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.
This property has a strong investment case with a forecast total return of 40% over 5 years. By agreeing to buy all three houses in a single transaction, we’ve secured a 7.1% discount to the price of the individual units. The exit strategy for this investment will be to sell the houses individually to realise the full discount for investors.
These 3 four-bedroom barn-style houses are located in northern Worthing, South East England. The properties are being acquired fully tenanted and should continue to appeal to families being at the foot of the beautiful South Downs and within close proximity to Brighton and Hove.
The properties are less than a mile to Goring-by-Sea railway station, providing direct services to Brighton, Portsmouth & Southsea and London Victoria. Local employment opportunities are also compelling with GlaxoSmithKline, Southern Water and Worthing Hospital all within 4 miles of the property.
View a short video from our Director of Property to learn more.
- The investment comprises 3 semi-detached houses on Fulbeck Avenue, Worthing, and the Freehold interests. We are purchasing the properties at a 7.1% discount by buying in bulk providing a platform for above average capital growth and a degree of downside protection, in addition to the dividend
- Our exit strategy is to sell the houses individually rather than as a single investment, thereby realising the discount that we have secured from buying in bulk. Being 3 Freehold houses in a well-established South East location, they lend themselves to individual sale
- Leading research agencies Savills, Knight Frank, JLL and CBRE, have predicted house price growth in the South East of 17%, 17%, 14.7% and 20.5% respectively, over the next 5 years (correct as of 31/10/2017). The average of these predictions is 17.3% and once geared by the mortgage debt would deliver 5-year capital growth of 24%, based on selling the units individually. Once the dividend yield is added, this would equate to a total return of 40% over a 5-year period after deducting all costs of purchase (including the initial Property Partner transaction fee) and accounting for corporation tax on the capital gain, if the houses were sold at this value. The enhanced rental income promotion is paid in addition to these underlying returns
- The property is mortgaged at 50% loan-to-value (LTV) of the purchase price. The mortgage gives enhanced exposure to property price movements, and the potential for amplified returns; though investors must note amplified negative returns if prices fall. For your information, we have chosen to offer this investment on a mortgaged basis, because doing so increases the forecast 5-year total return from 29% to 40% and increases the annual yield by 0.12% p.a
Investors will start accruing dividend income from the day they commit to investing in the property. Contracts are due to exchange in the next few days with completion scheduled 5 weeks later. The resale market for this investment will launch the following business day after completion.
Our investment comprises 3 four-bedroom semi-detached houses. 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 £1,115,000 for these properties versus a Chartered Surveyors Valuation of the units if sold separately of £1,200,000. By purchasing these houses at a bulk discount investors will benefit from a higher dividend yield than would be achieved by purchasing individual units.
The total rent forecast for the 3 houses is £63,000 per annum. The number of vacant houses may vary month to month. For prudence we have factored into our forecasts an annual void rate of 3.8% and have not included any growth in rental values.
At the forecasted level of rent, Gross Rental Yield would be 5.58% and the forecast Dividend Yield 3.25% (fully accounting for and after mortgage interest payments, purchase costs, furnishings, forecast maintenance, annual voids, corporate taxation and all fees). Since April 2016 UK taxpayers are entitled to a £5,000 annual dividend allowance. See our FAQs here for more information.
The mortgage will be provided by a major high street bank with an anticipated two-year fixed interest rate of approximately 3.71%. 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 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 set aside a contingency of £10,000 for any issues that are identified after purchase. There is also a total provision of £1,500 for furnishings.
We are acquiring 3 semi-detached houses and the Freehold interests.
This transaction was approved by our RICS qualified Director of Property.
The investment comprises 3 four-bedroom semi-detached houses.
There is off street parking available for tenants.
We present here a floorplan as an example.
- 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
- - £563,075
- 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
- - £750
- Gross Rental Revenue
- = £62,250
- Gross Rental Yield
- - £40,513
- Annual Interest Payment
- Letting and Management
- Property Insurance
- Allowance for possible voids
- Maintenance Allowance
- Corporation Tax
- Dividends per year
- = £21,737
- 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.
3 houses in Fulbeck Avenue, BN13 3RS,