Investors paid 86.50p per share in the New Listing for this property, and it became available on the Resale market December 21st 2015.
Just a stone’s throw from the beach, this modern property comprises 14 flats. It’s on Hayling Island, which is situated between Portsmouth and Chichester in South-East England, and connected by road to the mainland. The building is being offered 50% geared for enhanced returns. A compelling investment opportunity:
- The investment comprises all 14 flats in this property 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.
- The property is on Hayling Island, in the South-East of England. Savills, in their forecasts for house price growth by region, have this as the region of the country they expect to appreciate most in value over the next 5 years - a predicted 21.6% (2016: 7%, 2017: 4%, 2018: 4%, 2019: 3%, 2020: 2%).
- By purchasing the entire block at its investment value as opposed to its break-up value, investors benefit from a higher dividend yield than they would achieve by purchasing individual flats. Net income is further enhanced by a favourable mortgage rate relative to the net dividend yield.
- 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.
You can read more on the investment case, here.
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.
Our investment comprises all 14 flats (13 two-bed and 1 one-bed) in the block, as well as the freehold interest for the building. We have achieved this off-market sale through our specialist networks, directly from the vendor. By purchasing the entire block at its investment value as opposed to its break-up value, investors benefit from a higher dividend yield than they would achieve by purchasing individual flats.
The flats were acquired in good condition and the Chartered Surveyor's report identified no material issues. We have made a provision of £6,300 for any remedial works that further testing reveals. There is also a provision of £2,400 for furnishings.
The total rent forecast for the 14 flats is £97,200 per annum, however, the number of vacant flats may vary month to month. The building has seen 100% occupancy in recent periods, but we have factored into our forecasts an annual void rate of 3.8% for prudence.
At the current level of rent, Gross Rental Yield would be 5.62% and the forecast Dividend Yield 3.60% (fully accounting for and after mortgage interest payments, purchase costs, furnishings, remedial cosmetic works, 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.
For prudence, we have not included any growth in rental values in our forecasts - any growth in rent will be incremental to our forecasts.
The mortgage is being provided by a major high street bank and has a five-year fixed interest rate of 3.99%. Please refer to our blog post on geared property for further details.
This transaction was approved by our RICS qualified Director of Property.
The property comprises 14 purpose built flats: 13 two-bedroom flats and 1 one-bedroom flat.
All the flats contain a living room, kitchen and bathroom. We present here floorplans for 3 of the flats as examples.
The Surveyor details the total Gross External area of the block to be 9,800 sq.ft / 910 sq.m
There is also parking available.
- Share Valuation
- House Price Index
- Rental Income Breakdown
- Latest Valuation
- Latest Share Valuation
- Latest Property Value
- Amortised Purchase Costs
- - £833,250
- Deferred Tax
- - £5,464
- 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
- = £97,200
- Gross Rental Yield
- - £63,051
- Annual Interest Payment
- Letting and Management
- Property Insurance
- Allowance for possible voids
- Maintenance Allowance
- Corporation Tax
- Dividends per year
- = £34,149
- 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.
129, Southwood Road, Hampshire, Hayling Island, PO11 9NQ,