SELL
MANAGING DIRECTOR OF CENTRAL LONDON ESTATE AGENCY, KAY & CO
Q.I have £500,000 in cash to invest in a buy-to-let flat in central London. What should I buy?
A.One-bedroom apartments are always in demand in central London which fits in well with your budget. I would recommend that you look for a property with a low service charge (this is important because it will be your responsibility as the landlord to pay this and a high one will eat into your return). Ideally, the flat should have good transport links and be on the ground, first or second floor, especially if there isn’t a lift. Bayswater is an area that is currently performing well and offers good value for money since it sits between the pricier areas of Notting Hill and Marylebone. Plus it certainly looks like it has room for price growth. Finally, don’t use cash, take a mortgage. You can offset the mortgage interest against the rental income which is extremely tax efficient. A good broker can offer you guidance on this. It will probably mean you can actually buy two flats rather than one with and this means twice the capital appreciation.
Q.I have owned my flat for 20 years. It has a large loft which I would like to develop into an extra room. While I have the sole use of this space it is not demised to me. Can I get planning permission to develop it before I sell it?
A.The problem you face is that although the flat has sole access to this space it does not actually own it, it is owned by your freeholder. No one can stop you from using this space as storage, given you have owned and used it for 20 years, but you cannot alter it in anyway without the freeholder’s consent. In addition, the freeholder would be perfectly entitled to ask for additional money from you to allow you to incorporate that space into your apartment. So, while you can apply for planning permission you cannot develop it without first getting permission from and (probably) paying a premium to the freeholder. If you do this without consent you would be in breach of your lease and the freeholder could force you to reinstate the flat to its former layout – something that any competent buyer’s solicitor would pick up on. This would result in them advising the buyer not to proceed with the purchase, irrespective of the planning permission.