Prospect Court, a fresh, modern-looking building of 10 flats, was secured at a 14% discount to its RICS break-up value and is available with gearing for enhanced returns. This property offers a particularly attractive dividend yield and is a great opportunity to diversify to the West-Midlands of England.

This compelling investment case is underpinned by four factors:

• The investment comprises all 10 flats in this property and is geared at 50% loan-to-value (LTV) of the purchase price. Gearing gives enhanced exposure to property price movements, and the potential for amplified returns; though investors must note amplified negative returns if prices fall.
• There is a significant discount reflected in the purchase price of this property, which we have secured by purchasing the entire block at an RICS investment value of £840,000 versus the RICS break-up value of the individual flats of £975,000.
• By purchasing the unbroken block at its investment value as opposed to its break-up value, investors will benefit from a higher net dividend yield than they would achieve by purchasing individual flats. Net income is further enhanced by a favourable mortgage rate relative to the net dividend yield.
• The property is in Market Drayton, in the West-Midlands of England. The well-regarded research team at Savills estimate this region to enjoy a forecast capital growth of 16.5% over the next 5 years (2016: 4.5%, 2017-2018: 3%, 2019-2020: 2.5%)

Our investment comprises an unbroken block of 10 two-bedroom flats, as well as the Freehold interest for the building. By purchasing the entire building in a single transaction, we were able to offer the vendor speed and certainty. We are paying £840,000 for the entire block versus an RICS certified break-up value of the individual flats of £975,000. In the interests of prudence, and as per our valuation policy for blocks located in less active markets, we will value this property at RICS investment value on our platform.

This property offers an attractive dividend yield. This is partly due to the discount secured at the purchase price, and partly because rental yields tend to be higher in areas outside London and other major cities. This figure is net of mortgage interest payments, purchase costs, furnishings, remedial cosmetic works, forecast maintenance, annual voids, corporate taxation and all fees.

Further, by purchasing the entire block at its investment value as opposed to its break-up value, investors will benefit from a higher dividend yield than they would achieve by purchasing individual flats. Net income is further enhanced by a favourable mortgage rate relative to the net dividend yield.

Market Drayton is a historic market town located North of Birmingham and South of Manchester. The town benefits from excellent road communications being located on the A53, which connects Newcastle-under-Lyme with Shrewsbury. The M6 motorway is 13 miles to the east and provides access to the national motorway network.

The well-regarded research team at Savills estimate this region to enjoy a forecast capital growth of 16.5% over the next 5 years (2016: 4.5%, 2017-2018: 3%, 2019-2020: 2.5%).