Episode Information Henley & Diss

Date Published:

30/06/2009

It's July 2007 and in Henley-on-Thames in Oxfordshire, self-employed bookseller, Nigel Gough, and his wife Jilly, who restores antique furniture, have decided that they should invest all their savings into a three-bedroom Victorian property in a bid to pay off their mortgage.

The budget

They paid £527,000 for the property, right at the top of the market. But waiting for planning permission in a falling market means their sums don’t stack up from the start. They have a £100,000 budget, which is small for such a big project, and they hope to sell for an optimistic £675,000.

That would make them a £33,000 profit. But that’s just a five per cent return on their investment. Property developing involves a lot of money and as a rule you should aim for 20 per cent return on your investment.

The build

At the top of the house there’s an unconverted roof space with a large chimney breast in the middle. On the first floor there’s a master bedroom with ensuite, a further two bedrooms but no family bedroom. And downstairs there are two reception rooms, an unfashionably small kitchen and, right at the back, the bathroom – exactly where no one wants it.

It’s a terrible layout. But Nigel and Jilly have a vision for putting it right. They want to demolish the old bathroom and extend to the side to gain more space. But they also want to take out the entire back wall of the house to join the rear reception room into the now enormous kitchen diner. Sarah feels they should instead keep the second reception room as a playroom and install a downstairs WC, crucial to a large family home.

Upstairs they’re converting the loft, which should add real value. But they’re only adding one bedroom and they’re putting the family bathroom up here, which could be a major pain for the bedrooms below. If they took out the chimney, they could get a second bedroom into the space, and on the floor below, they could turn the rear bedroom into a far more convenient family bathroom.

Nigel and Jilly spend so much time finalising plans that by the time their original schedule is up, the builders are only just starting work on the loft. Downstairs, work on the kitchen extension has also begun.

They are doing an enormous amount of work to transform this property, but surprisingly they’re still reluctant to put in one small but vital addition: a downstairs toilet. As the decline in the housing market has now reached Henley, even the smallest compromise could jeopardise their chance of selling, let alone make any money. Eventually Nigel and Jilly are persuaded when they speak to some local estate agents - and every one of them agrees a downstairs loo is a must.

By the time they come to furnish the house, they are over budget and the bank is refusing to help. So they should be finishing this project as cheaply as possible, but furniture restorer Jilly has one expensive weakness. They buy a massive dining room table - and won't even tell Sarah how much it costs.

The finished project

Outside, this once neglected family home has now been spruced up. But it’s inside that the development comes into its own. Nigel and Jilly have maximised the value of their loft conversion by creating two bright and spacious top floor rooms. Downstairs there’s the master bedroom with ensuite, and a further bedroom, and that crucial family bathroom.

On the ground floor the front reception room is spacious and beautifully styled. It’s a shame they didn’t keep the value adding second reception room, but the kitchen is bright and modern, and has enough room for that very expensive table.

Luckily, though, they did install the critical downstairs loo.

Final figures

Overall the budget went from £100,000 to £120,000, which is not good news in a market that’s only going down. It may not be worth £675,000, but Jilly and Nigel have to get £647,000 just to break even.

So what do the estate agents think? Two come in at £620,000, which would give them a £27,000 loss. The other one thinks they can achieve £650,000 – a £3,000 profit which, in this market, is at least a profit.

Nigel’s opinion? “We got the timing wrong. It’s as simple as that.”

But timing wasn’t the only thing that was wrong with this development. When planning a budget, a 20 per cent contingency is vital, but Nigel and Jilly’s margins were too small from the outset.

When it became clear that the market wasn’t going to turn around overnight, Nigel and Jilly decided to sell their more expensive family home and move into the Henley development.