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.
These ten 2-bed flats are located in Pendlebury, an easy commute to Manchester city centre and a mere 15 minutes from MediaCityUK. Home to the BBC, ITV and over 250 other businesses - MediaCityUK is set to double in size over the next 10 years, with a £1bn expansion plan recently approved. This coupled with Manchester's population growth being three times the national average, speaks to strong capital growth potential, and even stronger rental prospects. Agecroft Apartments is offered with gearing to enhance dividend yield and potential capital returns.
- The investment comprises 10 out of 48 flats in Agecroft Apartments, Pendlebury 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 £918,000 versus the RICS Vacant Possession Value (break-up price) of the individual units of £998,000. 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.
- Manchester is a key driver within the UK's 'Northern Powerhouse', being the second largest economic hub after London. The area is expected to benefit from a large number of infrastructure projects including plans for High Speed Rail 2 and the £1bn planned expansion of MediaCityUK in Salford.
Our investment comprises 10 two-bedroom flats within a 48 flat residential block. 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 £918,000 for these properties versus an RICS certified Vacant Possession Value (break-up price) of the individual units of £998,000. 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 December 9th and completion was scheduled for January 17th 2017. Due to administrative delays relating to the arrangement of the mortgage facility, completion is set to occur later than anticipated. However, we expect to complete in the next few working days. 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 10 units is £60,000 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 5.67% and the forecast Dividend Yield 3.60% (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 £2,500 for any remedial works that further testing reveals. There is also a total provision of £2,000 for furnishings.
This transaction was approved by our RICS qualified Director of Property.
The investment comprises 10 two-bedroom flats within a 48 flat residential block. All flats contain a living room, kitchen and bathroom.
Each of the 10 flats has the benefit of an allocated parking space.
We present here floorplans for 2 of the properties as examples.
- 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
- - £463,590
- 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
- - £7,950
- Gross Rental Revenue
- = £52,050
- Gross Rental Yield
- - £33,017
- Annual Interest Payment
- Letting and Management
- Property Insurance
- Allowance for possible voids
- Maintenance Allowance
- Corporation Tax
- Dividends per year
- = £19,033
- 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.
10 flats in Agecroft Apartments, M27 8BG,