Investors paid 65.63p per share in the New Listing for this property, and it became available on the Resale market December 18th 2015.
A mere 350m from the sea and a short distance to the picturesque Ansteys Cove, this art deco property offers a compelling investment opportunity in the seaside town of Torquay, Devon. The block comprises 9 flats and is offered with gearing for enhanced returns.
- The investment comprises all 9 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 in Torquay, Devon in the South-West of England. Savills, in their forecast for house price growth by region, expect this region to appreciate significantly in value over the next 5 years - a predicted 19.9% (2016: 6%, 2017: 3.5%, 2018: 3.5%, 2019: 3%, 2020: 2.5%).
- The area has seen significant investment from both private and public sector with Government announcing £18 million expansion project in the region.
- 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 units individually rather than as a single investment, thereby realising the discount that we have secured from buying in bulk.
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 an unbroken block of 9 two-bedroom flats, as well as the Freehold interest for the building. 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.
The flats were being acquired in good condition. We have made a provision of £13,160 for any remedial works that further testing reveals, including a contingency for maintenance of the roof as highlighted in the Homebuyer Report.
The total rent forecast for the 9 flats is £68,160 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 4.91% and the forecast Dividend Yield 2.55% (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.
The mortgage is provided by a major high street bank and has a two-year fixed interest rate of 3.90%. 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.
This transaction was approved by our RICS qualified Director of Property.
The property comprises 9 purpose built two-bedroom flats.
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 Internal area of the block to be 6,250 sq.ft / 581 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
- - £618,625
- Deferred Tax
- - £20,100
- 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
- = £68,160
- Gross Rental Yield
- - £47,776
- Annual Interest Payment
- Letting and Management
- Property Insurance
- Allowance for possible voids
- Maintenance Allowance
- Corporation Tax
- Dividends per year
- = £20,384
- 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.
Ansteys Court, Torquay, Torquay, TQ1 3TB,