over 80% of buyers cited that energy efficiency is now one of the main considerations when assessing the purchase of a property tions are looking to redevelop and refurbish them and then sell on. These high energy bills make it especially difficult to sell a property as buyers are increasingly concerned with the running costs of a home. A survey
P.10 | SUMMER 2012
conducted by Rightmove found that over 80% of buyers cited that energy efficiency is now one of the main
ASIAN HOUSE AND HOME
considerations when assessing the purchase of a property. There are a number of measures
that can be installed that will help protect against rising energy costs whilst at the same time earn significant potential returns on investment through government backed incentive schemes. Renewable technologies that help reduce energy bills which are currently being installed are: solar panels, solar hot water, air and ground source heat pumps, wind turbines and biomass boilers. Alongside these renewables, measures to shore up the fabric of the property are equally important such as insulation, draught proofing, and double or triple glazing which help limit heat loss. In addition, for those properties where renewable technologies are not feasible simply changing your gas boiler to a new more efficient condensing boiler will yield instant and substantial energy savings. Mr and Mrs Kotecha were looking for ways to reduce their electricity bills especially given the coupleâ€™s love for making their own ice cream â€“ they have three freezers in their property which are consuming electricity every day all year round. As a result they
installed solar panels, which produce electricity from daylight and help offset the running electricity costs. Since installing the panels their bills have re-
There are a number of measures that can be installed that will help protect against rising energy costs whilst at the same time earn significant potential returns on investment through government backed incentive schemes. duced by 35% and the bonus is that they receive a fixed price, linked to inflation, for every unit of electricity they produce for 25 years â€“ known as the feed in tariff and the income is tax free. The rising cost of energy has also had
a significant impact on business profitability. In fact over the past 15 years the compound average annual electricity price for a medium sized business has been over 4%, which is twice rate of average inflation over the same period. In response to these concerns, Companies are actively exploring ways to avoid being hit by the increase in energy prices by investing in energy efficient technologies such as lighting. For example, by adopting energy efficient LED lighting solutions not only results in lower running costs but also provides better light and reduces maintenance requirements as tubes/bulbs last much longer. In addition, tax efficient financing is available such that there is no upfront cost, with the cost savings from the energy efficient lighting used to repay the loan.
Renewable and energy efficiency expert Nish Dattani from EnergyMyWay
ASIAN HOUSE AND HOME P.11 | SUMMER 2012
AT HOME WITH KISH The detached house located in the leafy Hampstead area is set amongst some of the most extravagant houses in London. However, it had been left empty for years, and in need of complete modernisation. A knock down and rebuild would probably have been more appropriate, but it had a hidden charm under the overgrowth and boarded up windows. The house was located within a Conservation Area, and that meant planning permission would be required for any extensions, to change the roof tiles, replace windows, to block pave the driveway, and even to cut down some of the trees in the rear garden. Basically everything. ‘I had to appoint a project manager, as I’m often away on business, and don’t have the time to deal with the Council and contractors’, explained Kavit as he shows off his Hi-tech Sound system as he controls it with his I-Phone. ‘It’s useful to have a project manager to co-ordinate the various disciplines involved in the project to avoid costly mistakes, especially if you are busy with your own business. Leave it to the experts’. Whilst waiting for planning permission, an Interior designer was appointed early on to begin shaping the inside of house, as was the Audio Visual and Lighting specialist. The house had set him back more than he budgeted for, but he was determined to buy it. However, this
When an old friend of mine Kavit called to say he’s just bought a house at an Auction and in an exclusive area and needed some help renovating it, I thought this was an opportunity not to be missed. P.12 | SUMMER 2012
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area, and a large room for storing shoe boxes and suitcases. Kavit’s wife Jeni, who is also a working mother of 3, had insisted she have a large walk-in-wardrobe, which seems high on the list for every modern women these days, leading to a luxurious walk-in-wet room, and a large Jacuzzi tub to relax after a long hard week at the office.
Once planning had been obtained building works proceeded with a great deal of changes along the way. ‘No building project ever goes to plan and to budget. Best to accept this fact and be flexible, this way both the contractor and the wife are kept happy...!!’.
subsequently led to a tighter budget to redevelop the house. He still wanted something special, but didn’t want to compromise on style, but like with most projects there was a limit on how much he could afford to spend. ‘We’re living in times of austerity’ he smirked. The old house was of solid construction, but was about as energy efficient as a sieve. All the external walls were insulated to bring them above current regulations, as was the roof, and with triple glazed windows the building envelope was completely sealed. The ground floor was stripped out and insulated and
had underfloor heating installed, this was later extended to the entire house, removing the need for any radiators in the house. Low energy efficient LED light fittings were specified with a programmable lighting system. ‘A rainwater harvester was installed under the rear patio to collect all the rainwater from the main roof, which is then used for flushing all the toilets and for watering the garden, but not for washing the Ferrari’ he laughs. Separate accommodation area was needed for the household staff, so the vast loft area was converted into 2 bedrooms, 2 bathrooms, living
The overall result was a well planned, beautifully designed modern house with all the creature comforts you can expect.
ASIAN HOUSE AND HOME P.13 | SUMMER 2012
ften the most frustrating process of buying and selling a property is waiting around while the sale completes. It can take months to finalise the finance and legal matters and even longer if the property is in a chain. If the property is in a bad state of repair and requires work or the location of the property is not appealing, agreeing a sale can take some time. A recent survey showed 50% of properties listed on Rightmove.co.uk failed to sell within 12 months. An increasingly popular way to buy and sell a home or investment property is to approach an auction house.
A recent survey showed 50% of properties listed on Rightmove.co.uk failed to sell within 12 months
Since properties under the hammer are almost always chain free and the
P.14 | SUMMER 2012
buyer is legally obliged to finance the purchase within 28 days, this makes for a quick sale to the advantage of both parties. But as with all financial transactions it is worth doing some thorough research to assess whether property auctions are right for your circumstances. This applies to both the seller and the buyer. As the seller, one of the factors determining your success at the auction is the timing. Timing plays an important role for example; selling during the Queens Jubilee celebrations is not the best time, as Allsop auctions which would normally be full was empty and some star lots failed to sell. It is important that the auctioneer you choose is well rehearsed in similar properties of similar price and located in an area close to the property you are trying to shift. The better they understand your property, the more likely the seller will get the best deal. Auctioneers usually commission a charge between 1 - 2.5% of the purchase price. This figure usually varies on what type of auctioneer you go
ASIAN HOUSE AND HOME
for. There are those who focus solely on auctioning properties and there are those regular estate agents who have a small auctioneering division with little experience of the process. The former will usually charge slightly more but will attract more serial trustworthy bidders, due to more aggres-
As the seller, one of the factors determining your success at the auction is the timing
sive marketing. As a property bidder it is worth knowing what to expect. It is prudent to do 95% of the work prior to attending the auction. Auctioneers will provide a catalogue of properties to be sold and bidders can arrange a viewing and survey in advance of the auction date. A viewing is the minimum groundwork required since most properties at auction are projects that require refurbishment, repair or completely redevelopment that you
would not always spot from looking at pretty pictures in a catalogue. It pays to take along an experienced house builder or property developer who can advice on significant defects and provide an estimate of how much it will cost to make the property reasonably liveable. This will help to manage your budget and set a maximum limit for your bid. All
auction houses will require a 10% deposit on the day and you must have in place arrangements to pay the remaining sum typically within a month. For that reason, the bidder needs to have all their paperwork up to date to ensure the mortgage application process does not stall the sale. Despite all the groundwork, it is possible that the bidder could be outbid
by another buyer, in which case not only is the property lost but the cost of the survey, solicitor fees and any advisor fees will also be forfeited. Of course, you can snatch the property from the auction by making an offer and have it accepted prior to the auction date and even after the auction if the property does not achieve the reserve price. If the property does go to auction, neither the vendor nor buyer need be present at the auction and bids over the phone and even online are growing in popularity. If you are selling, you may need to be flexible on the reserve price depending on the feedback from the auctioneer. If you are buying remain disciplined and have a well thought out strategy. Making a rash bid could be regretful in a market where there are no refunds!
Property buying and management Satish Patel of Infinity Property Solutions
ASIAN HOUSE AND HOME P.15 | SUMMER 2012
HOW TO SPLIT A MILLION? H aving practiced Family law for over 10 years it is evident that in most cases when a married couple divorce, the single biggest asset that they will jointly own is the property, in which they both lived during the marriage, which is known as the Former Matrimonial Home (FMH). In the last few years there has been an increase in divorces amongst the Asian community and in nearly every Asian case, I am dealing with the division of property, primarily the FMH. When the married couple separate they will need to decide what will happen to the FMH, whether one of them will continue to reside there or whether it will be sold.
In the last few years there has been an increase in divorces amongst the Asian community and in nearly every Asian case, I am dealing with the division of property
In one particular case, I acted for the Wife in a divorce matter where there was dis-agreement over the division of assets. In this particular case the children were at university and so where they would be residing was not important, however where the children are of a younger age the paramount consideration for the Court will be the welfare of the children and where they will reside if the FMH is to be sold. The Husband had been the breadwinner throughout most the of the marriage earning in excess of £100k per annum and it was his argument that he should get the lion’s share of the FMH, which was considered to be worth approximately 1 million as he had provided financially support for the family throughout most of the marriage. The Wife, however, had taken a backseat in her career, not only to have the children, but to raise the children and therefore did not pur-
P.16 | SUMMER 2012
sue her career until the children of the marriage were at University but the husband had always agreed that she should stay at home and raise the children. The Courts, when dividing financial assets recognise that the Wife, which is often the case in Asian divorces, has stayed at home to take care of the children and that is considered to be her contribution to the marriage and there is substantive case law to support this. In fact it is recognised by the Courts that because the wife has stayed at home to take care of the children, this had allowed the Husband to advance his career and earn a lucrative income It was agreed that the Husband would continue to reside in the FMH and as it was not going to being be sold, which would have provided the market value, which would have
It is recognised by the Courts that because the wife has stayed at home to take care of the children, this had allowed the Husband to advance his career and earn a lucrative income been the selling price, so this had to be agreed. Even after taking 3 independent market valuations were obtained from Estate Agents and the aggregate of £750,000 was taken as the market value, there was a disagreement about the market value of the FMH not being accurate, but
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eventually the Husband and Wife agreed to this figure, alternatively an independent Surveyor would have to be instructed to prepare a report to obtain an accurate figure, but this would have increased their legal costs. It is important to note that even though the FMH was worth at the peak of the housing market £1 million, the market valuation at the time of negotiating the financial matters is the figure that will be relevant and will be considered, in settling financial matters.
COMMON QUESTIONS But the property is not in my name. Do I have any rights? The courts will look into this. What you can do to protect your interest is by registering this with the Land Registry. The main point of doing this is to could ensure that the property cannot be sold or further charges placed on the property without your knowledge, pending negotiations or legal proceedings. This step is undertaken purely to protect your interests. As a woman, am I guaranteed 50%? Each case is unique even though there are common issues in divorce cases. The law in England and Wales does not naturally asssume that there is a fifty-fifty split with regards to any assets or property. Difficult decisions around children and how much cash is in the pot to split will often determine how matters are resolved financially
Family Lawyer Anna Patel of Caveat Solicitors
YOUR BIG BROTHERS KITCHEN I n today’s world a kitchen is more than simply a place to cook food. Rather, it is an area where friends and family congregate, converse and break bread. When people renovate their kitchens, there are so many manufacturers to choose from but little seems to set them apart.
put together, they also look appealing, with modern styles available in bright and even neon colours. They are also easier to maintain as the cabinets can be removed whenever they need to be cleaned. Speaking to Uberkuchen, the kitchen company who understands, a new kitchen is amongst the biggest
concerned about the customer being happy”. UberKuchen’s kitchens are manufactured in Germany and come ready-assembled, saving the customer the hassle of having to fit the units together themselves. This new type of modular kitchen is becoming increasingly popular worldwide - especially in India- amongst those who want a quick makeover to their kitchens. These modular kitchens have also made their debut on the hit reality television show, Big Brother, which showcases an entirely new, remodelled UberKuchen for the contestants. Yet as the company’s profile grows in London, they were keen to emphasise that while high profile
Another main concern is that people are worried about being overcharged as this does happen so often. Finding a new kitchen can seem a daunting task with a huge range of providers to choose from as well as ensuring that you get value for your money. Another main concern is that people are worried about being overcharged as this does happen so often. There are increasingly, more and more manufacturers that are competing to create sleek and easy, yet affordable kitchens. What is taking the market by storm are kitchens which are the latest and most functional progression of kitchen styles. The cabinets are broken down into several individual cabinets and are then fit together in any kitchen according to the space and size available. Whilst being extremely easy to
expenditure which one will make in their lifetime. So they have worked to consolidate attractiveness and good quality in an affordable price. “I think it helps that you have somebody like Parm [UberKuchen kitchen designer and director] who has industry awards for designs for kitchens,” said a spokeswoman for Uberkuchen, “He is passionate and is genuinely
clients and projects are most welcome, “they are added bonuses. UberKuchen caters for all budgets and every customer is a celebrity for us. We feel that a kitchen will showcase you and your business for life.”
Article supplied by: Romil Patel AV Correspondence
ASIAN HOUSE AND HOME P.17 | SUMMER 2012
FUNDING FOR AUCTION PROPERTIES I t is advisable when biding at auction to obtain a mortgage “in principle” in advance. This means you have been pre vetted by the lender for the finance.
Most of us have limited resources and have to balance what is affordable against what is achievable It is also vital to ensure the property that you intend to bid on is habitable and therefore mortgage able in its current condition. This means it is in a suitable condition to be rented, otherwise your Buy to Let lender will not lend on this property. If it is not the mortgage lender could insist on placing up to 100% retention on the mortgage offer. This means that they will not advance funds until the property is suitable for rental. If you are purchasing a property which
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requires work to bring it up to standard there are a couple of ways around this problem, the first is off course to complete using your own cash. If you don’t have the full amount in cash Bridging can be a good alternative in the right circumstances. If cash is not an issue for you then now is definitely a great time to be investing in property. However, most of us have limited resources and have to balance what is affordable against what is achievable. If you have a strategy of purchasing as many properties as possible whilst there are so many bargains around
CASE STUDY you may wish to consider taking the deposits for these purchases by way of remortgaging either your own home or existing properties you own. The benefit of doing so is to release the deposits you have tied up in your properties to buy some more. You will however, need to weigh up the cost of arranging the remortgage and any redemption penalties that may be due.
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Last August we arranged a buy-to-let mortgage for a client who purchased a 2 bedroom flat in Arica Road, Brockley, London, SE4 2PU at an auction. The auction was taking place in London on 13th July 2011 and the property was advertised at a guide price of £120,000. The client approached us a week before the auction to confirm he had viewed the property and was very much interested in purchasing. The property was an ex-council with a 70 year lease remaining and was in need of light refurbishment. All this together with the client requiring a 75% loan-to-value (LTV) mortgage was going to be a challenge. Most lenders offering buy-to-let mortgages either refuses to lend on ex-council flats or will limit LTV’s to 50% of the purchase price, which requires a larger deposit. We eventually found a lender who was willing to lend 75% of the purchase price, subject to satisfactory credit checks and a suitable valuation of the property to be purchased. Within 24 hours we had the Agreement in Principle (AIP) approved by the lender and issued the client with a mortgage certificate to
confirm the lenders decision. On the day of the auction we had a call late afternoon from our client to confirm he had secured the property at £131,000. He sounded very pleased and was very keen to make a mortgage application ASAP. Immediately we contacted the auctioneers for full details of the property and contact details for whom the surveyor, to be instructed by the mortgage lender should contact for access to the property. We also contacted our client’s solicitors to confirm the details and also to advise them Hertfordshire Mortgage Consultants Limited would be arranging the mortgage for our mutual client. Within 4 days of making the mortgage application to the lender we received the valuation report to confirm the property had been valued at £131,000. Even though we were confident the property was valued higher than £131,000 the surveyor will not value the property any more than the purchase price. The mortgage offer was issued 8 days after they had assessed the valuation report, so we had completed our role
with just over 2 weeks to spare. It was now over to the solicitors to aim for completion on or before the 28 day deadline. My client completed and received possession of the property on 10th August 2011.
A profit of approximately £50,000 in just over nine months is not bad considering the initial outlay was less than £40,000 My client decided to spend some money on the property and fitted a new bathroom and kitchen which was sure have increased the value of the property. I saw internal pictures of the property before and after the refurbishment and could not believe it was the same property considering my client spent just over £6,500 on the works.
The property is currently rented at £1030 per month and with the mortgage payments at £287.27 per month this equates to a massive 9.4% yield. We later arranged a remortgage on the same property for the client and the surveyor has confirmed a value of £190,000. We then extracted £142,500 (75% LTV) and has not only recovered the 25% deposit he paid on the initial purchase of £131,000 but also all the costs associated with the purchase, such as legal fees, refurbishment of the property, etc. A profit of approximately £50,000 in just over nine months is not bad considering the initial outlay was less than £40,000. Your home may be repossessed if you do not keep up repayments on your mortgage.
Mortgage expert Manish Popat from Hertfordshire Mortgages
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ARCHITECTURE & DESIGN
OUTBUILDINGS AND OUTLAWS
utbuildings at the back of the garden are becoming increasing popular. However, they are also No.1 on the Enforcement Officers list of illegal buildings, and this is not without reason. What they are used for is now the subject of concern as Council’s crack down on home owners building what is inadvertently a separate dwelling with the sole intention of profiting by letting to tenants. There has been some considerable media coverage in the last few years highlighting areas such as Hounslow, Ealing and Slough, which have high levels of Asian migrant workers in low paid work, often crammed into what can only be compared to ‘batteryhen’ conditions. The rules in a nutshell are that a de-
tached building may be erected in a garden of a dwelling house (not flats or commercial premises), subject to size restrictions, and most importantly, they must NOT consist of any habitable accommodation, such as a bedroom, kitchen or shower room. They should only be used for a ‘purpose incidental to the enjoyment of the dwelling-house by the occupants’. In the NW London area, we have dealt with several cases where outbuildings have been erected for the sole intention of letting out to tenants, or built larger than the limits.
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Once the Council discovered this, they issued an Enforcement Notice to have the building demolished. How did they find out? In one case the building owner had asked a local agent to let the building, who then advertised it on the internet and local newspaper, and with another, their relatives who lived next door snitched on them due to some long standing family dispute. At this stage, it’s too late to remove the internal fixtures and fittings and call it a shed again. Many have resulted in complete demolition and serious financial loss to the owner. There are NO safety limits and tolerances, you either comply or you face having it demolished. Other ‘Grey’ areas include Conservatories and Re-Roofing.
CONSERVATORIES As far as planning guidelines go, there is little distinction between a conservatory and a solid built extension. The biggest misunderstanding is that all conservatories are exempt from planning and building control. Furthermore, you CANNOT erect a conservatory behind an extension. Beware Conservatory companies who tell you otherwise. The general rules for extensions also apply to conservatories, so please check with your local authority plan-
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ning department, and if in doubt, submit the plans and obtain permission first.
RE-ROOFING This is without any doubt the biggest culprit, as an average semidetached house can be stripped off and re-roofed over a weekend without the use of any scaffolding and nobody will be any the wiser. However, re-roofing works DO REQUIRE
building regulations approval, and always have done. Lately, the local authorities in NW London have been actively pursuing those who have reroofed even up to 2-3 years ago. Many roofing contractors will still maintain that they have been ‘doing it for years’, and never had any complaints. The good ones will actually advise a building notice should be submitted. So do insist on building control approval. It’s a very simply procedure and requires submitting a Building Notice to the council prior to commencing works. The building inspector will be checking to ensure the existing timber structure is adequate for supporting the roof load, and that the loft space is suitably insulated and ventilated to meet current regulations. You may even save money on your heating bill as a result of the extra insulation required. So, the advise is NOT to take a chance, take proper advise from the council and a local Architect/ Surveyor.
Building design expert Kish Bhudia from KDB Design
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ASIAN HOUSE AND HOME P.21 | SUMMER 2012
CHAIRS THAT INSPIRE
Designed by award-winning designer Mike To, these Moon Bronze chairs are a sculptural statement. £429 www.fashionforhome.co.uk
With its rounded shape and glamourous choice of colours, The Ball chair is a great, modern piece of design. £144 www.bodieandfou.com
A cult and classic retro chair design. Eero Aarnio Chair was designed by using one of the most simple geometric forms - the ball. £365 www.justcoolchairs.com
The Polo Chair Based on a design by Enzo Berti and featured on Big Brother. Has a calming rocking motion. £293 www.the-furniture-company.com
Quirky and fun chair shaped as a stiletto shoe.This will certainly be a talking point amongst your peers. £249 www.furnitureshopuk.com
Designed by Philippe Starck for Kartell, this Mademoiselle Missoni chair is the latest must-have for dining rooms. £527 www.housetohome.co.uk
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