SOLD – Leicester City Centre Flats 25% Below Market Value


Deal Summary

  • 4 Flats Available
  • 1,2 and 3 bedrooms
  • 25% Below Market Value
  • Leicester City Centre Location
  • Excellent Rental Market
  • Cashflow positive
  • New leases of 99 years

Deal Structure

The structure we have put in place enables our clients to purchase these properties at a  discount of 25%, which represents instant equity between £18,000 and £20,000. Furthermore the rental income will exceed the mortgage payments, thereby generating a monthly positive cashflow.

Here is a 2 bed example:

2 Bed Flat

Valuation:                         £75,000

Discount:                             25%

Purchase Price:                 £56,250

Instant Equity:                £18,750

Monthly Cash-flow

Rental Assessment:              £450

Mortgage  (BM 4.35%):         £204

Ground rent &Service charge £ 41

Profit                                    £205


The flats are very well situated in Leicester city centre with all its amenities including shops, restaurants, bars and extensive leisure facilities. Leicester train station with direct links to London, Birmingham and Nottingham is only 400 yards away.  The M1 motorway is the gateway to London to the south as well as Nottingham, Sheffield and Leeds to the north.

The centrality and convenience of the location means there is a very buoyant rental market for these flats.


Living roomBedroom

To obtain further information about this deal,  please contact us by


Phone: 0208 940 9556

Market Views from Mortgage Btl Ltd

Going forward into 2010 I expect to see more products, less stringent criteria and an ease of LTV’s. Enquiries for buy-to-let mortgages have increased by nearly 50% since August 2008, whilst available products have diminished, but lenders realise this demand and we are starting to move forward.

As an experienced broker I have some very good internal contacts within the industry and I’m certainly hearing good things from many of my business development managers. Many of whom have been helping brokers like myself for 30 years or more. Lenders like The Mortgage Works, I expect to see them return to niche areas of the market in 2010 such as House in Multiple Occupation and 75% LTV lending. Their motto has always been ‘common sense lending’ and it certainly would be good business sense to carry out these changes as it will increase the much-needed competition in the market place.

Interest Rates 2010

We get many lender reports at this time of year from senior economists. A Nationwide report this month has revealed that most senior economists expect the Bank of England base rate to remain low throughout the majority of 2010 until Q3 when we should expect interest rates to reach 1.0%. You can read more about how interest rates will move into 2011 and 2012 by visiting our website.

BTL rental demand to rise

The residential rental market is beginning to stabilise with property oversupply decreasing across the UK and the number of new tenancies increasing, according to the Association of Residential Letting Agents (ARLA). It says that the historical decline in numbers of tenants, which led to a surplus of properties to rent, is coming to an end.

The research also showed that the average void period of a rental home has dropped for the first time in more than a year, indicating that properties are being rented more quickly (ARLA 29/9)

All in all, very positive news and a good outlook for investors. I firmly believe we have only a timescale of 6 months left to secure decent below market value property before the market starts to rise again. Successful investors will take advantage of this, buy now and sell when the market rises.


Investing in New-Build – Obsolete or Sensible Opportunism?


In the midst of the boom, the property sector was experiencing a new-build mania. Investors and end-users alike were rushing to buy, often 1 to 2 years off-plan, properties that developers were erecting across the country at an unprecedented speed. Result: Demand continued outstripping supply as prices and valuations escalated to historic highs. This self-inflating bubble could only be halted by one thing: the drying up of cheap and plentiful lending. The rest is history.

So a year on, where are we? The industry seems to have come to its senses, waking up with a hangover from a decade-long, debt-fuelled craze. Lenders will only lend up to 65-70% of the value of new builds, surveyors value them to levels commonly 25-40% lower than they would have a year ago, and cash-strapped developers have no choice but to let their once prized assets go for a minimum of 25% discount off these low RICS valuations.

Is it time to get in on the action? Distressed sales from developers are a good sign for opportunistic investors. After all, with genuine discounts off realistic valuations, there should be real equity and solid long-term growth prospects in these brand new, well located and high-spec properties. They come with build guarantees and are very appealing to prospective tenants.
The crux of the problem lies in the funding: with 65-70% loan to value, investors need to put in more money than for resale properties unless there are very substantial discounts in place. Moreover, such massive discounts are a tell-tale sign of oversupply which severely undermines rent levels and capital growth as large numbers of similar properties enter a subsiding market.

All in all there are definitely new-build bargains to be had. As always, rigorous due diligence is essential. The discount level needs to be at least 30% off the market value, preferably based on a recent RICS valuation, as they can otherwise often hold some nasty surprises. The rental figures need to be very realistic, taking into account the size of the rental market as well as the number of comparable properties available in the local area. If these cautious rental figures still leave a healthy cash-flow after expenses (mortgage, service charge, ground rent…etc), the property could well be a unique opportunity to capitalise on the current turmoil and yield some excellent returns. The current fire-sale of good quality new-build properties might not happen again for a long time…

Alpha Property Investment Ltd