Investors paid 120.07p per share in the New Listing for this property, and it became available on the Resale market February 18th 2016.
Our second investment opportunity in Hastings, we bring you 13 flats in St David’s Lodge, a grand modern development. The flats are geared for enhanced returns. This investment offers an attractive opportunity to diversify to the South-East of England.
- The investment comprises 13 out of 14 flats in this block in Hastings plus the Freehold of the entire building 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 flats significantly below their break-up value, investors will benefit from a higher net dividend yield than they would achieve by purchasing individual flats.
- Hastings has recently been named in the top five English ‘heritage assets’ in the country. The town also has a growing arts and culture scene that is making it an increasingly attractive destination and place to live.
- The property is in Hastings, 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%).
- 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 for Hastings 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.
The mortgage is provided by a major high street bank and has a two-year fixed interest rate of 3.99%. 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. We have assumed a constant cost of debt and no rental growth in our annual income forecast. Please refer to our blog post on geared property for further details.
Our investment comprises 13 out of 14 flats, as well as the Freehold interest for the building. The flats have been acquired in good condition. The Chartered Surveyor's report identifies no material issues. We have made a precautionary provision of £13,800 for tests that are required and any remedial works that the testing reveals. There is also a provision of £3,900 for furnishings.
The total rent forecast for the 13 flats is £117,600 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%.
At this level of rent, the forecast Dividend Yield is 2.84% (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.
We haven't included any growth in rental values in our forecasts, which is simply a precaution. However, it is worth noting that Savills forecast rental growth of +20.5% through to 2020 for the UK.
This transaction was approved by our RICS qualified Director of Property.
The investment comprises 13 two-bedroom purpose built flats. All the flats contain a living room, kitchen and bathroom. There is also parking available.
The flats are built in two kinds of layout. We provide two sample floorplans to illustrate these.
- Share Valuation
- House Price Index
- Rental Income Breakdown
- Latest Valuation
- Latest Share Valuation
- Latest Property Value
- Amortised Purchase Costs
- - £1,125,000
- Deferred Tax
- - £6,115
- 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
- - £5,000
- Gross Rental Revenue
- = £112,600
- Gross Rental Yield
- - £75,285
- Annual Interest Payment
- Letting and Management
- Property Insurance
- Allowance for possible voids
- Maintenance Allowance
- Corporation Tax
- Dividends per year
- = £37,315
- 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.
St David's Lodge, Hastings, Hastings, TN34 2RD,