I had a surprisingly fun sunny Saturday afternoon looking at auction properties this weekend. Subsidence cracks has been the theme of the week. You know what they say, if it’s gone to auction “there must be trouble.”
The first property I saw was a two bed terrace whose garden wall backed onto a cemetery. A young couple and their two children who were living there kindly let me in to have look around. It was extraordinary opening the bathroom window at the rear of the property and peering out at rows of big grey tombstones. The owner’s very sweet six year old daughter stood on the toilet to have a look – she’d never seen the view before.
The property needed a full refurbishment including a new roof, which was fine: all pretty standard stuff for auction lots. But then I saw the crack. In the back wall along the line of the party wall with the next property. I haven’t seen this before and I would have to bow to the wisdom of a structural engineer. Sadly that’s the nail in the coffin of any hopes I had of getting a mortgage on this lot.
Next a large 4 bedroom house guided at a mere £100,000 in East London. I had no intention of bidding on this, I was just very curious. Setting a low guide price always does the trick, hey auctioneers? This was a handsome three storey Victorian house nestled alongside a double carriage section of the A13. I hadn’t looked at the legal pack but just by chatting to people at the site I discovered that it had been compulsorily purchased when the A13 was widened. The construction had cause lots of subsidence – I counted at least five cracks. Then I got chatting to a really sweet guy who said he used to be a builder. When everyone had gone he confided in me that he grew up in the property and was hoping to buy it back for himself. I found myself giving him lots of advice about the pitfalls, not least some serious questions over who had built a garage on the plot right next to the house, the likelihood of underpinning and the unlikelihood of future saleability. He was determined to follow his heart and that in an auction room can be very dangerous. Then he described the street before they built the main road and how his home looked out over the park – now way across the other side of the dual carriageway. I told him he MUST set a limit when bidding at the auction and he asked if I would stand next to him when he bid to stop him going over his limit. Yes, I will. I love the stories that these houses tell and it was a privilege to meet him.
Next to some serious business. I really like Warner style flats as they have their own front doors and if you can buy two together, you get the freehold. So I saw two solid Warner flats with great proportions in South London being off loaded by a housing association. I hadn’t seen the legal pack yet and but guess what someone told me who had: it’s been underpinned! One very savvy developer told me that this housing association only offloads difficult properties through auctions. Too right.
After the viewing I got chatting to two really nice developers. None of us had seen any cracks and we rummaged around trying to find out where it had been underpinned. I suspected the front bay as differential settlement is common here and sure enough we found three small signs of movement. Will this be too much to put off even commercial lenders in the current climate? One of the guys told me he had a nightmare with a property he bought at auction that had been underpinned. The lender automatically required a structural survey and the surveyor said there was evidence of recent movement. Goodbye mortgage.
I’m going to quiz a couple of lenders tomorrow. Are there any investors out there who’d like to lend me £300,000 at 8% interest for the next few months whilst I refurbish it? Then I can re-finance it to a mainstream lender. You know I think I’ve set my heart on getting these flats. I hope I wake up tomorrow with my business head firmly in place.