Investors paid 76.92p per share in the New Listing for this property, and it became available on the Resale market September 22nd 2017. Based on this share price, and third party forecasts for the region, the estimated total return is 40% over 5 years.
Owing to 0.5% stamp duty being applicable to Resale Market purchases and not New Listing purchases, investors on the Resale Market would need to purchase at an average price of 76.54p per share to achieve these same returns.
These stylish new-build townhouses in Goring-by-sea are finished to a high standard with private parking and gardens available for tenants. The properties are situated in a well-established residential area and benefit from close proximity to the seafront (0.5 miles away), as well as the South Downs (1.2 miles away), making this an attractive location to live. In addition, Goring-by-Sea railway station is less than a mile away with direct connections to Brighton (29 mins), Portsmouth & Southsea (50 mins) and London Victoria (1hr 25 mins). This should contribute to strong demand from commuting professionals and families.
View a short video from our Director of Property to learn more.
- The investment comprises 4 townhouses in Ollivers Chase, Goring-by-Sea plus the Freehold interests. We purchased the properties at a 7.6% discount by buying in bulk, providing a platform for above average capital growth and a degree of downside protection, in addition to the dividend
- Our exit strategy is to sell the houses individually rather than as a single investment, thereby realising the discount that we have secured from buying in bulk. Being 4 Freehold houses within a new development in a South East location, they lend themselves to individual sale
- Leading research agencies Savills, Knight Frank, JLL and CBRE, have predicted house price growth in the South East of 17%, 17%, 14.7% and 20.5% respectively, over the next 5 years. The average of these predictions is 17.3% and once geared by the mortgage debt would deliver 5-year capital growth of 27%, based on selling the units individually. Once a dividend yield is added, this would equate to a total return of 40% over a 5-year period based on the New Listing price of 76.92p per share and after deducting all costs of purchase (including the initial Property Partner transaction fee) and accounting for corporation tax on the capital gain, if the property were sold at this value. Owing to 0.5% stamp duty being applicable to Resale Market purchases and not New Listing purchases, investors on the Resale Market would need to purchase at an average price of 76.54p per share to achieve these same returns
- The nearby popular city of Brighton and Hove has higher average house prices, which should support value migration into the Worthing area
- The property is mortgaged at 50% loan-to-value (LTV) of the purchase price. The mortgage gives enhanced exposure to property price movements, and the potential for amplified returns; though investors must note amplified negative returns if prices fall
Our investment comprises 4 three-bedroom townhouses. By purchasing the properties in a single transaction, we were able to offer the vendor a fast and professional service from an experienced buyer. This, combined with our previous track record enabled us to secure a reduced purchase price of £1,330,000 for these properties versus a Chartered Surveyors Valuation of the units if sold separately of £1,440,000. By purchasing these properties at a bulk discount investors will benefit from a higher dividend yield than would be achieved by purchasing individual units.
The total rent forecast for the 4 units is £62,400 per annum. The number of vacant units 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 4.63% and the forecast Dividend Yield 2.54% (fully accounting for and after mortgage interest payments, purchase costs, furnishings, forecast maintenance, annual voids, corporate taxation and all fees). Since April 2016 UK taxpayers are entitled to a £5,000 annual dividend allowance. See our FAQs here for more information.
The mortgage is provided by a major high street bank with a two-year fixed interest rate of approximately 3.51%. After this two-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. Please refer to our blog post on geared property for further details.
The properties were acquired in good condition, and the Chartered Surveyor's report identifies no material issues. We have set aside a contingency of £1,200 for any issues that are identified after purchase. There is also a total provision of £6,000 for furnishings.
We acquired 4 townhouses with the Freehold interests.
This transaction was approved by our RICS qualified Director of Property.
The investment comprises 4 three-bedroom townhouses all finished to a high standard.
There is private allocated parking available to tenants.
We present here a floorplan as an example.
- Share Valuation
- House Price Index
- Rental Income Breakdown
- Latest Valuation
- Latest Share Valuation
- Latest Property Value
- Amortised Purchase Costs
- - £671,650
- 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
- - £800
- Gross Rental Revenue
- = £61,600
- Gross Rental Yield
- - £41,573
- Annual Interest Payment
- Letting and Management
- Property Insurance
- Allowance for possible voids
- Maintenance Allowance
- Corporation Tax
- Dividends per year
- = £20,027
- 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.
4 houses in Ollivers Chase, BN12 4FN,