DIY SOS
Three-bed terrace in Birmingham goes on sale for £1 – but it’s a ‘house of horrors’ on the inside
FIRST-time buyers can snap up a three-bed house for a bargain £1 - but they'll need to put in some serious cash and hard-work before moving in.
From the outside, the terrace house appears to be in a decent condition with its gable porch and trimmed hedge.
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But looks can be deceiving and behind the closed door lies a house of horrors.
Inside, you're greeted by fallen plaster, a caved in roof and heaps of rubble in every room, not to mention signs of damp.
The nightmare continues through to the bathroom that has a broken toilet and a sink that's falling off the wall.
The crumbling walls, dated oven and filthy floors in the kitchen is enough to put any buyer off - unless you can see the potential.
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Downstairs there's a hallway, kitchen and two reception rooms, both with period fire places installed in around the 1930s.
The front room also has a large bay window, while the back room has large French windows that open out into the garden.
Upstairs you'll find three bedrooms, two with original cast iron fireplaces and a bathroom.
It's within walking distance to Acocks Green Railway Station, six miles from the city centre and the same distance in the other direction to Birmingham International Airport.
Average property prices in Birmingham sit at £205,114 according to Zoopla, but this house is being sold at auction for the loose change in your pocket.
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What to look out for if you're buying a house at auction
PROPERTY expert Fraser Clark from Nested.com shares his top tips for first-time buyers looking to purchase property at auction:
- Get your finances sorted before the auction and be prepared to pay far more than the guide price as auction houses deliberately set the guide price very low to attract bargain hunters. Set yourself a budget and don't get caught up in the bidding frenzy and overstretch yourself.
- If the property is unhabitable (i.e not watertight or doesn't have a functioning kitchen) it will be unmortgageable so any prospective buyer will need to have cash or bridging finance in place. Remember, the minute the hammer drops, you are in a legally binding contract so you will need to have had a solicitor check the legal pack prior to the auction day.
- Be prepared and realistic with the amount of work that is required to make it a habitable property. You are taking on a major risk and will need to have factored in significant funds and time for the renovation.
- Fortune favours the brave but if you have done your research, you’re prepared, and are open-minded with risks, then it is great opportunity to get a bargain property.
But before you think that you're quids in, £1 is just a guide price that could easily shoot upwards when the haggling begins.
What's more, the property seller will likely set a reserve price too, which means that if the property doesn't reach a minimum price at auction the sale won't go through.
There's also the auction house fees to consider, as they will take a slice of the price, as well as any legal costs that come with buying property, such as those for solicitors and land registry.
Don't forget about stamp duty, or land tax, too which will also have to be paid for by the buyer if the house goes for more than £125,000 - unless you're a first-time buyer when the first £300,000 of the sold price is exempt.
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And that's before you've even started on the work. You'll need a hefty renovation budget as the work is likely to cost you thousands of pounds.
If you end up needing a mortgage on the property because it goes for more than £1 you will struggle to get one within the one-month period auctioneers give buyers to pay for properties upfront.
You're also unlikely to find a lender that will give you a mortgage on a property in such a bad state full stop.
That means you'd need to find the cash upfront or you could put it on a credit card or loan.
If that's the case, make sure you find one with a low interest rate or 0 per cent interest-free period and pay it off within the term to avoid being charged extra.
Or if you already have a mortgage you could increase the size of it, but be aware of any exit fees or whether it means you'll lose any special introductory terms.
Property expert Paula Higgins from consumer site warns that projects like these can easily "escalate quickly" so it's important to thoroughly research what you're getting into.
Fraser Clark, from , added: "It would take a very brave first time buyer to attempt to buy a derelict property at auction.
"Yes, the guide price is appealing and there is an opportunity to bag a bargain and get your foot on the property ladder but it comes with huge risks and associated costs.
"Remember, it is not a coincidence that the majority of buyers attending auctions are savvy professional developers."
The property is being sold through SDL Auctions on September 29.
MOst read in money
Home ownership may feel out of reach for some first-time buyers but there are some bargains to be had out there.
Yesterday, we reported how a three-bed house in Yorkshire has also gone on sale for £1 but it also needs a lot of work.
Earlier this year, a four-bed Doncaster house went on sale for £15,000, but it looked like a "war zone" inside.
Last month, a holiday home in West Sussex with a swimming pool and no council tax went on sale for £20,000.
What help is out there for first-time buyers?
GETTING on the property ladder can feel like a daunting task but there are schemes out there to help first-time buyers have their own home.
Help to Buy Isa - It's a tax-free savings account where for every £200 you save, the Government will add an extra £50. But there's a maximum limit of £3,000 which is paid to your solicitor when you move.
Help to Buy equity loan - The Government will lend you up to 20 per cent of the home's value - or 40 per cent in London - after you've put down a five per cent deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property.
Lifetime Isa - This is another Government scheme that gives anyone aged 18 to 39 the chance to save tax-free and get a bonus of up to £32,000 towards their first home. You can save up to £4,000 a year and the Government will add 25 per cent on top.
Shared ownership - Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25 to 75 per cent of the property but you're restricted to specific ones.
"First dibs" in London - London Mayor Sadiq Khan is working on a scheme that will restrict sales of all new-build homes in the capital up to £350,000 to UK buyers for three months before any overseas marketing can take place.
Starter Home Initiative - A Government scheme that will see 200,000 new-build homes in England sold to first-time buyers with a 20 per cent discount by 2020. To receive updates on the progress of these homes you can register your interest on the website.
Four-bed Doncaster house on sale for £15,000 – but it looks like a ‘war zone’ inside
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