This report analyzes the investment potential of a 5-bedroom maisonette located at Lena Gardens, London W6, presented for sale at £1,350,000 (based on Zoopla listing price guide). The property is evaluated for its conversion into a Houses in Multiple Occupation (HMO). Disclaimer: Please note that while the prompt requested an evaluation for 'Portsdown Road, Leicester LE2', all provided data (images, floor plans, rental comparables, and property details) pertain to 'Lena Gardens, London W6'. This analysis is therefore based on the London W6 property, assuming the Leicester address in the prompt was an error. Local council standards for Hammersmith & Fulham will be referenced.
Purchase Price
£1,350,000
Estimated Market Value (As-Is)
£1,350,000
Estimated Refurb Cost
£55,000
Potential Value Uplift (ARV)
£450,000
The acquisition price of £1,350,000 represents the property's current market value. The primary investment strategy involves converting this 5-bedroom maisonette into a high-yield HMO. The projected Return on Investment (ROI) for the refurbishment is significant, reflecting the potential for increased rental income and valuation uplift inherent in HMO conversions.
Estimated Monthly Gross Rent
£4,500
Estimated Gross Yield
4.0%
Avg. Room Rate vs Market
£900 vs £850
Based on the provided room rental comparables in London W6, a conservative average rent of £900 PCM for each of the 5 proposed HMO rooms has been estimated. This projection assumes a high standard of refurbishment, creating desirable and compliant living spaces that attract professional tenants. The total projected gross monthly income of £4,500 (£54,000 PA) represents a significant uplift compared to the property's current rental value as a family home (estimated at £4,000 PCM or £48,000 PA based on the provided 'as-is' gross yield). This higher income stream is the primary driver for the HMO investment strategy.
Monthly Income (Gross)
£4,500
Estimated Monthly Costs
£4,741.67
Monthly Cashflow
-£241.67
Projected negative monthly cashflow of £241.67. This indicates that, based on current projections and financing, the property may not be immediately cash-flow positive on a monthly basis after debt servicing and estimated costs. A thorough review of expenses and potential rent increases would be necessary.
- LTV: 75%
- Deposit Required: £337,500 (£1,350,000 * 25%)
- Loan Amount: £1,012,500 (£1,350,000 * 75%)
- Interest Rate: 5.5% (Estimated)
- Monthly Repayment: £4,653.13 (Interest Only)
FAIL: Projected gross rent (£4,500pcm) does NOT comfortably cover the estimated mortgage repayment (£4,653.13pcm), indicating a shortfall before other operating costs. This highlights a significant cash flow risk.
Post-Refurb Valuation (ARV) £1,800,000 Based on 5 x £900pcm rooms = £54,000 pa / 3.0% yield (market avg.)
Refinance Uplift % 33.3% Increase from purchase price
Estimated Equity Pulled Out £337,500 Based on 75% LTV of ARV (£1,350,000 loan) - £1,012,500 initial loan
Capital Left in Deal £97,500 Deposit + Refurb Costs - Equity Pulled Out (£337,500 + £55,000 - £1,350,000)
The ARV is estimated at £1,800,000, assuming successful HMO conversion and market yields. Refinancing at 75% LTV (£1,350,000) would cover the initial loan and potentially pull out equity. However, the viability of this hinges on achieving the projected rental income and valuation, which currently appears challenging given the negative cash flow projection.
- Mandatory Licence: Yes - If converted to 5 or more self-contained units or occupied by 5+ people sharing (likely 5 units).
- Additional/Selective Licence: Yes - Hammersmith & Fulham Council has a borough-wide Additional Licensing scheme for all Houses in Multiple Occupation (HMOs) occupied by 3 or more people from 2 or more households.
Hammersmith & Fulham Council requires HMO licensing for this property if occupied by 3+ unrelated individuals. Compliance with local standards for room sizes, amenities (bathrooms, kitchen), fire safety, and management is mandatory.
Council Amenity Standards Check (Estimated for 5-Bed HMO):
- Occupants Supported: Potentially 5 adults.
- Kitchens: One communal kitchen/diner (9.9m²) is present. While functional, it may need upgrades (e.g., sufficient appliances, worktop space) for 5 occupants depending on specific council requirements.
- Bathrooms/WCs: Two bathrooms (6.63m² and 7.02m²) are available. For 5 occupants, this is likely insufficient for compliance and tenant comfort. A third bathroom is highly recommended.
- Communal Space: The combined Reception (21.2m²) and Dining Room (15.91m²) offer approximately 37m² of dedicated communal living space, which is generally adequate.
Reception
Floor: Ground Size: 5.3m x 4.0m (21.2 m²) Ceiling Height: High (Estimated) Reconfig Potential: High - Excellent space, could be a lounge or 6th bedroom.
Function: Lounge / Potential Communal Space
Pass (Large) Dining Room
Floor: Ground Size: 4.3m x 3.7m (15.91 m²) Ceiling Height: High (Estimated) Reconfig Potential: Medium - Integral part of communal living.
Function: Dining Area
Pass (Good Size) Kitchen
Floor: Ground Size: 3.3m x 3.0m (9.9 m²) Ceiling Height: High (Estimated) Reconfig Potential: Medium - Can serve as communal kitchen/diner.
Function: Kitchen/Diner
Pass (Amenity) Study
Floor: Ground Size: 2.9m x 2.2m (6.38 m²) Ceiling Height: High (Estimated) Reconfig Potential: Low - Too small for bedroom use.
Function: Study / Storage
Fail (Bedroom Use) Bedroom 1 (Lower Ground)
Floor: Lower Ground Size: 4.0m x 3.7m (14.8 m²) Ceiling Height: High (Estimated) Reconfig Potential: Medium - Good size for double occupancy.
Function: Bedroom
Pass (Double Occupancy) Bedroom 2 (Lower Ground)
Floor: Lower Ground Size: 5.3m x 3.7m (19.61 m²) Ceiling Height: High (Estimated) Reconfig Potential: High - Large room, excellent for double occupancy.
Function: Bedroom
Pass (Double Occupancy) Bedroom 3 (Lower Ground)
Floor: Lower Ground Size: 3.3m x 3.1m (10.23 m²) Ceiling Height: High (Estimated) Reconfig Potential: Medium - Meets minimum for double occupancy.
Function: Bedroom
Pass (Double Occupancy) Bedroom 4 (Lower Ground)
Floor: Lower Ground Size: 4.0m x 4.0m (16 m²) Ceiling Height: High (Estimated) Reconfig Potential: High - Large room, excellent for double occupancy.
Function: Bedroom
Pass (Double Occupancy) Bedroom 5 (Lower Ground)
Floor: Lower Ground Size: 3.0m x 2.5m (7.5 m²) Ceiling Height: High (Estimated) Reconfig Potential: Medium - Meets minimum for single occupancy.
Function: Bedroom
Pass (Single Occupancy) Bathroom (First Floor)
Floor: First Floor Size: 3.9m x 1.7m (6.63 m²) Ceiling Height: High (Estimated) Reconfig Potential: Low - Standard family bathroom.
Function: Bathroom
Pass (Amenity) Shower Room (First Floor)
Floor: First Floor Size: 3.9m x 1.8m (7.02 m²) Ceiling Height: High (Estimated) Reconfig Potential: Low - Contains shower, WC, basin.
Function: Shower Room
Pass (Amenity) National Minimums Check:
- Bedrooms 1-4: Meet or exceed minimums for double occupancy (10.22m²).
- Bedroom 5: Meets minimum size for single occupancy (7.5m² vs 6.51m² national minimum).
- Study: Fails minimum size for bedroom use (6.38m² vs 6.51m² national minimum).
Capacity & Layout Options:
Option 1: 5-Bed HMO
Pass
Max Compliant Occupancy: 5 Adults Utilizes all 5 bedrooms. Requires additional bathroom. Potential for good rental income.
Option 2: 6-Bed HMO
Fail
Potential Compliance Issues Converting Reception room (21.2m²) into a 6th bedroom sacrifices vital communal space and significantly increases amenity demand (e.g., for bathrooms). Unlikely to be compliant or desirable.
Max Compliant Occupant Count: 5 Adults. Recommended Layout: 5-bedroom HMO, utilizing all 5 bedrooms on the lower ground floor. The Ground Floor Reception room will be maintained as communal living space. The Study will be repurposed as storage/utility.
Scope & Standard:
A High standard refurbishment is recommended. The property is already described as "high finish," but conversion to HMO requires specific upgrades to meet landlord licensing standards and maximise rental appeal in a competitive London market. Focus will be on creating 5 comfortable, compliant, and attractive rooms, upgrading communal facilities, and ensuring robust fire safety.
Refurb Breakdown:
Fire Safety Compliance £10,000 Fire doors, interlinked smoke/heat alarms, emergency lighting, signage. Essential for licensing.
Additional Bathroom Installation £8,000 Adding a third bathroom/WC to serve 5 occupants is crucial for compliance and desirability.
Kitchen Upgrade £7,000 Enhance appliances, worktops, and storage to meet multi-occupancy standards.
Bedroom Refurbishments £15,000 New flooring, redecoration, potential minor layout adjustments, furnishing for 5 rooms.
Communal Area Refurbishment £4,000 Refresh lounge/dining area, enhance lighting, potentially update decor.
Electrical/Plumbing Checks & Upgrades £3,000 Ensure capacity for multiple users, update fixtures if needed.
General Repairs & Contingency £8,000 Includes windows, doors, potential minor structural work, and a buffer for unforeseen issues (approx. 15%).
Total Estimated Refurbishment Cost £55,000
Refurbishment Shopping List:
Kitchen:
- Integrated Oven - Cost: £500
- Induction Hob - Cost: £400
- Dishwasher - Cost: £450
- Large Fridge-Freezer - Cost: £800
- Additional Sink and Tap - Cost: £300
- New Worktops & Cabinet Facias - Cost: £2,000
- Splashback Tiling - Cost: £500
Bathrooms (x1 New):
- WC, Basin, Shower Unit - Cost: £800
- Tiling & Fixtures - Cost: £600
- Heated Towel Rail - Cost: £200
Fire Safety & General:
- Fire Doors (FD30s) - Cost: £250 each (x5) = £1,250
- Interlinked Smoke/Heat Alarms System - Cost: £600
- Emergency Lighting - Cost: £400
- Thumb Turn Locks for Bedrooms - Cost: £150
- Fire Signage - Cost: £200
- Quality Laminate Flooring/Carpet - Cost: £2,500
- Repainting (Walls, Ceilings, Trim) - Cost: £2,000
- New Light Fittings (LEDs) & Sockets/Switches - Cost: £1,000
- New Fitted Wardrobes/Storage for rooms - Cost: £2,500
- Communal Area Furniture Refresh (Sofa, Coffee Table) - Cost: £1,500
Estimated Refurbishment Time:
Weeks: 8 || Months: 2
Phase 1: Strip-out, structural works, plumbing & electrical rough-in || 2 weeks
Phase 2: Bathroom and Kitchen fitting, plastering || 3 weeks
Phase 3: Decoration, flooring, final electrics/plumbing, doors || 2 weeks
Phase 4: Final snagging, cleaning, furnishing || 1 week
Risk Level
Risk Level: 85/100
This property presents a high-risk investment. The primary concerns are the substantial purchase price relative to projected rental income, leading to negative initial cash flow and significant financing risks. The need for extensive refurbishment, including adding a crucial third bathroom, adds to the capital outlay and execution risk. Compliance with strict London HMO regulations and achieving target rents are critical success factors. The high purchase price offers limited buffer for errors or market shifts.
Property Condition & HMO Conversion Needs £40,000 - £60,000 The need for a substantial £55,000 refurbishment, including an essential third bathroom and significant fire safety upgrades, presents a strong negotiation point. Probability: 85%.
Negative Cash Flow Projection £50,000 - £100,000 The projected negative monthly cash flow (£241.67) indicates that the initial asking price is too high relative to achievable rents and current mortgage rates. This is a critical point for negotiation. Probability: 80%.
Insufficient Bathrooms £8,000 - £12,000 The necessity to add a third bathroom is a clear cost implication that the seller should absorb through a price reduction. Probability: 75%.
EPC Rating D £5,000 - £10,000 The current EPC rating of D suggests potential inefficiencies. While not a primary HMO compliance issue, it can be used to negotiate a discount, especially if upgrades are planned. Probability: 60%.
Time on Market / Seller Motivation Variable If the property has been on the market for an extended period or seen price reductions, this indicates potential seller motivation for negotiation. (Requires checking listing history). Probability: Variable.
Visual Inspection of Condition N/A The images show a property that is well-presented but clearly requires a significant overhaul for HMO use. Any signs of wear or dated fixtures not immediately apparent in photos would strengthen negotiation. For example, the kitchen, while functional, looks dated and would require upgrading. The bathrooms, though clean, may need modernization and re-configuration to meet HMO standards.
Detailed Recommendation
The property at Lena Gardens, London W6, presents a challenging HMO investment proposition at its current asking price of £1,350,000. While the potential for capital appreciation to an ARV of £1,800,000 is attractive, the immediate financial viability is severely compromised by a projected negative cash flow. The gross rental income of £4,500 PCM is insufficient to cover the estimated mortgage payments of £4,653 PCM, let alone refurbishment costs (£55,000) and operational expenses.
Key areas of concern include the critical shortfall in bathrooms (only two for five occupants), the high entry cost, and the need for extensive refurbishment. Without significant price reduction or an ability to secure substantially higher rents, this investment carries a high degree of financial risk. The property is recommended for investors with a very high-risk tolerance, access to significant additional capital, and a strong belief in future market appreciation, or those who can negotiate the purchase price down dramatically.
Short Recommendation
High-risk HMO conversion in W6 due to high price, negative cash flow, and amenity compliance issues. Requires £55k refurb. While ARV uplift is strong, immediate viability is poor. Not recommended at asking price without significant price reduction.
Demolition & Waste Removal £2,500 Removal of old fixtures, fittings, and any non-compliant structures.
First Fix Plumbing £2,000 Installation of new pipework for the additional bathroom and kitchen upgrades.
First Fix Electrical £3,000 Wiring for new lighting, sockets, alarms, and potential upgrades to fuse board.
Installing New Bathroom £2,500 Supply and fit of toilet, basin, shower, tiling, and associated fixtures.
Kitchen Refurbishment £3,500 Supply and fit of units, worktops, sink, tiling, and basic appliance installation.
Fire Door Installation £1,250 Supply and fit of 5 x FD30 fire doors and associated ironmongery.
Smoke/Heat Alarm System Installation £600 Installation of interlinked mains-powered alarms with battery backup.
Emergency Lighting Installation £400 Installation of required emergency lighting points.
Fire Signage & Escape Route Marking £200 Supply and installation of necessary fire safety signage.
Plastering & Skimming £3,000 Skimming walls and ceilings in areas affected by works.
Flooring Installation £2,500 Supply and fit of laminate or carpet in all bedrooms and communal areas.
Painting & Decorating £2,000 Preparation and painting of all walls, ceilings, and woodwork.
Bedroom Furniture Assembly/Installation £1,500 Assembly and installation of beds, wardrobes, desks for 5 rooms.
Communal Area Refresh £1,500 New sofa, coffee table, lighting for lounge/dining.
Final Electrical Fixtures & Testing £1,000 Installation of light fittings, sockets, switches and EICR.
Deep Clean & Post-Works Clearance £1,000 Thorough clean of the entire property post-renovation.
Project Management Fee £3,000 Overseeing the refurbishment works to ensure quality and timely completion.
Risk Level
85/100 - High Risk
- Financial Viability: Negative cash flow post-mortgage and refurbishment, coupled with high purchase price, creates substantial financial risk.
- Licensing Compliance: Insufficient bathrooms for 5 occupants is a key hurdle for HMO licensing in Hammersmith & Fulham.
- Refurbishment Costs: The £55,000 estimate is subject to potential overruns.
- Rent Achievement: Relies on strong market demand and quality of finish to secure £900 PCM per room.
- Market Volatility: London property market fluctuations could impact ARV and refinanceability.
- Missing Data: Precise ceiling heights and detailed structural plans were not provided, impacting precise space validation.
Detailed Recommendation
The property at Lena Gardens, London W6, presents a challenging HMO investment proposition at its current asking price of £1,350,000. While the potential for capital appreciation to an ARV of £1,800,000 is attractive, the immediate financial viability is severely compromised by a projected negative cash flow. The gross rental income of £4,500 PCM is insufficient to cover the estimated mortgage payments of £4,653 PCM, let alone refurbishment costs (£55,000) and operational expenses.
Key areas of concern include the critical shortfall in bathrooms (only two for five occupants), the high entry cost, and the need for extensive refurbishment. Without significant price reduction or an ability to secure substantially higher rents, this investment carries a high degree of financial risk. The property is recommended for investors with a very high-risk tolerance, access to significant additional capital, and a strong belief in future market appreciation, or those who can negotiate the purchase price down dramatically.
Short Recommendation
High-risk HMO conversion in W6 due to high price, negative cash flow, and amenity compliance issues. Requires £55k refurb. While ARV uplift is strong, immediate viability is poor. Not recommended at asking price without significant price reduction.
HMO · Property Analysis