Investors paid 34.90p per share in the New Listing for this property, and it became available on the Resale market September 28th 2016.
Lydan House is a strong yielding property for the income-seekers amongst you. This block of 6 flats can be found in Redditch, a leafy commuter town 15 miles south of Birmingham. The area should benefit from value migration out of the city which has seen strong growth over the past two years, and should also benefit from the plans for High Speed Rail 2. The property is offered with gearing to enhance investor returns. View a short video from our Director of Property on why this is a great investment.
- The investment comprises an unbroken block of 6 flats in Lydan House, Redditch plus the Freehold interest for the entire building and is geared at 50% loan-to-value (LTV) of the purchase price. Gearing gives enhanced exposure to property price movements, and the potential for amplified returns; though investors must note amplified negative returns if prices fall.
- By purchasing the unbroken block at its investment value as opposed to its break-up value, investors will benefit from a higher net dividend yield than they would achieve by purchasing individual flats.
- The property is located 1km from Redditch Railway Station, which offers a 37 minute direct journey to Birmingham New Street Station. The area should continue to be attractive to professionals who are willing to commute to have more living space.
- Our exit strategy is to sell the investment as a single holding to an investor. This will preserve its value as an income producing freehold block, and ensure an efficient and timely sale.
Property Partner does not provide advice and nothing in this Overview should be construed as investment or tax advice. The information which appears in this Overview is for general information purposes only and does not constitute specific advice.
The mortgage is provided by a major high street bank with a five-year fixed interest rate of 3.44%. After this five-year period, the interest rate will switch to a variable rate based on the bank's base rate. At that point, we will assess the situation and either continue with the variable rate or fix the interest rate for an additional period if necessary. We have assumed no rental growth in our annual income forecast. Please refer to our blog post on geared property for further details.
Our investment comprises an unbroken block of 6 flats (2 one-bedroom and 4-two bedroom), as well as the Freehold interest for the building. By purchasing these flats at a bulk discount investors will benefit from a higher dividend yield than they would achieve by purchasing individual units.
The flats were acquired in good condition, and the Chartered Surveyor's report identifies no material issues. We have made a provision of £1,000 for any remedial works that further testing reveals.
The total rent forecast for the 6 flats is £39,240 per annum. The number of vacant flats may vary month to month. For prudence we have factored into our forecasts an annual void rate of 3.8% and have not included any growth in rental values.
At the forecasted level of rent, Gross Rental Yield would be 6.56% and the forecast Dividend Yield 4.14% (fully accounting for and after mortgage interest payments, purchase costs, forecast maintenance, annual voids, corporate taxation and all fees). From April 2016 UK taxpayers are entitled to a £5,000 annual dividend allowance. See our FAQs here for more information.
This transaction was approved by our RICS qualified Director of Property.
The investment comprises 6 flats - 2 one-bedroom flats and 4 two-bedroom flats. All the flats contain a living room, kitchen and bathroom. We present here floorplans for 3 of the flats as examples.
There is off street parking available for tenants.
- Share Valuation
- House Price Index
- Rental Income Breakdown
- Latest Valuation
- Latest Share Valuation
- Latest Property Value
- Amortised Purchase Costs
- - £290,375
- Latest Valuation
Note: The estimates provided do not constitute valuation advice; it remains your responsibility to determine valuation.
The HPI is an official statistic that captures changes in the value of residential properties across England and Wales. It is published by the Land Registry, which is a UK government organisation.
Note: Past performance is not a reliable indicator of future results.
Residential property investment is a total returns product. This information is the income component only. Increasing capital values have historically driven most of the return.
- Gross Rent per year (E)
- Service Charges
- - £0
- Gross Rental Revenue
- = £39,240
- Gross Rental Yield
- - £24,477
- Annual Interest Payment
- Letting and Management
- Property Insurance
- Allowance for possible voids
- Maintenance Allowance
- Corporation Tax
- Dividends per year
- = £14,763
- Dividend Yield
Note: UK taxpayers are currently entitled to a £5,000 annual dividend allowance. This means that the total income related tax you pay is no greater than if you were to own the property directly. Gross rent and dividends may be lower than estimated. Tax treatment depends on individual circumstances and may be subject to change in future. See FAQs for more information on taxation. The Dividend Yield assumes an investment at the Latest Valuation.
Lydan House, Redditch, Worcestershire, B97 4JS,