Latest Valuation
£349,997
Yield
26%
Selling Agent
Sourced Uxbridge

STPP Commercial To Residential Conversion For 9 Apartments

Off-Market, Fully Managed Conversion in Lytham St Annes
Guide Price
£350,000

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Key Features

  • Prime Location
  • Planning Granted
  • £0 Sourcing Fee
  • Commercial Conversion
  • 26% Financed Buyer Yield
  • Fully Project Managed

The Property

This development has been sourced off-market from a vendor that has secured the site on an option. The vendor is a prolific developer and they are obtaining the planning permission to be able to sell on as a development opportunity. The property is currently an antiques auction center.

Planning granted march 2019 conversion and extension of existing building to provide 9 apartments (4 one-bed and 5 two-bed) including split-level three storey rear extension, alterations to shop front and provision of off-street parking

However, in order to maximise the site new planning is being submitted by the option holder for 9 x 2-bed flats.

The vendor will be paying for the buyers to purchase legal fees for this transaction for a solicitor that’s on the panel of recommended lawyers.

The present building comprises an open plan auction room, with a shop front and ancillary areas:
Ground Floor GIA: 300 SQ M (3,229 SQ FT)
Uppers floors: not measured but currently being used as storage and music lessons

Storage units on upper floors currently used as storage - not tenanted

Tenure: The property is a virtual freehold with a 999-year lease that began on 9th November 1923. Meaning there are 904 years remaining on a ground rent which is a peppercorn amount. In order to develop the land, there is a freeholders contribution to pay to abide by the lease which is circa £30,000, this is disclosed within the appraisal.

There is not any residential space within the building currently.

The financials:

GDV: £1,530,000 (after conversion)

Purchase Price: £466,200
Development: £475,000
Building Survey £780
Project Management £39,900
Stamp Duty £12,350
Legals: Split Title £2,000
Freeholder Contribution £30,000

Sourcing Fee £0
Legal Purchase £0
S106 £0
Cil £0

Total Costs / Cash Buyer £1,026,230

Finance:

Financed buyer. We have lenders in place ready to finance.
Please note the final finance offered will be based on your personal circumstances.
The figures provided are for typical lending on this type of property.

£466,200 Purchase Price
£475,000 Development

Finance to purchase;

Borrow 60% LTV of purchase price £466,200 = £279,720 Loan / £186,480 Deposit
100% Funding for build costs
Total Loan £754,720
One-off 2% Arrangement fee
The interest of 0.9% per month over 12 months. Total interest payable (incl. arrangement fee) = £96,604
Exit Fees: None

Money in
£186,480 Deposit
£39,900 in Project Management
£780 Building Survey
£2,000 Other Legals
£12,350 SDLT
£30,000 Freeholder Contribution

TOTAL CASH IN £271,510

There are 3 exit strategies that can be adopted for this opportunity:
Strategy 1: Build to sell
Strategy 2: Build to Rent Residential
Strategy 3: Build to Rent FRI Lease

Strategy 1: Build to sell

We have spoken this through with an RICS valuer and local agents and they recommend each unit valued at £180k - £185k. We have valued each unit at £170k which give you a solid contingency.

GDV
Each 2 bed apartment valued at £170,000
9 x 2 Bedroom Apartments @ £170,000
Total Gross Development Value £1,530,000

Less:

Purchase Price £466,200
Development Cost £475,000
Building Survey £780
Stamp Duty £12,350
Sale Legal & Splitting Titles £6,000
Project Management £39,900
Freeholder Contribution £30,000
Finance Costs £96,604
Estate Agent Fees @ 2% £30,600

Total Cost 1,157,434

Profit of £372,566

Profit on Gross Development Value (GDV): 24%
Profit on Cost: 32%

Strategy 2: Build to Rent Residential
In this strategy, all of the units will be rented to the private rental market. The demographic would be working professionals or retired individuals. There is very good demand in the area due to a shortage of ready availability of modernised stock. Generally, people that live in this area rarely move so it makes it harder for newcomers to the area. This shortage of supply, in turn, drives up sales prices and also rents.

Post Development, refinance against GDV;

75% LTV of £1,530,000 @ 4% = £1,147,500 Loan. £45,900 per annum / £3,825 pcm
£1,147,500 pays original loan £754,720 + finance costs £96,604 + £271,510 of your initial capital invested. Surplus £24,666. INFINITE RETURN

Cashflow Numbers
9 x 2 Bedroom Flats @ £650 per month £70,200 per annum
Total Gross Income £70,200 per annum

Less:

10% Management costs(incl VAT) £7,020 per annum
10% Operating costs: Maintenance, voids, insurance etc £7,020 per annum
Mortgage £45,900 per annum

Circa Net Cashflow £10,260 per annum
Circa Net Cashflow £855 per month
ROI Infinite All money out

Strategy 3: Build to Rent FRI Lease

In this strategy, all of the units will be rented by a Serviced Accommodation operator (Airbnb,Booking.com etc) on a fully repairing and insuring lease. The lease would be for 5 years and the responsibility of the maintenance and voids is the operators. There is very good demand in the area due to a shortage of ready availability of modernised short stay accommodation for the popular seaside holiday destination.

Cashflow Numbers
9 x 2 Bedroom Flats @ £500 per month £54,000 per annum
Total Gross Income £54,000 per annum

Less:
Mortgage £45,900 per annum

Circa Net Cashflow £8,100 per annum
Circa Net Cashflow £675 per month
ROI Infinite All money out

The yield based on invested funds:

Financed Buyer Build to Rent to the private rental market
26% - £271,510 invested and £70,200 gross annual income

Limited risk management;

PURCHASE PRICE: £466,200
Desktop RICS survey will be supplied before exchange

GDV: £1,530,000 (AFTER CONVERSION)
Verified by an RICS valuer and an RICS valuation will be provided to the buyer before purchase. The value of Each unit as verified by local agents are between £180K - £185K. The values here are at £170K so extremely conservative

Exchange
5 %
The exchange will be subject to achieving planning approval. As soon as planning achieved you, the buyer will have 28 days to complete but you are more than welcome to start works in that 28 day period.
The option holder is paying for the planning fees and the buyer will not have to pay anything toward the planning.

DEVELOPMENT: £475,000 with 10% contingency built-in. SUBJECT TO DETAILED SURVEY & INCL OF VAT. Overseen by RICS Building Surveyor. Alternatively, you can use your own team.
The duration is estimated to be 9 - 12 months
Introduction to the main contractor can be made upon request along with a site visit to talk through the scheme. The price is subject to some slight changes when going to detailed design and tender, and the RICS Building surveyor will provide the full renovation schedule of works and specifications. The RICS Building surveyor will give the full renovation schedule of works and specifications. The builder has surveyed the building in detail and priced against the plans. A detailed schedule providing a breakdown of costs and timelines will be supplied. You have a choice to use your development team. The developer undertaking the conversion are specialists in this location, having carried out several developments in the area. A schedule of works (SOW) with a detailed breakdown of costs and timelines can be sent on request.

PROJECT MANAGEMENT £39,900 INCL VAT - Project Managed by RICS Building Surveyor
An RICS building surveyor will act as the contractor overseeing all works. The works have been costed already, and a schedule of works provided.
You have a choice to use your project management team. Introduction to the main contractor can be made upon request along with a site visit to talk through the scheme. The project managers job is to take care of the development and deliver the job on time and within budget, subject to unexpected circumstances arising.
All payments will be verified by the RICS building surveyor via payment certificates to ensure that payment is made for only works that have been completed. Meaning all payments will be made in arrears. The project manager will administer all of the paperwork concerning the building works, including a JCT contract between you, the client and the contractor. Also, a service agreement between the project manager and you the client. Throughout the project, the project manager will provide weekly updates via written, photo and video updates. The surveyor’s details/contact can be sent on request.

DEPOSIT TO RESERVE: £5,000 (DEDUCTIBLE FROM PURCHASE)
Fully refundable if surveyor downs value or discover undisclosed problems or undisclosed legal issues with Title

STAMP DUTY £12,350
Commercial Rates

BUILDING SURVEY £780
This is the estimated cost of instructing your own RICS survey whether for a finance application or cash purchase

PURCHASE LEGALS £0
The vendor will pay for the buyers to purchase legal fees in turn for the buyer using a solicitor that is recommended. The vendor is willing to do this for fast exchange and completion as he knows the solicitors can achieve this

OTHER LEGALS
All other legal costs are paid for by the buyer. i.e. splitting titles & sales

SOURCING FEE £0
We are getting paid from the seller

Sold As Seen
The development opportunity is sold as seen and all numbers provided are a guide only based on professional opinions and should not be solely relied upon. You must do your own due diligence and seek professional advice if necessary.

FRI Lease
All residential units will be used as serviced accommodation by an in-place operator. They will offer a Fully Repairing and Insuring leases for five years
All maintenance will be carried out by the operator, so there is no management fee, no voids, and no repairs. There will be a tenant only break clause at the end of year 1
The rent reviews will be cap and collar with the retail price index, so rents are increased relatively in line with the market, they will pay you £500 per month for each of the 2 Bedroom Apartments

Matterport floorplan and photos will be provided.

Financed buyer. We have lenders in place ready to finance.
Please note the final finance offered will be based on your personal circumstances.
The figures provided are for typical lending on this type of property.

One investor who has been buying for a few years now numerous BMV commercial to residential conversion projects has used the recommended build team, project management and the end to end services and was pleased to see figures, time-frames, and GDVs holding true. His quote: "Working with the teams was easy, trustworthy and reliable. Their teams are well versed in dealing with projects and investors alike. I don't live locally so having hands-on support as and when needed, was critical to seeing our projects through. I wholly recommend working with them and see massive value in their turnkey service." Tiruven, UK Property Investor.

Planning Information

Fylde Council (https://new.fylde.gov.uk) Ref: 18/0966

The terms of the subject to planning offer is for 9 x 2 bedroom apartments. An early exchange is required subject to the planning being achieved with a completion date within 28 days from the planning approval.
The building formerly had planning for ten units, 6 x 1 bedroom apartments and 4 x 2 bedroom apartments, but that permission has now lapsed. And more recently a scheme for nine apartments which has not been fully maximised.

The reason for 9 x 2 bedroom units is because the ten units break the threshold for the section 106 agreement for affordable housing. Also having nine units will allow the apartments to be of better quality and have much better practical assets in terms of the space and layout of them.
The planning consultant has already studied the building and layout in detail and held preliminary discussions with Fylde council and is 99% confident that we can get this application for 9 x 2
bedroom apartments approved.

The property is a virtual freehold with a 999-year lease that began on 9th November 1923. Meaning 904 years are remaining on a ground rent is a peppercorn amount. To develop the land, there is a freeholders contribution to pay to abide by the lease, which is circa £30,000; this is disclosed within the appraisal.

The Plan

THE FINANCIALS:

GDV: £1,530,000 (AFTER CONVERSION)

PURCHASE PRICE: £466,200
DEVELOPMENT: £475,000
BUILDING SURVEY £780
PROJECT MANAGEMENT £39,900
STAMP DUTY £12,350
LEGALS: SPLIT TITLE £2,000
FREEHOLDER CONTRIBUTION £30,000

SOURCING FEE £0
LEGAL PURCHASE £0
S106 £0
CIL £0

TOTAL COSTS / CASH BUYER £1,026,230

Finance;

FINANCED BUYER. WE HAVE LENDERS IN PLACE READY TO FINANCE
PLEASE NOTE THE FINAL FINANCE OFFERED WILL BE BASED ON YOUR PERSONAL CIRCUMSTANCES
THE FIGURES PROVIDED ARE FOR TYPICAL LENDING ON THIS TYPE OF PROPERTY

£466,200 Purchase Price
£475,000 Development

Finance to purchase;

Borrow 60% LTV of purchase price £466,200 = £279,720 Loan / £186,480 Deposit
100% Funding for build costs
Total Loan £754,720
One-off 2% Arrangement fee
The interest of 0.9% per month over 12 months. Total interest payable (incl. arrangement fee) = £96,604
Exit Fees: None

Money in
£186,480 Deposit
£39,900 in Project Management
£780 Building Survey
£2,000 Other Legals
£12,350 SDLT
£30,000 Freeholder Contribution

TOTAL CASH IN £271,510

There are 3 exit strategies that can be adopted for this opportunity:
Strategy 1: Build to sell
Strategy 2: Build to Rent Residential
Strategy 3: Build to Rent FRI Lease

Strategy 1: Build to sell

We have spoken this through with an RICS valuer and local agents and they recommend each unit valued at £180k - £185k. We have valued each unit at £170k which give you a solid contingency.

GDV
Each 2 bed apartment valued at £170,000
9 x 2 Bedroom Apartments @ £170,000
Total Gross Development Value £1,530,000

Less:

Purchase Price £466,200
Development Cost £475,000
Building Survey £780
Stamp Duty £12,350
Sale Legal & Splitting Titles £6,000
Project Management £39,900
Freeholder Contribution £30,000
Finance Costs £96,604
Estate Agent Fees @ 2% £30,600

Total Cost 1,157,434

Profit of £372,566

Profit on Gross Development Value (GDV): 24%
Profit on Cost: 32%

Strategy 2: Build to Rent Residential
In this strategy, all of the units will be rented to the private rental market. The demographic would be working professionals or retired individuals. There is very good demand in the area due to a shortage of ready availability of modernised stock. Generally, people that live in this area rarely move so it makes it harder for newcomers to the area. This shortage of supply, in turn, drives up sales prices and also rents.

Post Development, refinance against GDV;

75% LTV of £1,530,000 @ 4% = £1,147,500 Loan. £45,900 per annum / £3,825 pcm
£1,147,500 pays original loan £754,720 + finance costs £96,604 + £271,510 of your initial capital invested. Surplus £24,666. INFINITE RETURN

Cashflow Numbers
9 x 2 Bedroom Flats @ £650 per month £70,200 per annum
Total Gross Income £70,200 per annum

Less:

10% Management costs(incl VAT) £7,020 per annum
10% Operating costs: Maintenance, voids, insurance etc £7,020 per annum
Mortgage £45,900 per annum

Circa Net Cashflow £10,260 per annum
Circa Net Cashflow £855 per month
ROI Infinite All money out

Strategy 3: Build to Rent FRI Lease

In this strategy, all of the units will be rented by a Serviced Accommodation operator (Airbnb,Booking.com etc) on a fully repairing and insuring lease. The lease would be for 5 years and the responsibility of the maintenance and voids is the operators. There is very good demand in the area due to a shortage of ready availability of modernised short stay accommodation for the popular seaside holiday destination.

Cashflow Numbers
9 x 2 Bedroom Flats @ £500 per month £54,000 per annum
Total Gross Income £54,000 per annum

Less:
Mortgage £45,900 per annum

Circa Net Cashflow £8,100 per annum
Circa Net Cashflow £675 per month
ROI Infinite All money out

The yield based on invested funds:

Financed Buyer Build to Rent to the private rental market
26% - £271,510 invested and £70,200 gross annual income

Limited risk management;

PURCHASE PRICE: £466,200
Desktop RICS survey will be supplied before exchange

GDV: £1,530,000 (AFTER CONVERSION)
Verified by an RICS valuer and an RICS valuation will be provided to the buyer before purchase. The value of Each unit as verified by local agents are between £180K - £185K. The values here are at £170K so extremely conservative

Exchange
5 %
The exchange will be subject to achieving planning approval. As soon as planning achieved you, the buyer will have 28 days to complete but you are more than welcome to start works in that 28 day period.
The option holder is paying for the planning fees and the buyer will not have to pay anything toward the planning.

DEVELOPMENT: £475,000 with 10% contingency built-in. SUBJECT TO DETAILED SURVEY & INCL OF VAT. Overseen by RICS Building Surveyor. Alternatively, you can use your own team.
The duration is estimated to be 9 - 12 months
Introduction to the main contractor can be made upon request along with a site visit to talk through the scheme. The price is subject to some slight changes when going to detailed design and tender, and the RICS Building surveyor will provide the full renovation schedule of works and specifications. The RICS Building surveyor will give the full renovation schedule of works and specifications. The builder has surveyed the building in detail and priced against the plans. A detailed schedule providing a breakdown of costs and timelines will be supplied. You have a choice to use your development team. The developer undertaking the conversion are specialists in this location, having carried out several developments in the area. A schedule of works (SOW) with a detailed breakdown of costs and timelines can be sent on request.

PROJECT MANAGEMENT £39,900 INCL VAT - Project Managed by RICS Building Surveyor
An RICS building surveyor will act as the contractor overseeing all works. The works have been costed already, and a schedule of works provided.
You have a choice to use your project management team. Introduction to the main contractor can be made upon request along with a site visit to talk through the scheme. The project managers job is to take care of the development and deliver the job on time and within budget, subject to unexpected circumstances arising.
All payments will be verified by the RICS building surveyor via payment certificates to ensure that payment is made for only works that have been completed. Meaning all payments will be made in arrears. The project manager will administer all of the paperwork concerning the building works, including a JCT contract between you, the client and the contractor. Also, a service agreement between the project manager and you the client. Throughout the project, the project manager will provide weekly updates via written, photo and video updates. The surveyor’s details/contact can be sent on request.

DEPOSIT TO RESERVE: £5,000 (DEDUCTIBLE FROM PURCHASE)
Fully refundable if surveyor downs value or discover undisclosed problems or undisclosed legal issues with Title

STAMP DUTY £12,350
Commercial Rates

BUILDING SURVEY £780
This is the estimated cost of instructing your own RICS survey whether for a finance application or cash purchase

PURCHASE LEGALS £0
The vendor will pay for the buyers to purchase legal fees in turn for the buyer using a solicitor that is recommended. The vendor is willing to do this for fast exchange and completion as he knows the solicitors can achieve this

OTHER LEGALS
All other legal costs are paid for by the buyer. i.e. splitting titles & sales

SOURCING FEE £0
We are getting paid from the seller

Sold As Seen
The development opportunity is sold as seen and all numbers provided are a guide only based on professional opinions and should not be solely relied upon. You must do your own due diligence and seek professional advice if necessary.

FRI Lease
All residential units will be used as serviced accommodation by an in-place operator. They will offer a Fully Repairing and Insuring leases for five years
All maintenance will be carried out by the operator, so there is no management fee, no voids, and no repairs. There will be a tenant only break clause at the end of year 1
The rent reviews will be cap and collar with the retail price index, so rents are increased relatively in line with the market, they will pay you £500 per month for each of the 2 Bedroom Apartments

Matterport floorplan and photos will be provided.

Financed buyer. We have lenders in place ready to finance.
Please note the final finance offered will be based on your personal circumstances.
The figures provided are for typical lending on this type of property.

The Location

Nearest stations;
Ansdell & Fairhaven (0.1 mi)
Lytham (1.3 mi)
St. Annes-on-the-Sea (1.6 mi)

The site is within an area of considerable charm and character.

The area has good transport links with the M55 within a 10-minute drive. Bus routes are available linking into all major networks. Blackpool airport is also within a short 15 minutes drive from the site while Lytham train station is within a short drive

The site is located on Kingsway, Andell. The site can be accessed directly off Kingsway. Opposite the site, there is a garage sales forecourt. The area is mainly residential with close proximity to Woodlands road shopping area

St Anne's on the Sea lies on the sandy Fylde coast in Lancashire just south of Blackpool. St Anne's is brimming with tradition, Lancashire's friendliness, charm, and style. St Anne's was developed to cater for holidaymakers from around the country earlier in the last century and did it very successfully. It still attracts visitors today with new family attractions. The town centre's spacious Square has undergone major investment and regeneration which exudes a continental atmosphere.

The property is located just off the Lytham St Annes seafront with a short distance from Lytham center and Royal Lytham Golf course

The Development is situated just off the promenade of Ansdell Lytham St Annes, which has a strong demand for high-end luxury apartments. The site is placed in a fantastic location only a short walk from Fairhaven Lake, one of the jewels of the Fylde coastline.
Also, easy access is Ansdell high street and the center of Lytham which is one of the most prestigious residences to live in the UK.
Only around the corner is the exclusive Royal Lytham golf course where the Open golf championship is played.

Sought after location in the affluent town of Ansdell, Lytham St Annes.

It is located on Kingsway, which is accessed off Woodlands Road. It is within walking distance of the train station, local supermarket, local shops, and amenities. The surrounding areas also include dense residential areas. Ease of access is available on the coast road / Promenade and towards Fairhaven Lake. Ease of commuting is available towards Lytham and St Annes as well as Blackpool.

Average estimated value for a house in FY8

£178,306

The average price paid for a 2 bed flat in FY8 is £178,306 at £224 per sqft

Local Area Averages - Postcode - FY8 1AE;
Last 5 years postcode house price growth: 14.80%

GDV: £1,530,000 This is supported by sold and for sale 2 Bedroom apartments nearby:

Rightmove Sold. First part of Postcode. This area only. Type – Flat.

£175,000 Sold Aug 2019 Flat 86, Majestic, Clifton Drive North, Lytham St Annes, Lancashire FY8 2PH
https://www.rightmove.co.uk/house-prices/detailMatching.html?prop=61228155&sale=56360141&country=england

£187,500 Sold Dec 2019 Flat 15, Lowood Lodge, Lowther Terrace, Lytham St Annes, Lancashire FY8 5QG
https://www.rightmove.co.uk/house-prices/detailMatching.html?prop=75602744&sale=90366309&country=england

£199,000 Sold Apr 2019 61 Woodlands View, Lytham St Annes, Lancashire FY8 4EF
https://www.rightmove.co.uk/house-prices/detailMatching.html?prop=67250188&sale=9457372&country=england

£199,950 Sold Aug 2019 25, Madison Heights, Coopers Row, Lytham St Annes, Lancashire FY8 4UD
https://www.rightmove.co.uk/house-prices/detailMatching.html?prop=64023341&sale=10753087&country=england

£205,000 Sold May 2019 28 Sunningdale Court, Lytham St Annes, Lancashire FY8 3UP
https://www.rightmove.co.uk/house-prices/detailMatching.html?prop=57943416&sale=9942670&country=england

Date Sold Price Type Address
11/05/2018 £195,000 2 Bedroom Flat Flat 2, Crystal Lodge, 71 Clifton Drive, Lytham St Annes, FY8 1BZ
14/06/2018 £173,000 2 Bedroom Flat 58 Orchard Road, Lytham St Annes, FY8 1PG
01/06/2018 £178,000 2 Bedroom Flat Flat 3, Crystal Lodge, 71 Clifton Drive, Lytham St Annes, FY8 1BZ
28/11/2018 £175,000 2 Bedroom Flat 2, The Gables, 35, Orchard Road, Lytham St Annes, Lancashire FY8 1PG
14/12/2018 £205,000 2 Bedroom Flat 18, The Gables, 35, Orchard Road, Lytham St Annes, Lancashire FY8 1PG
02/01/2019 £168,000 2 Bedroom Flat 1, The Gables, 35, Orchard Road, Lytham St Annes, Lancashire FY8 1PG
11/01/2019 £175,000 2 Bedroom Flat 7, The Gables, 35, Orchard Road, Lytham St Annes, Lancashire FY8 1PG
22/03/2019 £250,000 2 Bedroom Flat 19, The Gables, 35, Orchard Road, Lytham St Annes, Lancashire FY8 1PG
29/03/2019 £205,000 2 Bedroom Flat 17, The Gables, 35, Orchard Road, Lytham St Annes, Lancashire FY8 1PG
29/03/2019 £175,000 2 Bedroom Flat 4, The Gables, 35, Orchard Road, Lytham St Annes, Lancashire FY8 1PG
12/06/2019 £188,000 2 Bedroom Flat 16 The Gables, 35 Orchard Road, Lytham St Annes FY8
28/06/2019 £180,000 2 Bedroom Flat 11 The Gables, 35 Orchard Road, Lytham St Annes FY8
Average Price £188,917

The main comparable development to this one is The Gables 35-39 Orchard Road, Lytham St Annes. It is a development of 19 x 2 Bedroom new build apartments. The Gables site is located in a slightly worse location than Kingsway and they are selling for a minimum £25,000 more than we have in for our end values. If the GDV was calculated at the average sold price, the GDV would be £1,700,253. Which is just shy of £200,000 more than we have projected. So the numbers presented are certainly conservative.

One investor who has been buying for a few years now numerous BMV commercial to residential conversion projects from the seller has used the recommended build team, project management and the end to end services and was pleased to see figures, time-frames and GDVs holding true. His quote: "Working with the teams was easy, trustworthy and reliable. Their teams are well versed in dealing with projects and investors alike. I don't live locally so having hands-on support as and when needed was critical to seeing our projects through. I wholly recommend working with them and see massive value in their turnkey service." Tiruven, UK Property Investor