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Property with a catch


Frank Hovis
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Seventeen bedroom grade 2 listed Georgian manor house in over an acre very near to the beach in Lynton, North Devon.  In need of restoration.

1_Manor-3.jpg

£250k on Zoopla listing

https://www.zoopla.co.uk/property-history/the-manor-house/lynmouth/ex35-6en/52635076?image=1

Now going to auction for £160k.

https://www.bristolpost.co.uk/news/uk-world-news/17-bedroom-beach-side-manor-3802808

Quote

since Carol purchased the leasehold on the property in 2015, they have put a new roof on the main Manor, renovated two holiday cottages, established a tearoom and gallery and rented part of the building to an artisan brewer.

Even leasehold with 120 years to go it still sounds cheap, leases can be extended.

 

But then you hit the sting in the tail:

Quote

Lease Terms Full repairing and insuring lease with over 120 years remaining. Ground rent is  £30,000pa :S. The tenant is obliged to carry out considerable renovations. We have requested a full schedule of works. Full details can be made available as soon as possible after viewing the property.

 

Right.  £2,500 a month ground rent.  Or just rent.  With an additioanl requirement to renovate the place.

A quick search shows that for that £30k in real rent you could just live in a nice house (this is also in Devon) and have somebody else do the repairs

4267f1b3e6c8ac13e2bbefa1ef40021be3b5a669

https://www.zoopla.co.uk/to-rent/details/54050753?search_identifier=05d2e7a77a592d2532bfcfb25cabf341

 

With that ground rent it's a liability rather thna an asset; it's like a time share.  You would literally have to pay somebody to take that on.

 

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Nice find.  Crowdfunding a failed business venture, obviously (from the Bristol Post link):

Quote

In 2018 a crowdfunding campaign was set up to try and restore the property "to its former glory".

The then owner Carol Bolton, set up a fundraising target of £100,000 - to date it has raised £10.

On the crowdfunding page it says: "The Manor has had a chequered past and over the years has functioned as a school, a care home, a holiday fellowship property and very briefly and most recently as an Art Hotel.

https://www.justgiving.com/crowdfunding/themanorhouse

Quote

I bought the property 2 years ago at auction (leasehold) and we have begun the long job of rescue (a slow and very expensive endeavour).

It's odd that the transaction (I guess in 2016?) does not show up in Zoopla prices history for the area

Edited by Bear Hug
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LR classifies does record sales as it reckons they are not fair price.

I think any price paid is fair value.

You can see tge Carol woman, going to auction and thinking shes got a bargain.

Some people are idiots.

Id love to know who has the leasehold.

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1 hour ago, Bear Hug said:

Nice find.  Crowdfunding a failed business venture, obviously (from the Bristol Post link):

https://www.justgiving.com/crowdfunding/themanorhouse

It's odd that the transaction (I guess in 2016?) does not show up in Zoopla prices history for the area

Bought at auction for £98,500 in 2015.

Plus £150k gone in ground rent and the refurb costs less some rental income.

They're probably in this for about £300k.

But seriously who would take on a 110 year lease that requires them to pay £3.3m even before inflation?

https://www.i-bidder.com/en-gb/auction-catalogues/clive-emson/catalogue-id-ibcl10079/lot-819817b5-2cdf-4a90-a3d0-a4fe00e20050

If you are a huge gambler then there have been noises about ground rent reform over the last few years saying that it should be more like a service charge: being that you only pay for the services you receive.

If the ground rent is abolished, as there aren't any services in this case, then you have a million pound property for £160k plus renovation costs and £30k per year for every year until and if ground rent is reformed.

Leases can be extended very cheaply if done early enough, the landlord has no choice in the matter, so that's not a problem.

I'm not however that much of a gambler.

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11 minutes ago, Frank Hovis said:

Bought at auction for £98,500 in 2015.

Plus £150k gone in ground rent and the refurb costs less some rental income.

They're probably in this for about £300k.

But seriously who would take on a 110 year lease that requires them to pay £3.3m even before inflation?

https://www.i-bidder.com/en-gb/auction-catalogues/clive-emson/catalogue-id-ibcl10079/lot-819817b5-2cdf-4a90-a3d0-a4fe00e20050

If you are a huge gambler then there have been noises about ground rent reform over the last few years saying that it should be more like a service charge: being that you only pay for the services you receive.

If the ground rent is abolished, as there aren't any services in this case, then you have a million pound property for £160k plus renovation costs and £30k per year for every year until and if ground rent is reformed.

Leases can be extended very cheaply if done early enough, the landlord has no choice in the matter, so that's not a problem.

I'm not however that much of a gambler.

From Zoopla listing

Quote
  • Considerable renovation works still required
  • Grounds of over 1-acre
  • (Buyers should obtain estimates, but works are likely to cost in excess of £500,000)

It all looks like even  £1 would be too much for it. Agree with ground rent reform, although I am not sure if this is one of its intended targets.

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3 minutes ago, Bear Hug said:

From Zoopla listing

It all looks like even  £1 would be too much for it. Agree with ground rent reform, although I am not sure if this is one of its intended targets.

I hadn't seen that £500k!

Wow, £30k annual rent and needing £500k spending.

That's a liability rather than an asset.

I hope the seller is sufficiently sensible to have no reserve on it.

The recommendation for dealing with timeshares was to pay the local dosser £100 to come into the solicitors with you and you then legally transfer the title to them.

It's not clear that you can do that in this case as the maintenance requirement obviously isn't being set by the leaseholder so it may be a condition of transferring the lease that the freeholder has to approve the transfer.

If it doesn't sell at auction and I was the leaseholder then I would be looking to declare bankruptcy as a way out of the lease as they must be in debt.

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2 minutes ago, Frank Hovis said:

I hadn't seen that £500k!

Wow, £30k annual rent and needing £500k spending.

That's a liability rather than an asset.

It's something that will look great when showing to friends and colleagues: we are doing so well - bought a massive manor house.  But agree, it will probably just bankrupt the owner. 

If a potential owner already had a spare million or two and could afford it, why would they buy a property with a massive lease in the first place? 

However, it will probably sell at the auction. 

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9 minutes ago, Bear Hug said:

It's something that will look great when showing to friends and colleagues: we are doing so well - bought a massive manor house.  But agree, it will probably just bankrupt the owner. 

If a potential owner already had a spare million or two and could afford it, why would they buy a property with a massive lease in the first place? 

However, it will probably sell at the auction. 

I agree that it would be nice to casually drop mention of the seventeen bed Georgian manor house you've just bought.

 

From the article it seems like the original buyer had the rose tinted glasses on and thought that the income from letting rooms and business units plus the tea rooms would cover the rent and the renovation costs.

And for £98k it must have seemed like the bargain of the century.

The problem with a place like that is, as you say, that anyone who could actually afford it wouldn't touch it because there are thousands of places that offer hugely better value for your million.

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I reckon a business will buy it, and try to turn it into a wedding venue, or possibly have another go at a hotel. If you consider that it needs £600k going in, that's a lot, but in these modern times where cash is not king and financing is the way to go for many businesses, £600k upfront + £30k a year "rent" doesn't seem like a lot if you're hoping to turn over a few £m from it annually. Someone will risk it.

The other option is to dispute the ground rent as being excessive, which at face value appears to be the case. There are companies that specialise in this litigation so yes I wonder if someone's willing to sink a few £100k into legal fees to get that £30k reduced significantly.

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54 minutes ago, spunko said:

I reckon a business will buy it, and try to turn it into a wedding venue, or possibly have another go at a hotel. If you consider that it needs £600k going in, that's a lot, but in these modern times where cash is not king and financing is the way to go for many businesses, £600k upfront + £30k a year "rent" doesn't seem like a lot if you're hoping to turn over a few £m from it annually. Someone will risk it.

The other option is to dispute the ground rent as being excessive, which at face value appears to be the case. There are companies that specialise in this litigation so yes I wonder if someone's willing to sink a few £100k into legal fees to get that £30k reduced significantly.

I like the second option anyway.

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  • 4 weeks later...

It didn't sell at auction; there was no greater fool.
 

Quote

 

He said: "You get an awful lot for your money with this property, but it is a long lease and the £30,000 a year ground rent may have put some people off.

"The state of the building may also have been an issue for potential buyers as it does need work.

"If you remove one of those factors then I'm sure it would have sold, but together it's a bit of a triple whammy."

 

though it did reveal who is the Rachman-like owner charging the £30k ground rent that is bankrupting the current lessee:
 

Quote

 

The property is owned by Lynton and Lynmouth Town Council, to whom the ground rent of £30,000 a year is payable.

Paul said: "Is it sensible for the council to charge that level of rent?  It seems a bit unfair.

 

 

https://www.cornwalllive.com/news/local-news/dream-160000-devon-beach-side-3893325

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2 hours ago, Frank Hovis said:

It didn't sell at auction; there was no greater fool.
 

though it did reveal who is the Rachman-like owner charging the £30k ground rent that is bankrupting the current lessee:
 

 

https://www.cornwalllive.com/news/local-news/dream-160000-devon-beach-side-3893325

Set up a Ltd Co to buy it.

If it fails, it fails not you.

 

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Frank Hovis
On 27/02/2020 at 22:19, spygirl said:

Set up a Ltd Co to buy it.

If it fails, it fails not you.

 

But it will fail.

And the limited company can't create money out of air.

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Hells bells - £30,000 a year in ground rent. That is mind boggling. O.o

I can't even see the most experienced property developers making a success out of this.

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Is that estate even worth zero with such a massive lease cost? Needs lots of money for improvements but they will mainly benefit the landlord. 

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Can easily see £1m going into renovations, it looks like it's in a right state. Not sure what work the current owner has done going by the photos.......

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15 minutes ago, spunko said:

Can easily see £1m going into renovations, it looks like it's in a right state. Not sure what work the current owner has done going by the photos.......

Can bet the figures are on the low side.

Saw one of my builder mates last night, does nice high end conservatories and now more extensions, how's going I ask, moved into the £500k extension bracket. I mentioned the cost of materials, up 60 odd percent he said in last couple of years - he uses a lot of natural stone and materials. Thank fuck I collected the stone for this place over the last 5 years, buying when I could and even resorting to pulling out of skips (with builder's approval of course), all in paid a tiny fraction ex mine/quarry. All in about £1200 direct spend, probably touching £15K-£20k if I had to buy it freshly extracted.

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Frank Hovis
6 hours ago, Bear Hug said:

Is that estate even worth zero with such a massive lease cost? Needs lots of money for improvements but they will mainly benefit the landlord. 

I don't think so.

That money will pay the rent somewhere really nice where the landlord is paying for all the repairs.

It's an absolute lemon and I would not enter into that leasehold for no cost; similar to a time share it's a net liability.

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  • 4 weeks later...
2 minutes ago, sleepwello'nights said:

Don't make a silly offer to this seller:

https://www.rightmove.co.uk/property-for-sale/property-78148489.html

 

Look at picture 12. 

please note: this property comes under section 21 of the Estate Agents Act in that it is owned by a relative or a member of our staff.
 

Maybe they will be safer when the seller has to hear the lower your price advice

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stop_the_craziness
On 30/03/2020 at 21:49, sleepwello'nights said:

Don't make a silly offer to this seller:

https://www.rightmove.co.uk/property-for-sale/property-78148489.html

 

Look at picture 12. 

Brilliant.  Weapons on the bedside table, Minions on the windowsill.  Someone wants be an evil genius AND the ruler of zee entire vorld.  And they are related to an estate agent.  I want to meet this person, they must be a riot.

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1 hour ago, stop_the_craziness said:

Brilliant.  Weapons on the bedside table, Minions on the windowsill.  Someone wants be an evil genius AND the ruler of zee entire vorld.  And they are related to an estate agent.  I want to meet this person, they must be a riot.

The object on the floor under the mirror looks like a tinfoil hat!!! 

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2 hours ago, stop_the_craziness said:

Brilliant.  Weapons on the bedside table, Minions on the windowsill.  Someone wants be an evil genius AND the ruler of zee entire vorld.  And they are related to an estate agent.  I want to meet this person, they must be a riot.

Leave @Great Guy alone! :CryBaby:

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  • 2 months later...
Frank Hovis

Amazingly the lease on the manor house sold at the next auction in April for £120k.

Still with the £30k annual ground rent payable to the council and the obligation to carry out renovations.

The seller will have lost a lot of money but has at last been given an escape route by a greater fool.

https://www.mirror.co.uk/news/uk-news/stunning-beach-side-manor-house-21816615

 

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