Evening Standard – 18 August 2003
Take your Equity and Run
Londoners are escaping to the country in droves in search of a better quality of life. Now is an ideal time to go, says David Spittles.
Equity release from residential property is fuelling demand for “lifestyle” retail businesses that keep owners happy and solvent. More and more Londoners are turning their backs on the capital by purchasing small country hotels, B&Bs, village pubs or post offices and convenience stores. It can be a quick and painless route to a better quality of life. Entry costs are low and businesses such as grocery stores require little expertise.
Specialist agents say the market is the strongest is has been for many years. “It is boom time in the south west,” says Paul Heather of Christie & Co. “All sorts of businesses are changing hands and we are getting good prices.”
Heather cites The Print and Post Tearoom and Bar in the village of St Giles-on-the-Heath, Devon. “We were inundated with enquiries and had to ask for best offers by a closing date. We had five formal offers and it sold for well in excess of the £205,000 asking price.”
The most sought-after businesses are those in chocolate-box villages and scenic areas with a tourist trade. Cornwall, East Anglia and the Lake District are favoured locations because property values are still relatively cheap.
Anyone cashing in their London home to buy a business will not be heavily reliant on bank borrowing, which increases the chances of being successful. “A small hotel or quality guest house can produce gross profits of up to 90 per cent,” says Spencer Mann of Christie & Co’s Winchester office. “These sorts of businesses appeal to buyers with families because hours can be adapted to fit round children.” In many areas, buying a small guest house can be no more expensive than buying a large family house, yet, on average, turnover in excess of £50,000 is generated, with operating profits of between £20,000 and £30,000,” he adds.
The Government has given a boost to rural post offices, which has restored confidence in the sector. Ironically, it is the presence of such stores that attracts second-home weekenders to villages, which in turn boosts property prices. Most post offices are run as small independent businesses and usually come with residential accommodation. Owners receive an income depending on the number of transactions carried out. Often this is a modest income of a few thousand pounds, but it can reach more than £30,000.
Holiday cottages are another popular sector. Rental agencies say a well-located cottage that sleeps six can gross more than £15,000 during the main season from Easter to September. Even a two-person cottage can generate as much as £6,000 a year.
English Country Cottages, based in Norfolk, says location and appearance are the essential ingredients. Agencies are always on the look-out for well-equipped, character homes in attractive settings. Above all, cottages should have “brochure appeal” – photograph well and have a bit of romance about them. Properties with sea views or close to the coast are top of the list with holidaymakers. Otherwise the next best location is in rural countryside.
Demand for cottage complexes – tasteful conversions of barns or other farm buildings, with suitable facilities for families (swimming pool, tennis court, games room) – are highly sought after, according to estate agent Knight Frank. Draydon Cottages, near Dulverton, in the Exmoor National Park, is one such complex, on the market for £700,000. Others on Knight Frank’s books include Halgabron House, in Tintagel, cornwall (a listed farmhouse plus six cottages), priced at £750,000, and Didsworthy House, South Brent, Devon (Victorian house with three letting units), which is for sale at £800,000.
Res Nova, a floating restaurant and hotel on the River Dart, comes with 12 letting cabins and owner’s accommodation. The price is £195,000. For this and properties above, call 01392 493101. Strutt & Parker is another West Country estate worth contacting – 01392 215631.
CGT is a complicated area of tax and you may have to consult an accountant. The Inland Revenue will want to separate the house you live in (your main residence, which is not liable for tax) from the cottage business.
BusinessesForSale.com, a property website, warns that some first-time buyers are failing to use specialists when purchasing. A survey of people attending seminars organised by the company revealed that more than 80 per cent of would-be buyers did not have an accountant, lawyer or finance lined up.
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