Industrial unit loses 99% of its value
A COMMERCIAL property unit in Warrington which was bought five years ago at £365,000 has just failed to sell at auction for £3,000.
The 15,698 sq ft warehouse/office unit at Woolston Grange in Warrington had been placed in Pugh & Co’s December auction with a guide price of £3,000-£5,000 but no buyer emerged for the premises. It is now listed on the site as being available for £2,000.
The unit has seen its value drop by 99% due partly to the high rate of ground rent expected by the site’s freehold owner.
A 99-year lease on the site began in 1980, which is subject to seven-year reviews. During the last review, the ground rent for the space was set at £25,000 per year.
Mark Hawthorn of Bolton-based ground rents investment firm Landmark Investments, said: “In effect, what you’re buying is a property with a liability. When the rent was first set at 1980 it was £3,000, but some clever clogs has massively overvalued the rental value of the land.
“Instead of having a site with a tenant for the next 80-90 years, it now has a site that’s empty and a potential empty rates liability.
“It’s a typical example of an aggressive freeholder over-egging it,” he added.
