The 7-square-metre dwelling in Hackney is being auctioned off for £50,000
It brings a new meaning to one of London's real estate agents' favorite words: bijou. A single apartment smaller than regular parking will be auctioned next week with a starting price of £50,000.
The 75 sq ft (approximately 7 sqm) micro studio in Clapton, east London, is a gorgeous ground floor bedroom converted from a Victorian townhouse. It features a single cabin-style bed with cupboards, shelves, microwave and (small) fridge space. There was also a folding table and sink in the room, but there was no coal stove for stir-frying. Separate bathrooms have toilets, vanity stations, showers and heated towel rails.
Stuart Collar-Brown, director of My Auction, the property company that oversees the online auction of the bachelorette apartment, said: "This apartment is small – but you can't buy a property with long-term title in central London for £50,000. So, for some first-time buyers, this is a great opportunity to climb the property ladder. "The title of this single apartment is still 994 years old.
Bidding begins at noon on February 15 and ends at 4 p.m. the following day. Collar-Brown considers it to be the smallest apartment on the central London market. According to Halifax, the price tag is lower than the average first-time home buyer's deposit of £53,935 and needs to be paid in cash to buy.
"As the apartment is too small, we know that banks on the high street won't lend on the property, so that's why it will attract investor interest – when the average rental yield in London is below 5 per cent – if this apartment purchased at a guide price of £50,000 will generate a rental return of over 19 per cent, meaning investors will earn back the principal of their investment in more than five years," Collar-Brown said.
Chris Sykes, an adviser to mortgage brokerage Private Finance, confirmed that the buyer was not eligible for a mortgage loan on the property. The main reason is that 99% of people don't want to live in a house like this, and the snail market like this is so small that lenders risk mortgaging it because it may take a long time to process the sale after the property is eventually recovered. In addition, it is likely to have less room to upgrade than the most undervalued by some lenders.
The property was sold by a property company based in the Hounslow district of West London, which bought the studio apartment for £103,500 in May 2017 and registered it as 'Room', 9 Saratoga Road, Clapton, East London. The company rents out on a guaranteed short-term lease of £800 per month, with rental income equivalent to £9,600 per annum.
Described in the sales details as a newly renovated investment opportunity, the property is close to Homerton University Hospital, generating an annual return on investment opportunities of £9,600 and within walking distance of homerton, Hackney Downs and Clapton skytrain stations.
If the buyer makes the property their primary residence, then the buyer will not have to pay any stamp duty, but if it is an additional investment property, they will have to pay a stamp duty of £1,500. The property has a rent of £400 per annum and a property management fee of £500 per annum. Municipal taxes for 2021/22 are £1,068.09 (Class A, Hackney City Hall); municipal taxes are £801.07 after a discount for single residents.
In 2019, a 98 sq ft apartment in Hackney, east London, sold for around £200,000, but in comparison, the apartment is spacious with a double sofa bed, twin hobs and washing machine. In 2020, a 79-square-foot bachelorette apartment in kensington and Chelsea in central London will sell for around £200,000.
Collar-Brown expects the bid for this kind of dwelling to be very competitive: "Investors can never predict how these properties will perform at auction, but since the New Year, we have seen no slowdown in interest from professionals and first-time buyers, with our last auction generating a total of 95 bids. ”
Last week, Housing Minister Michael Gove announced in his White Paper on Housing Upgrades that a legal requirement would be introduced that would require landlords to retrofit properties that do not meet the national tenancy condition criteria for the renovation of existing properties to provide tenants with "safe, warm and well-maintained rental homes." "All landlords will be listed in a national database, and some bad landlords and rental properties will be removed from that database.
Other auction properties priced around £50,000:
A 1 bedroom retirement apartment on the second floor near the waterfront in Plymouth. To be eligible to purchase, buyers must be at least 55 years old. Bidding will begin on February 7.
Tenders for a three-bedroom townhouse in Little Heath, Birmingham, will commence on 9 February. The property has gardens and a rear garage and is located about 2.5 miles southeast of downtown.