This property has been fully funded and is not currently available for investment. We are in the process of completing the purchase at which point it will move to our Resale market.
View a short video from our Director of Property on why this is a great investment.
500m from Brighton Pier and Pavilion, and 300m from the beach, these three flats are a rare find in 'Kemp town', the heart of Brighton. They are also within walking distance of Brighton railway station providing an easy commute to London. There is little scope for large-scale development in Brighton, which will limit the amount of available stock and should help underpin rental and capital values going forward.
- The investment comprises 3 out of 5 flats in a converted Victorian house 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.
- There is a significant discount reflected in the purchase price of these properties, which we have secured by bulk-purchasing them at an RICS Investment Value (bulk price) of £726,850 versus the RICS Vacant Possession Value (break-up price) of the individual units of £790,000. Please note that future quarterly revaluations will be based on the Investment Value.
- 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 property is just 300m from the beach, and 1.1km from Brighton railway station, which takes you to London Bridge in an hour. An attractive area for professionals who are willing to commute to have more space, and enjoy summer by the sea.
Our investment comprises 3 one-bedroom flats. 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 £726,850 for these properties versus an RICS certified Vacant Possession Value (break-up price) of the individual units of £790,000. Further, by purchasing these properties at a bulk discount investors will benefit from a higher dividend yield than would be achieved by purchasing individual units.
Contracts were exchanged on January 6th and completion has a backstop date of 35 days after fully funding. The resale market for this investment will launch the following business day after completion. Regardless of the completion date, investors will start accruing dividend income from the day they commit to investing in the property.
The total rent forecast for the 3 units is £37,800 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 1.9% and have not included any growth in rental values.
At the forecasted level of rent, Gross Rental Yield would be 5.08% and the forecast Dividend Yield 3.30% (fully accounting for and after mortgage interest payments, purchase costs, furnishings, 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.
The mortgage is provided by a major high street bank with a five-year fixed interest rate. The interest rate is fixed at completion, but based on rates currently available, we estimate interest of approximately 3.8%. 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. Please refer to our blog post on geared property for further details.
The properties are being 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.
This transaction was approved by our RICS qualified Director of Property.
The investment comprises 3 one-bedroom flats.
We present here the floorplans for all 3 flats.
- Share Valuation
- House Price Index
- Rental Income Breakdown
- Funding Target
- Share Valuation
- Purchase Price
- Purchase Costs
- Stamp Duty
- Legal & Prof Fees
- Pre-let expenses
- Repairs Provision
- Mortgage Arrangement Fees
- - £363,600
- Funding Target
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
- - £850
- Gross Rental Revenue
- = £36,950
- Gross Rental Yield
- - £23,183
- Annual Interest Payment
- Letting and Management
- Property Insurance
- Allowance for possible voids
- Maintenance Allowance
- Corporation Tax
- Dividends per year
- = £13,767
- Dividend Yield
Note: UK taxpayers are currently entitled to a 10% pidend tax credit on Dividends. As of April 2016, this is to be replaced by 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 or more information on taxation. The Dividend Yield assumes an investment at the Latest Valuation.
3 flats in Devonshire Place, Brighton & Hove, BN2 1QA,