Marlpark Homes

77 Northampton Road Croydon

Property Investment Opportunity with poten�al returns of up to 230% on ini�al capital

Invest in one of Greater London’s fastest developing Boroughs

77 Northampton Road Croydon

Table of Contents Executive Summary .......................................................................................................... 3 Summary of costs and income .................................................................................... 3 The Plot & Existing Structure .............................................................................................. 4 Location ............................................................................................................................. 6 Map ............................................................................................................................... 6 Transport and Travel ..................................................................................................... 7 Development Potential .................................................................................................... 8 Extension and conversion of existing property .......................................................... 8 New Build ...................................................................................................................... 9 Gross Development Value and Costs ........................................................................... 11 Extension of existing structure and conversion ........................................................ 11 New Build Scheme ..................................................................................................... 12 Help to Buy .................................................................................................................. 12 Comparative Data ..........................................................................................................13 The Market ....................................................................................................................... 16 The Impact of Brexit .................................................................................................... 16 The Croydon Property Market and Local Economy ................................................ 16 Finance and Cash Flow .................................................................................................. 18 Investment Opportunity ................................................................................................. 20

2

77 Northampton Road Croydon

Executive Summary 77 Northampton Road, Croydon, CR0 7HD offers an exciting development opportunity. Whilst the house will be bought without the benefit of planning consent, it is believed that planning consent should be achievable for a new block of 11 flats. In the event that planning consent is not achieved for a new block, it will be possible to convert the existing house, following extensions allowed under permitted development, to convert the house into 5 flats and make a small profit.

Based on a new build scheme of 11 flats, we anticipate a GDV of at least £3,995,000.

The costs are as follows

Summary of costs and income Purchase Costs: Professional Fees: Development Costs Finance Costs Selling Costs Total Costs

£739,000 £30,000 £1,215,000 £176,753.32 £100,710 £2,261,463.32

Profit

£1,733,536.68

Investors will fund 100% of the capital required in exchange for 40% of the shares in the company. Accordingly, an investment of £100,000 will generate a return of 230.83% on their initial investment. This equates to an annualised return of 15.415%: Percentage Shareholding Share of profit Total returned to investor

3

7.547% £130,829.96 £230,829.96

77 Northampton Road Croydon

The Plot & Existing Structure The site occupies a plot of 659 sq m (0.163 acres). The plot is 15 m wide by 43 m deep. A two storey detached house with additional roof space currently occupies the plot. The built up area of the plot is 155 sqm. The current internal area of the house is 182 sq m.

Front of the house fronting Northampton Road

The existing house on the site has 4 bedrooms, 3 reception rooms and a single storey detached garage.

Floor plans of existing house

4

77 Northampton Road Croydon

Rear Garden

Satellite image of the plot, outlines in red.

Foot print of existing structure on site

Plot area

5

77 Northampton Road Croydon

Location Northampton Road is one of a number of roads that runs perpendicular to both Addiscombe Road and Lower Addiscombe Road. These roads are known as the East India Estate as the area was historically owned by the East India Company. The roads have a number of single dwelling houses, substantial buildings that have been converted into flats as well as purpose built blocks of flats.

Northampton Road is mainly made up of single dwelling houses and has a smaller proportion of flats than the roads the that run parallel to it. The most recent development of flats on the road was in 2011.

Addiscombe is an area of Croydon located to the East of the town centre and central business district. The property is located only 1.5 miles away from the new Westfield Mall that is due to open in 2020. Lower Addiscombe Road which is located 150m from 77 Northampton Road is a secondary retail trading location with a number of local and national traders present on the road. Larger brands on Lower Addiscombe Road include Natwest, William Hill, Greggs, KFC, Boots, Sainsbury’s Local, Santander, Co-Op Food, Barclays and Coughlans.

6

77 Northampton Road Croydon

Map

Transport and Travel 7 Northampton Road is only 1.2 miles from East Croydon Station in the town centre which is a 23 minute walk from the property. East Croydon has a large Shopping Mall that will soon become Westfield. East Croydon Station is extremely popular because of the number of destinations that are reachable directly from the station.

Outside London Connec�ons Des�na�on Journey Time Gatwick Airport 15 mins Brighton 40 mins Eastbourne 1 hr 5 mins Luton Airport Parkway 1 hr 11 mins Bognor Regis 1 hr 22 mins Li�lehampton 1 hr 23 mins Bedford 1 hr 40 mins Portsmouth Harbour 1 hr 40 mins Milton Keynes Central 1 hr 50 mins Southampton 2 hrs 9 mins

London Connec�ons Des�na�on Journey Time Clapham Junc�on 9 mins London Victoria 16 mins London Bridge 17 mins London Blackfriars 28 mins Kensington Olympia 28 mins City Thames Link 31 mins Farringdon 34 mins Kings Cross St Pancras 38 mins Harrow & Wealdtone 42 mins Wa�ord Junc�on 1 hr 11 mins

77 Northampton Road is located 150 meters from Addiscombe Tram Stop which offers frequent connections to East Croydon (7 mins journey time) and Wimbledon (32 mins journey time). The property is also served by numerous bus routes.

7

77 Northampton Road Croydon

Development Potential The site offers a number of development options. The opportunities we will focus on are the extension and conversion of the existing building or the demolition of the existing building and the erection of a new purpose built block of flats

Extension and conversion of existing property At a very basic level, the existing house could be comfortably converted into 3 flats. Local policy permits the conversion of large houses into multiple self-contained flats, provided the original house has a floor area greater than 130 sq m.

As a detached house, the property benefits from various permitted development rights. Under the GPDO, the house could be extended to the side and rear. The single storey side and rear extension would add 101 sq m.

Additional area created by single “wrap around� single storey extension

Total area including 2 storey extension

8

77 Northampton Road Croydon

The GPDO also allows for 2 storey rear extensions on detached houses and conversion of the loft space with the addition of a dormer extension. It is also virtually guaranteed that a 2 storey side extension would be permissible.

Accordingly, should be possible to add a further 101 sq m to the 1st floor and 50 sq m in the loft. This would provide the following internal floor areas: Ground floor 1st floor 2nd floor

203 sq m 203 Sq m 50 sq m

The 456 sq of floor space would comfortably house the following: Ground floor First floor Loft

2 x 1 bedroom flats 1 x 2 bedroom flat 2 x 2 bedroom flats 1 x 1 bedroom flat 1 x 1 bedroom flat

New Build The much more profitable opportunity lies in obtaining consent for demolishing the existing structure and building 11 new flats. The schedule of accommodation would be as follows: Lower Ground3 x 2 bedroom flats Ground Floor3 x 2 bedroom flats First floor3 x 2 bedroom flats Roof Space (Second Floor) 2 x 2 bedroom flats The ground floor would not provide 3 x 2 bedroom flats as some floor area would be lost to allow for the main entrance and corridor to lobby and stairwell area.

Total area including 2 storey extension

9

3 flats on Lower Ground and First floor

Layout of ground floor flat

10

77 Northampton Road Croydon

Gross Development Value and Costs We have provided the 2 different outcomes below. Outcome 1 is virtually assured and outcome 2 carries some planning risk, although based on local planning policy and demand, we are confident planning will be granted for the proposed scheme for a new block of flats.

The base costs are: Purchase Price: SDLT Legal and Valuation Costs Planning Fees: Interest Servicing at 7%/annum Rates, Utilities, Maintenance etc..

£675,000 £44,000 £20,000 £30,000 £28,917 (until grant of planning permission) £15,000 £812,917

Extension of existing structure and conversion The following pricing would be achieved for the 7 flats following the various extensions and then conversion of the existing structure.

Level Ground floor Ground floor Ground floor 1st floor 1st floor 1st floor 2nd Floor

Bedrooms 1 bedroom 1 bedroom 2 bedroom 2 bedroom 2 bedroom 1 bedroom 1 bedroom

Sq m 50 50 61 61 61 50 50

Sq � 525 525 640 640 640 525 525

Price £250,000 £250,000 £300,000 £300,000 £300,000 £250,000 £250,000 £1,900,000

£/s � 476.19 476.19 468.38 468.38 468.38 476.19 476.19

The build costs of a two storey side and rear extension, loft conversion and 7 flats would be £450,000. This is based on £1,200/ sq m for the new build and £850/sq m for the conversion of the existing structure.

11

Base costs Build costs GDV

-£816,100 -£450,000 £1,900,000

Profit

£633,900 (before finance and selling costs)

77 Northampton Road Croydon

New Build Scheme The GDV for the new build scheme would be as follows: Level Lower Ground Lower Ground Lower Ground Ground Ground Ground First First First 2nd 2nd

Bedrooms 2 bedroom 2 bedroom 2 bedroom 1 bedroom 2 bedroom 2 bedroom 2 bedroom 2 bedroom 2 bedroom 2 bedroom 2 bedroom

Sq m 77.6 76.7 63.1 67.8 76.7 63.1 77.6 76.7 63.1 63.8 68.2 774.40

Sq � 834.20 824.53 678.33 728.85 824.53 678.33 834.20 824.53 678.33 685.85 733.15 8324.83

Price £375,000.00 £370,000.00 £310,000.00 £350,000.00 £395,000.00 £310,000.00 £410,000.00 £410,000.00 £340,000.00 £350,000.00 £375,000.00 £3,995,000.00

£/s � 449.53 448.74 457.01 480.21 479.06 457.01 491.49 497.26 501.23 510.32 511.49

Based on RICS guidelines, the build costs for a new block of flats should be £1,200/sq m. Based on this, the cost of the build costs for the new development would be £929,280. We have allowed 30% for contingencies and cost increases giving us a total build cost of £1,200,000.

Base costs Build costs GDV

-£816,100 -£1,200,000 £3,995,000.00

Profit

£1,978,900 (before finance and selling costs)

12

77 Northampton Road Croydon

Help to Buy Following the government withdrawing help to buy for existing property, first time buyers who want to benefit from the scheme can only do so when buying a new build property from a developer that has been accredited on the scheme by the Homes and Communities Agency (HCA). The result of this is that new build properties can command as much as 10% more than an equivalent second hand property on the market. All the pricing presented above is based on comparative data for second hand home sales. In fact the ÂŁ/sq ft used in our projections is actually less than the average in the area and accordingly is very conservative.

It would therefore be realistic to expect the prices we achieve on sale to actually be as much as 15% higher than those presented. Furthermore, a conversion of house into flats is still considered a new build and accordingly qualifies for funding under Help to Buy.

Comparative Data The following sales are all located within a 500 meter radius of the subject property. The sales are all of flats located on roads that run parallel to Northampton Road and form part of the East India Estate. We should achieve much higher prices than those presented in the comparative evidence we are accredited with Help to Buy allowing our buyers to benefit from funding that requires them to pay a deposit of only 5%.

13

77 Northampton Road Croydon

Outram Road, Croydon 2 bedroom 620 sq ft flat Sold STC-£325,000 November 2016 £525/ sq ft Agent’s description: A stunning two bedroom first floor flat comprising of two double bedrooms, large bay fronted open plan reception room with modern fitted kitchen, luxury bathroom suite and communal gardens. The property further benefits from off street parking on a first come first served basis, double glazing throughout, gas central heating, period features and long lease.

First Floor Two Double Bedrooms Large Bay Fronted Open Plan Reception Room Modern Fitted Kitchen Luxury Bathroom Suite Communal Gardens

14

77 Northampton Road Croydon

Rear Garden

Clyde Road, Croydon, 1 bedroom flat Sold STC- £240,000 November 2016 £560/ sq ft

Agent’s description: This one double bedroom top floor flat, situated in a converted Victorian semi-detached house, very close to East Croydon station with its excellent commuter services to Central London and beyond and the forthcoming Westfield shopping centre.

The accommodation comprises one double bedrooms, a large reception room with space for a dining table and living area, ample storage and a family bathroom Further benefits include gas central heating, fantastic location being only a 10 min walk to East Croydon and well maintained communal areas.

15

77 Northampton Road Croydon

Flat 4, 15 Northampton Road 2 bedroom, 620 sq ft flat Sold - £285,000 February 2016 £459/sq ft This is the Zoopla’s description: This leasehold flat is located at 15 Northampton Road, Addiscombe, Croydon CR0 7HB and has an estimated current value of £329,000. Northampton Road has 113 houses and flats on it with a average current value of £618,302, compared to an an average property value of £378,046

16

77 Northampton Road Croydon

Flat 4, 15 Northampton Road 2 bedroom, 595 sq ft flat Sold STC - £330,000 November 2016 £554/sq ft This is the Agent’s description: STUNNING.. two double bedroom ground floor flat is offered to the market in superb condition throughout. Located right in the heart of Addiscombe, on one of the popular ladder roads. This beautifully presented flat comprises a great sized reception room full of light, a newly fitted kitchen, two double bedrooms, modern bathroom and a well-kept private rear garden. Further benefiting from an allocated off-street parking space and a good lease. Situated close to East Croydon Station giving direct access to London Victoria & London Bridge, Croydon Town Centre, bars, restaurants and many more. This property is perfect for those commuters, or those looking to get on the property ladder.

It is a gem of a property and needs to be internally viewed to be appreciated.

17

77 Northampton Road Croydon

Elgin Road, Croydon, CR0 2 bedroom, 727 sq ft flat Sold STC - ÂŁ315,000 November 2016 ÂŁ433/sq ft Agents Description: HouseSimple is pleased to present this two double bedroom split level period conversion flat in a popular residential road close to East Croydon Station near bus and tram links. Well maintained and neutrally decorated throughout. Property consists of good sized reception room with feature fireplace, large kitchen diner, two double bedrooms, and modern bathroom. Outside there is a garden to front which could provide off-street parking, subject to planning

18

77 Northampton Road Croydon

The Market There were some concerns about the future of the property market in the UK following Brexit. Transactions following Brexit have however remained stable, and a number of reports have also proven that property prices have continued to rise. In addition, the regeneration of Croydon, and the continued economic prospects of the borough mean that Croydon is likely to see further growth over the next few years.

19

The Impact of Brexit Whilst it was widely forecast that Brexit would result in a crash in property prices, the property market has actually not only been resilient, it has actually seen price growth since Brexit. There are a number of factors that caused this. The most immediate cause of stability was the fact that the devaluation of the pound meant UK property was suddenly much cheaper for foreign investors.

This led to an immediate surge in property demand following Brexit that helped keep the market stable. Foreign investors continue to generate demand which continues to help the market.

An article on the economist on 10th December 2016 suggested that demand has also been bolstered by looser credit and a fall in interest rates. In addition, the article argues that underlying shortage of supply has not dissipated- the UK continues to build half the houses needed on an annual basis and following Brexit, the uncertainty in the market has resulted in fewer sellers putting their properties on the market.

Finally, new build developers are one of the biggest gainers following Brexit.

The government’s Help To Buy scheme has been withdrawn for all property purchases except for those being offered by new build developers. Help to Buy allows first time buyers to purchase a new home with a deposit of only 5%. New build homes which are part of Help to Buy are therefore commanding a significant premium on the market value of an equivalent second hand home as a first time buyer cannot generally afford the 30% deposit to purchase such a property.

20

77 Northampton Road Croydon

The Croydon Property Market and Local Economy Strategically located on the edge of the capital, Croydon is on the receiving end of a multi-billion-pound regeneration programme and was the first suburban “super-hub” as part of Boris Johnson’s plan to reshape London during the next decade. In fact, Croydon is set to become London's biggest growth centre with £5.25bn worth of investment over the next five years. Croydon is one of the UK‘s best connected business hubs with East Croydon Station providing train connections to Gatwick, London Bridge and London Victoria in under 20 minutes. Croydon is one of the capital’s prime office centres with low operating costs that has now established it as London’s second tech hub after Shoreditch. A growing community of digital, creative and IT companies continue to move themselves into the area and the borough aims to eventually rival Silicon Roundabout as the leading tech hub in the capital. The £1.2 billion Westfield Hammerson regeneration of the town’s shopping centre will create the largest urban mall in Europe.

Sir Edward Lister, Deputy Mayor of London said in May 2015: “Croydon is firmly on the up and well on the way to becoming one of London’s most vibrant centres as well as a major driver of our economy. With a brand new Westfield on the way and major schemes such as the regeneration of Ruskin Square progressing at speed, the outlook for Croydon has never been more positive. The town is also one of the capital’s fastest growing tech clusters, with the sector almost doubling in size since 2011, generating new jobs and economic prosperity for the town and London as a whole.”

Croydon is one of the UK’s largest commercial centres, with 20,000 businesses, attracting 50,000 office workers a day. The town also has a buzzing cultural quarter and the town’s entertainment venues are on the tour list of most major productions and artists. Fairfield Halls regularly hosts major star performances, whilst scores of clubs, bars and small stages host live music, stand-up comedy and up-and-coming talent. And there’s not just one but two cinema multiplexes to keep the most devoted film-goers happy. Foodies love Croydon for its sheer variety of eating locations on offer.

All of these fundamentals have resulted in significant house price growth over the last 2 years. Croydon is still considered to be undervalued by many experts and whilst house prices in Croydon have risen nearly 16 per cent to £328,282 over the 12 months to June 2016, Croydon still enjoys a reputation for offering amongst the best value real estate in London. With all the new development taking place in Croydon, and as the public begin to realise that Croydon is better connected to central London that areas that are closer in distance to London, growth is forecast to continue at a similar pace over the next 5 years.

As the effects of the multi-billion pound investment in Croydon become visible, property prices will inevitable rise further still.

21

77 Northampton Road Croydon

Finance and Cash Flow The initial purchase will be funded with a loan from Commercial Acceptances based on a 60% LTV. Once planning consent has been obtained, the lenders will provide a further facility for 100% of the build costs.

Purchase Price: SDLT Legal and Valuation Costs Planning Fees: Build Costs Rates, Utilities, Maintenance etc..

Arrangement Fee Interest Exit Fee Estate agency fees @ 1.5% (sale) Legal fees @ £2,000/unit (sale) Total Costs

£675,000 £44,000 £20,000 £30,000 £1,200,000 £15,000 £32,100 £119,256.56 £25,396.76 £71,910 (£59,925 + VAT) £28,800 (24,000 +VAT) £2,261,463.32

GDV Profit

£3, 995,000 £1,733,536.68

Initial Cash Requirement Purchase Price: Purchase Loan: Balance of Purchase: Arrangement Fees SDLT Legal and Valuation Costs Planning Fees: Interest Servicing at 7%/annum Rates, Utilities, Maintenance etc..

Total requirement

£675,000 £405,000 £270,000 £32,100 £44,000 £20,000 £30,000 £28,917 (until grant of planning permission) £15,000 £440,017

Initial Cash Injection Cash Injection on start of build Total cash injection

£430,000 £100,000 £530,000

22

77 Northampton Road Croydon

Once planning consent is granted, the lender will fund build costs in arrears based on their monitoring surveyors inspections. It is normal to draw down £100,000 at a time, and accordingly, an additional £100,000 for cash flow will be required on commencement of build works. Once planning is granted, the interest will no longer require servicing and will be added to the loan balance every month.

There will be a bullet repaint of the capital and accrued interest at the end of the loan. On exiting the loan, a 1.5% fee in the outstanding loan amount will be payable to the lenders.

Months 1-3:

Months 4-9: Months 9-20: Months 20-24:

23

Pre – Planning for new block of flats and also submission of Lawful Development Certificates for Permitted Develop ment Extensions Planning Application for new block of flats Construction work to start on either new build or extensions under permitted development and then conversion Sale Contracts

77 Northampton Road Croydon

Cash Injec�on Draw Down

Costs

Loan Balance

Interest

Loan

Cash balance

-

405,000.00

63,900.00

430,000.00

-771,100.00

Month 1

-

-4,000.00

-405,000.00

-2,362.50

-

57,537.50

Month 2

-

-6,000.00

-405,000.00

-2,362.50

-

49,175.00

Month 3

-

-10,000.00

-405,000.00

-2,362.50

-

36,812.50

Month 4

-

-10,000.00

-405,000.00

-2,362.50

-

24,450.00

Month 5

-

-750.00

-405,000.00

-2,362.50

-

21,337.50

Month 6

-

-750.00

-405,000.00

-2,362.50

-

18,225.00

Month 7

-

-750.00

-405,000.00

-2,362.50

-

15,112.50

Month 8

-

-750.00

-405,000.00

-2,362.50

-

12,000.00

Month 9

100,000.00

-100,750.00

-405,000.00

-2,362.50

-

8,887.50

Month 10

-

-100,750.00

-405,000.00

-2,362.50

100,000.00

8,137.50

Month 11

-

-100,750.00

-507,362.50

-2,959.61

100,000.00

7,387.50

Month 12

-

-100,750.00

-610,322.11

-3,560.21

100,000.00

6,637.50

Month 13

-

-100,750.00

-713,882.33

-4,164.31

100,000.00

5,887.50

Month 14

-

-100,750.00

-818,046.64

-4,771.94

100,000.00

5,137.50

Month 15

-

-100,750.00

-922,818.58

-5,383.11

100,000.00

4,387.50

Month 16

-

-100,750.00

-1,028,201.69

-5,997.84

100,000.00

3,637.50

Month 17

-

-100,750.00

-1,134,199.53

-6,616.16

100,000.00

2,887.50

Month 18

-

-100,750.00

-1,240,815.69

-7,238.09

100,000.00

2,137.50

Month 19

-

-100,750.00

-1,348,053.79

-7,863.65

100,000.00

1,387.50

Month 20

-

-100,750.00

-1,455,917.43

-8,492.85

100,000.00

637.50

Month 21

-

-750.00

-1,564,410.29

-9,125.73

100,000.00

99,887.50

Month 22

-

-750.00

-1,673,536.01

-9,762.29

-

99,137.50

Month 23

-

-750.00

-1,683,298.31

-9,819.24

-

98,387.50

Month 24

-

-750.00

-1,693,117.55

-9,876.52

-

97,637.50

Exit

-

-750.00

-1,702,994.06

-25,396.76

-

530,000.00

-2,016,850.00

-1,728,390.83

-144,653.33

1,605,000.00

Total

97,637.50

24

77 Northampton Road Croydon

Investment Opportunity A total investment of £530,000 is required. Investors will fund 100% of the cash requirement and will receive a 40% equity stake in the company. Investor shares will be allocated proportionate to the level of investment. Marlpark Homes will hold the remaining 60% of the shares. Marlpark Homes will be managing the project and its directors and shareholders will be providing the security and personal guarantees to the lenders to secure the funding for the project. On completion of the project, the company will be liquidated, and the shareholders will receive their profit proportionate to their investment.

Example Investment: Percentage Shareholding Total Profit Share of profit

£100,000 7.547% £1,733,536 £130,829.96

Total returned to investor

£230,829.96

Return Annualised return

230.83% 115.415%

The investor will get back the initial £100,000 invested in addition to their share of the profit.

25