Investors paid 63.94p per share in the New Listing for this property, and it became available on the Resale market June 26th 2017.
This property is comprised of four newly converted apartments on London Road, Brighton and boasts a strong dividend yield for the area. The flats themselves are less than a mile from the seafront, as well as being an 8-minute walk to Brighton railway station – offering direct line services to central London in an hour. With young professionals continuing to relocate to the city and a thriving local economy, home to major employers including American Express and Bupa, this should help underpin rental and capital values going forward.
- The investment comprises 4 flats on London Road, Brighton 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 properties at their investment value as opposed to their break-up value, investors will benefit from a higher net dividend yield than would be achieved by purchasing individual units.
- The pricing point for flats above shops is lower than for conventional flats. However, these units command a similar rental level which, together with the negotiated price, deliver a strong yield and should grow at a comparable rate to the surrounding area.
- Brighton is the site of major regeneration projects, including an £81m redevelopment scheme in the city centre, which is set to contribute £153m to the local economy over the next ten years and should support capital values going forward.
- Our exit strategy is to sell the units individually rather than as a single investment, thereby realising the discount that we have secured from buying in bulk.
View a short video from our Director of Property to learn more.
Our investment comprises 4 two-bedroom flats. By purchasing the 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 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 5.28% and the forecast Dividend Yield 3.54% (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 3.2%. 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 made a provision of £4,000 for any remedial works that further testing reveals. There is also a total provision of £4,000 for furnishings.
This transaction was approved by our RICS qualified Director of Property.
The investment comprises 4 two-bedroom flats.
The flats all provide high specification finishes with modern kitchens and bathrooms. Flats 2 & 4 benefit from roof terraces to the rear of the building.
We present here floorplans for 3 of the flats as examples.
- Share Valuation
- House Price Index
- Rental Income Breakdown
- Latest Valuation
- Latest Share Valuation
- Latest Property Value
- Amortised Purchase Costs
- - £572,923
- 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
- - £2,500
- Gross Rental Revenue
- = £59,900
- Gross Rental Yield
- - £36,681
- Annual Interest Payment
- Letting and Management
- Property Insurance
- Allowance for possible voids
- Maintenance Allowance
- Corporation Tax
- Dividends per year
- = £23,219
- 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 flats on London Road, BN1 4JF,