Is now a good time to buy luxury property in London?

By Emanuele Midolo

There are 317 homes over £10 million for sale — the race for super-prime real estate is revving up

London’s super-prime property market is roaring back to life. Overseas buyers are beginning to return and the supply of luxury bricks and mortar is set to be boosted by the launch of luxury developments with multimillion-pound price tags.

A silver Lamborghini with a blue camouflage wrap and a Kuwait registration plate comes gunning into the narrow Mayfair street and parks on a double yellow line next to where Peter Wetherell, the founder of the Mayfair-based estate agency Wetherell, stands. It is a potent symbol of the va-va-voom returning to the capital.

“We should be proud that so many people are flying themselves — and their cars — over just to ride our streets and view our properties,” Wetherell says.

Wealthy Middle Eastern visitors are not just driving their cars, but driving the market and snapping up properties, while Far Eastern purchasers — who for years have led the pack and paid the premium for a central London postcode — are still unable to get here because of travel restrictions.

“Typically, high-net-worth buyers from Hong Kong are the early movers, followed by those from the Middle East,” says Henry Faun, a partner and head of the Middle East project marketing team at the estate agency Knight Frank, who adds that “phones are ringing off the hook”.

With the UAE having come off the government’s red list in early August, Faun says that a year’s worth of pent-up demand is being released. “One of our clients arrived in London recently with £30 million ready to invest. Within two weeks they had made an offer and exchanged on a property.”

Data from Knight Frank shows that demand for London properties is returning to pre-pandemic levels. When it comes to nationalities, homebuyers from the UAE have increased 47 per cent between January and August, compared with the same period in 2019. The estate agency also says sales over the period were up 56 per cent compared with the whole of 2020.

Analysis by the estate agency Hamptons shows that Middle Eastern buyers were the only nationality to increase their share of properties purchased across London since 2019.

Andrew Wishart, a property economist at the consultancy Capital Economics, says: “The real estate sector makes up about 12 per cent of GDP, so overall the sector is very important. But while the price of homes in prime central London is high, the value of prime homes transacted — around £4 billion in 2019 — is just a fraction of the £285 billion in the national market.”

Nonetheless it is a market that fascinates not just those collecting the hefty fees from top-end sales, but also the general public, who see it as a bellwether for the desirability of the capital, if not the country. During the pandemic, while the rest of the country’s property market boomed central London was subdued as domestic buyers fled to the country while international investors stayed at home.

Now though, as travel restrictions ease and vaccination programmes are rolled out, multimillionaires with money to splash are being given plenty of choice thanks to the launch of luxury developments that were delayed by the pandemic. According to figures published by this week by the estate agency Beactive there are 317 properties for sale for £10 million or more in the capital, giving buyers ample opportunity to join a global elite: there are 63 billionaires living in London, the largest concentration in the world outside San Francisco and Hong Kong.

On Monday, the developer Almacantar unveiled its showroom apartment at the Bryanston, a 54-flat ultra-luxury scheme next to Marble Arch and overlooking Hyde Park. The developer will be hoping that state-of-the-art features such as air purification systems will help to lure wealthy buyers to the block, designed by the starchitect Rafael Viñoly, where prices start from £2.4 million. The spacious apartments look out towards One Hyde Park, the original development of choice for Middle Eastern buyers.

Also overlooking Hyde Park is Park Modern, a 57-flat luxury development by Fenton Whelan where prices start at £2.2 million. A spokesman for the developer says growing demand from the Middle East was the reason it launched a roadshow of the scheme in Dubai.

Amenities at both the Bryanston and Park Modern include the now standard concierge, restaurant, café and valet parking, plus wellbeing facilities — a 25m pool, gym, spa, cinema and treatment salon.

Further out in Kensington, Lancer Square — a 36-apartment, three-block multi-use development by the Malaysian developer Bellworth, designed by Squire and Partners — also launched last week with prices beginning at £4.86 million for a two-bedroom flat.

Meanwhile, Christian Candy, of One Hyde Park fame, has a new scheme too: 80 Holland Park, where prices for a two-bedroom flat start at £2.6 million. The 25-apartment development has a 24-hour concierge, underground car parking with electric charging points, a 16.8m pool and a gym.

Despite their high-end facilities, the new breed of luxury developments are more understated than their predecessors. Tastes have changed since the Candy brothers launched One Hyde Park ten years ago and the style now is more pared down and minimalist with white the primary shade, not black.

Nonetheless, Will Watson, the head of London at the buying agency the Buying Solution, says: “The super-luxe London crash pad is definitely having a moment.”

Period flats and houses in Mayfair, Belgravia and Knightsbridge are also selling fast. “We have the most enormous pipeline with over £50 million worth of properties under offer, anything from flats priced at £2 million up to £25 million,” says Camilla Dell, the founder of the buying agency Black Brick.

She says North American buyers are starting to come over too, a strong dollar making London properties more affordable. “The New York market is hotting up and some American buyers might think they’ve missed the boat there and decide to buy here instead,” she says.

An anonymous American entrepreneur bought a £6 million flat in Mayfair through Black Brick just before the pandemic. He says he was not daunted by the stamp duty tax because he was investing for the long term. “In the US, you pay property [wealth] tax every year,” he says. “I’m planning to use the flat for many years to come so I don’t mind paying tax in one go.”

Some Far Eastern investors are making a leap of faith and buying without viewing the properties in person. Agents say these buyers favour trophy assets that are in the £10 million-plus price bracket and new-build properties. One Chinese buyer is rumoured to have recently snapped up an entire block of flats with two ground-floor shops on Mount Street in Mayfair for £45 million.

Not everyone, however, is opting to buy. A growing number of high-net-worth individuals are in the market for luxury rentals and in many cases they are happy to pay several months’ rent in advance to secure the best properties, which in Mayfair would easily amount to many millions of pounds.

“What is often forgotten about Mayfair is that 91 per cent of the properties are flats and that over half of the homes in Mayfair are rented,” says Wetherell, who adds that his agency had twice the number of lettings in the third quarter of this year compared with the previous quarter, renting 26 properties over the past six weeks, most of which were for over the asking price.

Wetherell says renting, even at this level, is the cheaper option as an overseas purchaser buying a £10 million second home would pay £1.614 million in stamp duty. Renting is also more discreet. “If they buy, the information is out. It’s public. With renting no one knows,” he explains.

For years, the ultra-rich have used offshore companies to shield their identities, but through a number of leaks over the years — the Panama Papers, the Paradise Papers and now the Pandora Papers — the names and details of hundreds of heads of governments, businessmen and oligarchs have come out, shining a light on this world of elite transactions.

“[The] rich try to minimise taxes, just like you and I would do, there is nothing illegal in that,” says Gary Hersham, the founder of the prime estate agency Beauchamp Estate, who last year sold the most expensive home in Britain to a Hong Kong billionaire for £210 million. “If they are allowed to avoid paying stamp duty that’s a problem for the government, not for the rich.”

So why would rich people want to spend all that money buying or renting properties in London? “The answer to the question why,” Hersham says, “is always the same: because they can.”

UK property Market for London’s top-end homes showing ‘signs of life’

By James Pickford

London’s high-end property market is showing glimmers of recovery as a second consecutive quarter of price increases followed years of falling or flatlining values, according to new data.

Prices for expensive London homes rose by 1.4 per cent in the year to September, including a rise of 0.7 per cent in the latest three-month period, according to estate agent Savills. “The research is the latest evidence that the prime central London market has bottomed out and is growing for the first time since September 2014, despite the absence of international buyers,” said Savills, which defines prime as the top 5 to 10 per cent of homes by value in a given district. Compared with the surge in prices seen in the mainstream market in other parts of the UK, the rise is modest.

Nationwide on Thursday said annual growth in UK house prices was 10 per cent in September, down from 11 per cent the previous month. The market for prime property in the capital extends from prime central London — Kensington, Chelsea and Westminster — to top properties in more distant districts such as Chiswick, Wimbledon, Hackney, Clapham and Hampstead.

Average values in the Savills index for prime central London are £4.5m; or £2.5m across prime London as a whole. This market has been in the doldrums since the end of 2014, when changes to stamp duty land tax raised the cost of a purchase at the top end. Uncertainty over Brexit added to the sense of caution among wealthy buyers, leading prices in prime central London to fall by nearly 20 per cent between 2014 and 2018.

Last year, pandemic travel restrictions stifled demand from overseas buyers, while homeworking shifted the balance of demand to larger homes outside city centres in the “race for space”.  But Savills said larger homes with gardens in London had increasingly benefited from the same effect, and this was accelerating as the return to office working gathered momentum.

In prime districts across the wider London area, homes with six or more bedrooms rose by an annual 6.2 per cent on average, with a 5.3 per cent rise for five bedroom homes. The effect was strongest in south-west areas of the capital favoured by families, such as Chiswick and Clapham, where price growth for the largest homes hit 8.9 per cent, comparable with rises elsewhere in the UK.

The gradual return to the office had started to change the priorities of buyers in the capital, said Lucian Cook, residential research director at Savills. “In our September buyer survey proximity to the Tube or train station took over from proximity to a park or green space at the top of buyers’ wish lists.” Tom Bill, head of UK residential research for estate agent Knight Frank, said prime central London had been in a “holding pattern” for the past six months, but change was afoot with the return of international buyers and “opportunistic purchasers”. Because the school year had now started, families will already have made their move, he said, leading to more purchasing by individuals over the next few months. “There’s an upwards momentum in London prime that’s long overdue. It’s straining at the leash to get going but we’re in a bit of an interim period at the moment,” Bill said.

Camilla Dell, founder of Mayfair-based buying agent Black Brick, said the prime central London property market was “finally showing signs of life”, particularly with the easing of travel restrictions. “It started in August when we suddenly had a lot of Middle Eastern clients coming over,” said Dell, adding that more clients arrived at the beginning of the school term, with prospective buyers coming mainly from North America, West Africa and the Middle East. Demand for apartments, which fell away during lockdown, may also be on the turn, with prices for prime central London flats growing by 0.6 per cent on the year in the Savills data — the first positive annual figure since 2014. Dell said that of eight clients she took on in the first two weeks of September, all but one wanted an apartment in prime central London. “There’s definitely more interest in apartments and the London pied-à-terre than there was 14 months ago,” said Bill. “That’s starting to change.”

Property woes hit women on divorce

By Simoney Kyriakou

Valuing the home on divorce can be a “bone of contention”, particularly for the woman in the relationship, specialists have warned.

Camilla Dell, founder and managing partner at buying agency Black Brick, said a lack of advice, distrust of valuations and having to be prepared for court battles are factors many divorcing women overlook, but all this can lead to additional stress and confusion.

Dell said: “We work with several divorce lawyers who often require our services for clients. When couples divorce the most valuable asset is often the family home. Who values the home can often be a bone of contention.

“If one side has an existing relationship with an estate agent there may be distrust from the other side that the valuation won’t be completely objective or unbiased.

“We have been asked by divorce lawyers to give our independent opinion on value in these situations.”

Historically, according to Debora Price, professor of gerontology at the University of Manchester, the man has taken his pension and the woman has taken the house on divorce.

Putting aside the problem of women not being able to fund their retirement years, Price said it is very hard for a woman to rely on the property as an “asset” later on in life.

We have been asked by divorce lawyers to give our independent opinion on value in these situations.

Dell commented: “There is a possibility that a woman might be able to release equity in the home, but outside of London and the south-east this is not a great option and comes with risks.

“The best way to release equity without any risks is to sell and trade down, but if you are living in a terraced house outside of London, it is not easy to trade down.”

There is also the importance of advising women to be prepared to explain why they need a certain value put on a home if the division of assets is contested and goes to court.

Often a woman might be left with a lower settlement because she does not know how to assess what sort of home she and any children might need – if the children are to live with her – as well as the ongoing cost of running a home.

Dell added: “We’ve also been asked by divorce lawyers to help prepare their client (often women) for court. We had one situation for a high-profile divorce where we had to prepare the wife.

“Part of that preparation included going on property tours to view houses of varying values, so when the judge asked her why she was seeking a certain value for her next home she could confidently talk about what things cost.

“That also included looking carefully at what the cost of running a home is too.”

PCL flats are back in demand, reports Mayfair agency

Black Brick has signed up eight new clients in the last fortnight – all but one of whom are looking for apartments in London’s top postcodes: ‘It was tumbleweed for 18 months but now it is a frenzy’.

Prime Central London flats are back on the wishlist for high-end buyers, according to a Mayfair-based agency.

Black Brick’s buying team has reported signing up eight new clients in the last fortnight alone, with a combined spending power of £17m. Interestingly, 100% of them want PCL addresses, and all but one are after an apartment.

Homes sold in London this summer were 20% bigger than the 2016 to 2019 average, according to LonRes, but the renewed appetite for flats suggests this particular pandemic-driven market trend “could be slowing down”, said the firm.

“It has been an extraordinary start to autumn,” confirmed managing partner Camilla Dell. “Demand for Prime Central London flats is back. It was tumbleweed for 18 months but now it is a frenzy.

“It started in August when we suddenly had a lot of Middle Eastern clients coming over…Then, literally as soon as the schools went back we started to get really busy with lots of new clients.”

The new crop of prospective buyers have mostly come from North America, West Africa, and the Middle East.

The return of overseas buyers is good news for PCL developers and vendors, added the firm, but the heightened interest isn’t yet reflected in house price data. According to the latest official UK HPI, prices in Westminster are down 3% year on year (to an average £898k) while in Kensington and Chelsea they have inched up by 0.7% to just over £1.3m.

Dell: “If you walk around London it really feels like the buzz is back. People are back in their offices, and just walking around town it feels almost like the pandemic never happened. In terms of prices, the needle is probably already moving, and we could see growth in Prime Central London of 2 to 3% by the end of the year if it carries on at the current rate.”

Is now the time to buy London property?

For many African clients, owning real estate assets in the UK is about wealth diversification.

The UK property market bounced back exceptionally strongly from the depths of pandemic last year. This year March was the busiest month for property transactions in at least 15 years with total spend over the preceding year reaching its highest level ($280bn) since before the global financial crisis.

This is according to Tom Bill, head of UK residential research for Knight Frank, who says that as a result of all the recent activity in the sector, house prices are rising sharply. The Nationwide House Price Index shows house prices registered their biggest monthly gain since 2004 in April this year, taking annual house price growth of 10%.

“In simple terms, we are seeing price distortion due to a lack of supply. The first two months of the year were marked by uncertainty over new Covid-19 variants, which meant that new sellers were reluctant or unable to list their properties. When demand escalated sharply in March, supported by the stamp duty deadline, the best properties sold quickly and as those properties disappeared from the market, sellers hesitated, which exacerbated the supply shortage and placed upward pressure on prices.”

The relief on stamp duty (tax on the sale of the home, usually set at £125,000) was increased to £500,000 pounds by the British government in July 2020 with the aim of making it easier for those who may have been financially impacted by Covid-19 to purchase property and to ultimately boost a battered economy. The initial deadline of March 2021 has since been extended to September and applies to both residents and non-residents.

“However, one reason to believe the supply and demand imbalance will correct is that the number of market valuation appraisals is rising,” Bill says. “This is a good leading indicator for supply.”

He says there has been a return to annual price growth in prime central London (PCL) for the first time in five years. “This serves as a reminder that there has been a long overdue return to growth in PCL that was beginning to pick up before the pandemic struck.”

Camilla Dell, managing partner at Black Brick Property Solutions, says much of the “growth and madness in the property market has been taking place outside of PCL. When analysing property in certain parts of city centre, there is good value and interesting buying opportunities”.

She says that across PCL, property prices are down just over 20% since the peak of the market at the end of 2014. She echoes Bill’s sentiments that PCL is due some sort of price growth, which was starting to play out just after the general election and after the pandemic started.

She says there is a window of opportunity for buyers in PCL. This, however, comes with a caveat: that PCL has never been a high-yielding asset class.

Dell has helped a mix of clients from across Africa, purchase property in London, ranging from clients relocating after having sold their businesses through to clients choosing to educate their children either at boarding school or university, and investors, ranging from those buying single, buy-to-let properties all the way to larger clients investing in larger property blocks.

“For many African clients, owning real estate assets in the UK and in particular, Prime Central London is about wealth diversification. Many of the families we advise have made their wealth in much higher risk countries and continue to view property in London as a safe-haven asset class. There are other strong pull factors, including education and business.”

She says the point of investing in a London property is “long term capital growth and in that regard, the forecasts are looking positive with Knight Frank forecasting 25% growth over next five years”.

Sanah Gumede, head of Standard Bank Wealth & Investment SA, says: “The pandemic has brought about a shift in societal conduct and investor confidence. It has caused unrest and fears about economic stability, which is now almost impossible to anticipate. However, investors seeking core assets continue to flock to regions such as the UK, which capitalises on its reputation as a safe haven for foreign investors.”

As with any investment, it is important to gain a thorough understanding of the market dynamics and potential risks associated. Non-UK residents who are looking at acquiring property in this jurisdiction should consider additional costs associated with the purchase price. This includes the new 2% non-resident surcharge for Stamp Duty Land Tax (SDLT), which was introduced on April 1 and that foreign buyers must contend with.

“This is yet another blow to the London property market,” says James Quarmby, partner and head of private wealth at Stephenson Harwood LLP. “Much of the prime London property market relies on interest from foreigners and, with this latest increase, the top rate of SDLT now stands at 17%, almost reaching VAT levels. This is a disincentive to invest in UK residential real estate.”

Despite this higher cost, the London market presents opportunity for foreign buyers at present. The tax relief does relief can be used to maximise a potential investor’s budget in the market. Quarmby says: “The rate for commercial building remains sensible,” which is good news for business owners looking to set up operations in the country.

“At Standard Bank we aim to guide our clients through the maze of issues surrounding finding and securing a property acquisition,” says Adam Hunt, head of international wealth and investment at Standard Bank. “We work with companies such as Black Brick to help our clients locate and negotiate their required property. We then work alongside them to arrange finance for the acquisition and, with firms such as Stephenson Harwood, how to structure ownership suitable for their requirements.”

Those who are interested in gaining deeper insight into key trends shaping activity in the UK property market and a more comprehensive understanding of legal aspects to be cognisant of, can download the free to view webinar below, recently held by Standard Bank.

Serenity rooms, drone jammers and reinforced steel doors: how the super-rich fortify their homes

By Mick Brown

Along with extreme wealth comes extreme security costs

A few years ago an international businessman – we’ll call him Hugo for the sake of discretion – was involved in the oil business in Latin America where he lived. He was doing well, winning tenders ‘in ways most of my rivals hated’. In a bid to discredit him, the rivals started planting stories in the media designed to blacken his name. Then the newspapers began publishing his address and pictures of his wife and family. “At that stage I had to make a decision whether to hire a squad of bodyguards or leave. I left.”

The bodyguards came later.

Roll on a couple of years and Hugo bought a company in another Latin-American country, rated one of the most unstable and dangerous in the world. His wealth alone would have been enough to bring unwanted attention, but in a volatile country, where the line between business and crime is a fine one and often crossed, the risk of kidnap or murder became real.

Hugo did not live in the country, but would fly in regularly for meetings, staying for two or three days at a time. This is how it worked: through a London security company, he hired a group of security professionals, ex-SAS and Royal Military Police – universally recognised as the best trained and most professional protection money can buy. A bodyguard would be waiting as he stepped off the plane and would accompany him to a waiting car and driver, parked at the closest point to the exit. “You wouldn’t know he was security. He wouldn’t be carrying a gun or have a radio in his hand or anything like that. The idea would be not to call too much attention to me or him.”

In the car, Hugo would be briefed on a ‘safety word’ (in one instance, Titanic) – to be used in any situation necessitating “getting the hell out of there as quickly as possible. Most people,” he says, “think security is about your guys fighting the other guys. It’s not. It’s about extracting you in one piece.”

Following an itinerary, he would check in to a hotel, taking a corner suite and booking either the entire floor or rooms immediately adjacent with a body-guard posted in each. All rooms would have been swept for bugs beforehand. One guard would stand outside his suite; another would be downstairs, watching people come in or out. For meetings in the hotel, everybody would be searched going in and have their mobile phones taken. If Hugo had to travel anywhere it would be in a bulletproofed vehicle, with two bodyguards and a driver. Wherever he was going would have been reconnoitred beforehand.

On one occasion, one of his business partners was travelling with three UK-trained security guards when the car was surrounded by a group of armed men, demanding to know their business. Rather than pulling their own guns, two of the security men calmly stepped out of the car and started photographing the group, who were so unsettled that they left. “It was incredible,” says Hugo. “The security guys knew how to read these things and exactly what to do.”

On another occasion, a gang was attempting to steal some documents from a car. They were confronted. Shots were fired and two of the thieves were killed. “It was serious stuff. And then, in countries like that, you don’t hang around for the police.” The security men skipped over the border to a neighbouring country and were flown out. Hugo estimates that he was spending around $200,000 (£144,000) a month on personal protection. “But it was worth it.”

Mayfair, Kensington, St John’s Wood and the Cotswolds aren’t Central or South America, but if you’re very rich things can still get a little sketchy, and in times of uncertainty help may be required.

In 2019, the UK market in security was worth over £13 billion. And Britain, says Philip Ingram, a security consultant and the head of content of the International Security Expo, held each year at Olympia in London, is seen as ‘the gold standard’, exporting more than £7 billion worth of material and expertise. “The Middle East in particular loves taking all the standards and processes the UK has developed and applying them there,” he says.

The International Security Expo brings together some 250 exhibitors and attracts security companies, architects looking for the latest technologies to design into buildings and public spaces, and representatives of government organisations who, as Ingram puts it, “won’t necessarily hand you a business card”.

But the exhibits on display – perimeter intruder-detection systems, technical-surveillance countermeasures, buried intrusion detectors – hold a particular interest for that mysterious group known as ultra-high-net-worth individuals. Silicon Valley titans, Russian oligarchs, Middle Eastern potentates, lucky hedge-fund managers, the odd minted celebrity: if they’re not worrying about getting more money, they’re worrying about how to hold on to what they’ve got.

Earlier this year it was revealed that Facebook paid $23.4 million (£17 million) in 2020 to cover the security costs of its co-founder Mark Zuckerberg and his family, both at home and while travelling, in order to mitigate ‘identified specific threats’. Zuckerberg, who bought the four homes neighbouring his main residence in Palo Alto, California, to ensure his privacy, is guarded round the clock by armed protection officers and a security team that carries out a reconnaissance of wherever he is going, and he has bullet-resistant windows in his office.

There are few people who can match Zuckerberg’s £97 billion fortune – only Jeff Bezos, Elon Musk and Bernard Arnault and family, to be precise. But for the other 2,751 billionaires in the world – and those struggling along with only hundreds or tens of millions to their name, wealth brings not only luxury but also fear.

A recent survey by the property consultant Knight Frank revealed that London has the most so-called ‘prime’ homes of any city in the world, with more than 68,000 properties valued at £2 million-plus. Meanwhile, crime figures in the UK continue to rise. There were 299,868 reported burglaries in 2020, with robberies at 68,095 and vehicle crimes at 371,278. There has also been a huge increase in cyber attacks in the past year, with a 300 per cent year-on-year rise in ransomware episodes.

These are figures that inculcate a sense of rising unease among the rich. A recent survey of high-net-worth individuals, by the security company Chubb, showed that on average 28 per cent felt more vulnerable at home, at work and travelling than five years ago. And the single greatest fear was of violent home invasion.

“The world’s becoming a more threatening place,” says Jack Mann, who runs Alma Risk, a company specialising in personal protection. “People want to keep their families safe, and they’re prepared to go to pretty extravagant lengths to do that.” Just how extravagant might that be?

Imagine for a moment that you are that Indian billionaire or Russian oligarch – or perhaps one of the 52 Hong Kong residents newly arrived in Britain, fleeing China’s new state-security laws, who have been granted a so-called golden visa after promising to invest at least £2 million in the UK. You’ve bought your house in Kensington or Hampstead, but your pride and joy is your new estate in the Cotswolds – not far, perhaps, from the £6 million property owned by David and Victoria Beckham, which masked thieves attempted to burgle in 2018. You are often away making more money, leaving your wife or husband at home with the children. What to do?

Philip Dowds is the MD of Okto Technologies, which develops and instals smart systems in homes and businesses. For a ‘360 degree shield’ and to keep any threat ‘as far away as possible’, he suggests the following.

Firstly, there is perimeter defence, comprising three elements: radar, thermal cameras to pick up body heat, and underground pressure sensors detecting anyone jumping over the wall. All of these would be integrated into a smart system that would eliminate the possibility of a false alarm being triggered by a fox or a badger. Anyone attempting to smash through the main gate in a truck would be met with a reinforced steel door capable of withstanding an impact at 40mph.

In the unlikely event of a breach in the outer defences, Dowds says, the super-wealthy will probably have their own security team on hand. (The raid on the Beckhams’ home was averted after their security staff spotted the intruders on CCTV, but not before the invaders had propped a ladder up to peer into an upstairs bedroom.) Lacking that, the occupier would be woken by an alarm, and have a control pad on hand to activate high-intensity security lights – imagine going from total darkness to the floodlights in a football stadium – along with loudspeakers, set at 110 decibels (as loud as a riveting machine), barking out a warning message. All of which is designed to make the intruder back off.

In the meantime, those inside have retreated to the panic room (or ‘serenity room’, as Dowds prefers). The old-fashioned panic room, he says, would usually be a bathroom or other small space, suitably reinforced. “But if your wife and family are locked in a small bathroom and they think people are attacking them, they’re not going to be very calm.”

A ‘serenity room’, on the other hand, will be the master bedroom, or a similarly familiar and comfortable area, specially customised – the walls lined with Kevlar, the doors made of reinforced steel, the windows bulletproof. Just as important, he says, will be ‘fully diverse communication’: separate phone lines buried deep inside the building and running in different directions in case the burglars or kidnappers have cut the obvious lines, with Wi-Fi, 5G and satellite channels to the outside world. Scented candles and piped new-age music to soothe jangled nerves are optional.

Then there’s the drone threat. It is estimated that one third of all the world’s 10 million drone flights a year have a criminal element. The latest perimeter-protection technology can alert a homeowner or their security team when a drone is heading towards them. And those who want can apply for government permission to allow them to locate the pilot and jam the communication system, causing the drone to fail, while at the same time notifying the authorities of the pilot’s whereabouts.

A complete home-defence system costs up to £1 million. A more modest package of perimeter protection with thermal cameras and radar, the lights and speakers, and a direct connection to the police ‘won’t blow the budget,’ according to Dowds – at about £100,000. He is working on a security system costing £2 million for a London property worth more than £150 million, for a client who will be there for only five or six weeks a year.

Can he tell me where it is? Dowds laughs. “No.”

Camilla Dell, the founder of luxury property agent Black Brick, which deals in London homes worth up to £20 million, says she is often surprised at how little security there is in older properties coming on to the market. “In a lot of the houses around The Bishops Avenue and Hampstead Garden Suburb it’s often just a burglar alarm and old-fashioned iron bars at the window.

“Where I do see security taken quite seriously is if you’re looking at a house owned by somebody who potentially could be under physical threat.” Ultra-high-net-worth Russians, for example, Dell says, “will often have bulletproof doors”.

What is also unexpected, she adds, is how little “very wealthy, very successful business people” know about security. “They tend to think in very simplistic terms: is this neighbourhood safe; what’s the crime rate? Does it have electric gates? If those boxes are ticked, they often won’t think beyond that. We always advise them to get a security firm to look where the weaknesses are and come up with a plan.” Recently, Dell hired a security team just to accompany her on viewings with a prospective woman buyer “who was very much in the public eye, in a negative way”.

“Technology is moving so fast that even security systems fitted two years ago may be outdated,” says Mann, who served with the Household Cavalry in Iraq and Afghanistan before setting up Alma Risk. “You would need to instal a system that is hardwired into the structure of the house and to change all the locks and alarms, because whoever was previously working there – cleaners or caretakers – might have access to existing systems.”

Screening your own staff is essential, and so is keeping them happy. A large proportion of break-ins and security breaches can be traced to disgruntled current or former employees.

“It’s the same principle as running a hedge fund in Mayfair dealing with sensitive information,” Mann says. “Everyone goes home in the evening, the office cleaners come in and someone hasn’t logged off properly, there’s some stuff in the wastepaper basket or left on the whiteboard… Generally speaking, no one has any idea who’s cleaning their office.”

Sweeping a house for eavesdropping devices – technical-surveillance countermeasures – is “another tick on the list for a happy client”.

Even the security systems installed for your protection become a threat in the wrong hands. Baby monitors can be hacked by mischief makers – stories abound of distressed parents hearing a voice coming over the monitor issuing expletives and threats, and rushing into the room to find there’s nobody there except a soundly sleeping child. “High-net-worth individuals will tend to have the latest gadgets, and the latest gadgets have security risks associated with them,” says Ingram. “Your internet-connected television, toaster or fridge could give someone a route into your network, and sophisticated hackers use people’s own security systems to target when they’re not in the home. These things need to be set up properly.”

“There’s a lot of technology on the market, and you can bolster up your house like a castle if you want to,” says Dom Whitmore, the operations director of Alma Risk, who spent over 20 years in the British Army. “But for the most intelligent, determined and driven criminal, there is always a way to navigate through that.” When thieves stole a reported £25 million in jewellery from Tamara Ecclestone’s Kensington home in 2019, they were able to evade the security and spend an hour undisturbed breaking into bedroom safes.

“It’s the mitigating procedures a security organisation implements that do the real work, and those constantly need reviewing,” Whitmore says.

Kidnapping, particularly of children, is another fear. There were about 1,100 child-abduction offences recorded by the police in England and Wales in 2019/20, 161 fewer than the previous year. There are no figures to differentiate how many of these were the result of domestic or custody disputes rather than ransom attempts, which often go unreported after being settled privately.

The security market abounds with all manner of devices to keep track of children, from wrist-worn GPS trackers to chips that can be sewn into clothing. But, as Mann points out, they offer no guarantee of safety.

“Children change their clothes a lot. You’d have to have a hell of a lot of trackers. If a child is taken and the kidnapper suspects there’s a tracker, they’ll just [remove it from] their wrist or change the clothes. The real question is, who’s monitoring that tracker? And what happens after it’s activated?” GPS tracker implants remain the stuff of fiction; there are no trackers small enough to implant into a child, and even if there were, recharging the battery would present a problem.

And as for prized possessions: what’s wrong with keeping the Monet or Warhol in a safe, or stashed away in a Zurich free port, and hanging a replica on the wall to fool visitors? And why not do the same with jewellery, when you can commission almost identical replicas?

The F1 racing driver Lando Norris may think again about choosing a timepiece from his safe after he had his wristwatch, worth £40,000, stolen by a group of thugs as he was approaching his McLaren sports car following the Euro final at Wembley. Which is where close protection comes in. Typically, hiring a personal bodyguard can cost anywhere between £500 and £1,500 a day. The stereotype of a pair of heavily muscled, shaven-headed goons in black suits is only for Chechen arms dealers and wannabe A-listers aiming to draw attention to themselves. The best security companies employ personnel so discreet you wouldn’t know they were there at all.

“Close protection is a skill,” Whitmore says. “Experienced protection officers are always anticipating what their client is going to do and considering, ‘What if X happens?’ It’s the way they dress, the way they hold themselves; it’s being streetwise. If someone is out shopping they might want the close protection to keep their distance; if they’re walking their dog at 10.30 at night they prefer to keep them near, looking like a couple.”

The more ostentatious your wealth, the greater the risk. Those who are in the business of showing off, not to mention footballers with Instagram accounts displaying pictures of their homes and supercars, are a particularly inviting target for thieves. In March, the Everton and Sweden goalkeeper Robin Olsen was held at knifepoint in front of his wife and children when thieves broke into his Cheshire home, making off with jewellery and a watch. A few weeks earlier two masked men burgled the home of the Everton manager, Carlo Ancelotti, while his daughter was said to be alone inside.

The best protection is not necessarily to instal radar, but to remain below it.

 

Where demand for homes is falling fastest and house price growth could slow

By Melissa Lawford

Stamp duty savings have disappeared and the race for space is receding – is the housing market returning to normal?

The property market is at a crossroads. For the past year, homes have been selling quickly at sky high prices, while buyers have been battling an army of gazumpers.

But now pent-up demand has run its course and stamp duty holiday savings have all but disappeared. A chronic shortage of supply is bolstering prices, but the post-Covid frenzy is starting to dissipate.

London, where higher values meant buyers benefited from the biggest stamp duty savings, is changing first.

Property website Zoopla found that of the 15 postcodes that recorded the biggest drops in demand across Britain, 10 were in the capital.

It compared demand from April 5 to July 25, when buyers were unlikely to be able to take advantage of the original stamp duty holiday, with the preceding 16-week period when the tax break was boosting the market. It measured buyer demand using a combination of searches and inquiries.

In London’s SW and E postcodes buyer demand fell by 26.5pc. Cory Askew, of Chestertons estate agents, said: “The absolute peak of demand was at the end of March when the stamp duty holiday was extended”.

“Then there was a steady decline in inquiries through April, May and June – levels were much lower than in 2020, but higher than in 2019. It is a normalised market.”

In almost all cases in the top 15, buyer demand was still significantly above the average in the same period in 2017 to 2019. In south-west London, where a rush for space and gardens drove massive spikes in sales in the likes of Barnes and Kew, demand was still up 17pc on the pre-Covid level. But the numbers show a gear shift.

The race for space seems to be receding. In Camden, demand is transferring to flats, said Mr Askew. “That market is predominantly first-time buyers who are feeling a lot more secure in their job prospects.”

But other parts of the capital are grappling with problems that the stamp duty holiday rush previously concealed. In the EC postcode, which encompasses areas such as Shoreditch and the City of London, demand fell by 19.5pc, and is now 12.6pc below the 2017 to 2019 average. “The engine is the City, and most firms have given no mandate for workers to come back to the office full time,” Mr Askew said.

Polat Ali, of Hunters estate agents in Shoreditch, said: “We had the busiest June ever. But then July and the start of August was extremely quiet. We had two offers in five weeks. Usually we have five per month.”

Now that the time pressure of the stamp duty holiday has gone, the problems of the cladding crisis are also becoming more apparent. East London has a large concentration of high rise blocks and many flat sales simply cannot happen because lenders require external wall safety (EWS1) forms before they can offer mortgages. “Probably 20pc of properties we see we just won’t take on,” said Mr Ali.

Meanwhile, London developers are scrambling to fill the affordabilty gap left by the stamp duty cash savings. Peter Gibney, of JLL, a property firm, said that many are now offering to pay stamp duty bills in full.

In outer London areas, such as Twickenham and Enfield, demand also fell, but this dip was partly because the peak was so high. In Kingston-upon-Thames, demand fell 21.8pc between the two periods studied, but it was still up 96.5pc versus the pre-Covid average.

By contrast, in the most expensive areas of central London, which suffered heavily during the pandemic, demand is now rising as international travel restrictions lift.

Camilla Dell, of buying agent Black Brick, said: “For the first time in a year and a half, I’m meeting up with clients from Dubai, Qatar, Saudi Arabia. They are looking for holiday homes and good long-term investments in Mayfair, South Kensington, Knightsbridge and Chelsea.”

Outside London, demand also fell significantly in parts of the North East. Property prices in the region rose by 15.3pc in the year to June, the second-highest rate in the country, according to the Office for National Statistics.

In Newcastle upon Tyne and the Cleveland and Teesside, demand fell by 18.7pc and 18.5pc respectively. In Darlington, in County Durham, buyer demand fell by 27.1pc, the largest drop in the country. But the level of demand was still historically high – 53pc above the average in the same period across 2017 to 2019.

Emma Wick, of Bridgfords estate agents in Darlington, said there has been a dramatic change in who is buying. “Earlier in the year, the market was primarily driven by families who wanted or needed to move for more space.” These movers accounted for half the market 16 weeks ago.

“Now, everybody who wanted to move for homeworking or lifestyle changes has done so,” said Ms Wick. “The world is becoming a bit more normal.”

Home movers now account for only a fifth of sales, she said. Instead, investors, who had made up only 10pc of the market, now account for half of buyers.

A change in the type of homes for sale has been key, said Ms Wick. “Now a lot of the properties we are selling are empty. There has been an increase in mortgage repossessions, which were banned during the pandemic, and landlords are offloading rental stock because prices are at an all time high.”

Why Britain’s punitive tax system risks deterring Middle East property investors

By Alice Haine

Experts say rising tax rates make residential homes less attractive to wealthy foreign buyers.

When the UK applied a stamp duty surcharge to overseas property investors in April this year, tax advisors and property consultants were flooded with enquiries from concerned buyers.

The big question for many was whether the 2 per cent increase in stamp duty for non-resident buyers made investing in Britain’s residential property market worth while.

But for clients contacting the tax advisory arm of global company The Sovereign Group, there was an even bigger shock in store. As well as a rise in stamp duty costs on new purchases, their tax liability on existing homes was also far higher than they realised.

Overseas buyers purchasing a property in their own name are now subject to a stamp duty levy of up to 17 per cent on homes worth more than £1.5 million ($2.08 million), higher than the maximum 15 per cent rate payable by UK residents.

However, high net worth investors, who choose to invest through company structures to reduce their tax burden, now face charges of 17 per cent.

In addition, those who invested through offshore structures must consider a raft of other taxes on their property portfolios – from capital gains tax (CGT) if they sell, to an annual tax on enveloped dwellings (Ated), and inheritance tax (IHT) of 40 per cent if the owner dies.

These levies have all been applied by the UK government over the past decade to prevent overseas buyers from escaping their tax obligations.

“The tax charges are punitive now and it’s getting to a stage where the UK property market is slightly less attractive than it once was,” Laurence Lancaster, group head of tax at The Sovereign Group, which advises high net worth clients around the globe, told The National.

“We are seeing clients invest less in property and choosing other investments.”

Britain’s property market has long been attractive to overseas investors who enjoy the country’s secure legal system, cosmopolitan lifestyle and high-quality education. London is a particular draw for Gulf-based investors, who enjoy the city’s cooler temperatures during the summer months as well as the many parks and cultural attractions for families.

The super-wealthy spent more on luxury homes in London last year than in any other city in the world, according to April data from property consultancy Knight Frank, shelling out almost $4 billion on super-prime properties.

However, that figure could be even higher this year with UAE buyers now able to enter the country more easily after the Emirates was moved from the red list to amber last week. Before then, UAE residents were prevented from viewing homes because entry into the UK required a 10-day quarantine in an airport hotel on arrival.

Property agents and developers are expecting a surge in transactions as buyers jet in to view properties they have already shortlisted online.

But Mr Lancaster said some buyers may consider their purchases more carefully in light of the higher tax burden.

“It’s the taxes that have to be paid immediately, such as stamp duty and CGT, that have created the interest from clients,” Mr Lancaster said.

“But there are many clients who are non-UK domiciled and sitting on offshore companies with property they maybe bought in the 1990s or 1980s and they’re not aware that they’ve got this looming inheritance tax problem.”

The overhaul to the UK taxation system first started in 2012 when the government clamped down on non-UK domiciles buying residential properties through offshore structures – even where the property was for personal use – to avoid IHT and stamp duty.

A 15 per cent stamp duty charge was applied to high-value homes acquired by a company. Then a year later, in 2013, the government rolled out the annual tax on enveloped dwellings, again to prevent tax avoidance from those with complicated company structures.

“Originally, Ated applied to properties worth £2m or more. Then it was extended to properties worth half a million or more with different charges that get higher the higher the value of a property,” said Mr Lancaster.

In 2015, corporation tax of 19 per cent was applied to the company sale of residential property, while CGT was applied to all overseas investors for the first time.

A change in the law around IHT came in April 2017, with those holding homes in company structures to avoid the tax made subject to the full 40 per cent hit on their death.

“The problem with inheritance tax is that most clients don’t expect to die, so it is a tax that is kicked down the turf to a later date,” Mr Lancaster said.

“We did send out memos, gave tax advice and had solutions in place before 2017, but not all clients wanted to pay for the tax advice that was needed.”

The taxation changes were necessary, experts say, because the overseas structures allowed buyers to sell and transfer the shares in their companies without paying stamp duty or CGT.

“It was a sort of free-for-all, as far as non-dom investors were concerned, with copious amounts of tax avoidance,” Mr Lancaster said.

“You can understand why the UK government decided to take action in 2012, but now they’ve gone too far because non-doms are actually taxed more heavily than their UK counterparts.”

Camilla Dell, managing partner at Black Brick, which helps Middle East investors purchase property in the UK, said wealthy buyers expect to pay high levels of tax when buying in a leading global city.

“Whether you are buying property in New York, London, Hong Kong, Singapore or Sydney – there is significant tax and other additional costs, such as agency fees, to pay,” she said.

The cost of buying, holding and selling a property in London in 2021 is actually cheaper than 15 other global cities, according to data from property consultancy Savills, with Vancouver the most expensive option for investors, followed by Hong Kong in second place and Singapore in third.

Rising taxation has certainly not put off investors, said Sean Ellis, chairman of developer St William and St James, which has a number of new developments on offer in the new Nine Elms district of South London as well as Fulham.

At the company’s marketing suite for its Prince of Wales Drive development in Battersea, there has already been a slight increase in Middle East investors viewing homes, with many holidaying in Europe to get round the UK’s strict isolation requirements.

“In terms of owning a property in a world city, London is still relatively cheap. Yes it is expensive but in comparison to buying in Paris, Rome or Hong Kong or any of the world’s cities, it’s still relatively good value. The transaction costs are not as high as they are in other parts of the world,” Mr Ellis said.

He said the rise in stamp duty is the first time in his 30-year career he has seen a different tax regime applied to overseas buyers.

Interestingly, he said, the stamp duty holiday, which offered a saving of up to £15,000 on the first £500,000 of a purchase, created a surge in demand for luxury homes from overseas buyers.

“All our buyers wanted to save that money. I was surprised,” he said

Ms Dell says it is too early to tell if the latest stamp duty surcharge will hamper demand.

The rise has so far been offset by the stamp duty holiday, but the tax break now applies to only the first £250,000 of a purchase price and will disappear entirely on September 30

“My instinct is that the additional 2 per cent will be less of a concern to ultra high net worth buyers, but may cause pause for thought amongst lower value purchasers,” she said.

“I think most overseas buyers buying in London today are attracted by the fact that property prices in the capital are down 20 per cent since the peak of the market in 2014. Combine this fact with cheap borrowing rates, a weaker pound and good prospects for capital appreciation over the next five years of 20 per cent to 25 per cent forecasted, then an additional 2 per cent surcharge becomes more palatable.”

One tax her clients are “acutely aware of”, however, is IHT.

The regulatory change in 2017 that led to the 40 per cent tax also being applied to company structures meant that overseas investors could no longer get around the levy.

“Some people would like to refer to it as a loophole, but it’s not really a loophole, it was really just extending the tax net to attack these structures,” Mr Lancaster said.

However, Ms Dell said there are a number of legitimate ways to minimise IHT, such as borrowing on purchase, life insurance, trusts, and gifting before death.

“We always advise our clients to seek professional tax advice to plan for this. Since all the tax changes came in we see far less corporate structures being used when buying property. Most clients now buy in their own personal names,” she said.

Henry Faun, partner and head of Knight Frank’s Middle East private office, said while he urges his clients to consider taxation at the start of a property search, rising rates in the UK are “not a deterrent” yet.

“As opposed to being put off buying, we have seen our Middle East clients take a longer-term horizon,” he said.

“Perhaps they were looking to buy and own a family home in the UK for five years before. Now that’s got to be 10-plus years to make it worthwhile and ensure that stamp duty has been offset over a larger timeframe.”

Mr Faun said clients also increasingly buy in their own names, rather than through a company, and add several family names to the ownership of a property to offset Ased and IHT, while CGT is actually viewed as a positive because it indicates the asset has gained in value.

Another tactic to offset taxation is buyers choosing to buy several lower-priced units rather than a more expensive, larger unit, to reduce the stamp duty burden.

“If you purchase more than six residential units in a single transaction, that is considered for stamp duty purposes as a commercial transaction, so stamp duty drops from the higher levels of 17 per cent down to approximately 5 per cent or less,” Mr Faun said.

While Mr Lancaster fears the prime market may suffer if buyers switch to lower-priced properties or to another investment vehicle altogether, Mr Faun said the shift is actually heading in a different direction.

“Typically the type of conversation I have is ‘let’s not buy somewhere and incur the stamp duty, why don’t we rent instead’,” he said.

“It’s not about finding an alternative to buying in the UK, it’s usually a buying versus renting conversation.”

Are you a super-snooper? 60% of Britons admit to looking up house prices of friends, colleagues and lovers – and a quarter have ditched partners based on their findings

By Jane Denton

  • Six in ten Britons try to find out how much people they know paid for a home
  • Friends, family, lovers and colleagues are all of interest to property ‘snoopers’ 
  • Buying agent tells This is Money people ‘always’ want to know this sort of data 
  • Find out how you can  track down property sold prices near you now

Nearly 60 per cent of Britons have tried to find out how much people they know spent on their latest property purchase, new figures have revealed.

While few believe it is acceptable to ask someone what they paid for a home outright, the vast majority have adopted under-the-radar tactics to discover what family, friends, ‘frenemies’, neighbours, colleagues and even potential partners paid for their homes.

Twenty-four per cent of people admitted they had even called time on a relationship after finding out the value of their partner’s home, according to Zoopla.

People also use ‘super-snooping’ tactics, which include searching for sale records online, to see how much a home they want to buy was last sold for, or to track what has happened to the price tag of a property they used to live in.

‘People always want to know what others have paid for a property’, Camilla Dell, managing partner at Black Brick Property Solutions, told This is Money.

While the majority of people are activity snooping, 65 per cent said they would never admit to the owner that they had researched their property’s sold price.

Neighbours, friends and family member’s homes are the most likely targets for super-snoopers, but 11 per cent said they had also looked up what a colleague paid for a property.

Three in ten said they were able to make assumptions about their colleagues’ pay packets after finding out how much they were able to fork out for their home.

One in ten people said they had even checked out the value of the home of a prospective, current or former partner.

Nearly a third said they continued to date someone they would have otherwise ditched after viewing the price tag of their home online. For people aged between 35 to 44, this figure rose to 46 per cent.

Around half of people said seeing a partner’s property value ‘encouraged’ them to keep dating someone, rising to 63 per cent for men.

But a quarter of people said they had called time on a relationship after viewing the value of their partner’s home.

The emotions stirred by seeing how much someone has paid for a home can be complicated, and 11 per cent admitted they felt jealous after seeing the figures involved.

However, 10 per cent said they respected the person more after seeing their property’s value, while 9 per cent said they felt they liked the person more than before.

Tom Parker, consumer spokesperson for Zoopla. said: ‘Buttoned up Brits love talking about house prices – but for most, asking someone straight up what they paid for their home is still considered a taboo.

‘But how much a house sold for is publicly available information and is easy to source online.

‘Whether it’s your boss, a friend or even a potential partner, it’s clear we want to know more about the homes they live in and will often treat them differently as a result.’

Buying agents will often go to great lengths to help their clients find out what other people paid for a home they are interested in.

Camilla Dell added: ‘As buying agents, before we submit an offer on a property, we always do a comprehensive “buying report” for our clients.

‘Within the report we highlight relevant comparable sales. It’s all about the price per square foot – the price paid divided by the internal square footage.

‘This gives our clients a pretty good idea if the price they are paying is reasonable or not, and also aids us with our negotiations.

‘We obtain data via Lonres – an industry-only database for agents, and the Land Registry.

‘For off-plan sales, obtaining comparable sales data is a lot more difficult as sales will only appear on the Land Registry once they have completed which could be years away.’

Last month, data from the Office for National Statics revealed that average house prices across the country increased by 10 per cent in the year to May.

Some buyers fear they paid too much for their latest property, after savings from the stamp duty holiday were eaten up by soaring price tags.

The main stamp duty holiday applicable on homes up to £500,000 ended on 30 June.

Until 30 September the nil rate band will be £250,000. It will then return to the standard amount of £125,000 on 1 October.

17 ways to renovate your garage

By Jayne Dowle

Where do you park yours? Even if you are lucky enough to have a garage, more than half (53 per cent) of homeowners with garages manoeuvred out the car, typically because family saloons and SUVs are now too large to get in and out.

Britain’s most popular cars have grown by a third in the last half a century — typical models on sale today are 1.8m wide, but the average garage door width is just 2.1m. Fitting into a garage built for a Ford Anglia is proving a tight squeeze.

“Domestic garages are often unfit for their intended purpose,” says Steve Gooding, director at the RAC Foundation, a motoring research group. “The planning system needs to recognise that garage design needs to catch up with vehicle design, or throw in the towel and recognise that they are, in practice, garden sheds waiting to be converted to provide extra accommodation.”

Done properly, a garage conversion, built on an existing footprint and without compromising garden space, is almost a guaranteed return on investment — a converted garage can add between 10 and 15 per cent to a home’s value, according to Virgin Money. “As house prices increase, the value of the converted space relative to build costs improves and is a strong incentive to undertake a project,” says Michael Holmes, spokesman for the Homebuilding and Renovating Show. So, what will drive your project?

  1. Kitchen

Helen Parker, creative director of deVOL, a kitchen company (devolkitchens.co.uk), says: “Knocking two rooms into one is just the start, once you see the space in reality or on a plan you suddenly see the possibilities for reorganising your life to give you more of what you need and really make the space work for you.”

That extra space can provide scope for a large central island unit or over-sized table, Parker says: “Or there’s the option to create and reposition walls to create corners for a separate walk-in pantry.”

  1. Annexe for granny

Creating a self-contained home for a relative can solve multi-generational living and add serious value to a property, between 20 to 30 per cent, depending on the size and location, according to Property Investor Today.

It’s certainly a project calling for a stand-out design combining form and functionality. Architectural expertise can really come to the fore, creating an annex using complementary building materials and clever small-space living solutions.

  1. Extra bedroom

Turning the garage into an extra bedroom might cost around £15,000 says Mark Hood, head of new builds at Resi (resi.co.uk), peanuts compared to moving from a three-bedder to a four-bedroom family house. It’s also a project popular with those with an eye on future mobility and care needs. “Creating a ground-floor bedroom is particularly popular with older homeowners, who want to keep their essential living spaces stairs-free, but who also don’t want to give up the family home just yet,” says Hood. Privacy is a consideration. Clerestory windows are a good fix, bringing in natural light from above.

  1. Studio

Whether dedicated to a particular pursuit such as art or music, or designed as a multi-purpose work, study and exercise area — London agent Mark Pollack, co-founding director at Aston Chase estate agency calls such spaces “pandemic rooms” — a studio takes pressure off a main house and keeps the garden intact.

For most creative pursuits, natural light is the key. Roof lights are a solution, and more secure than windows. “As a rule, roof lights can’t project 150mm above the roof plane — other than that there doesn’t tend to be restrictions, but it is worth checking your local rules,” says Phil Ruffle, head of architecture at multi-disciplinary practice Munday + Cramer (mcessex.co.uk).

  1. Utility room

When you free up the garage it can have a knock-on effect on every room of the house. Take the kitchen. Do you dream of a streamlined design, but the ugly tumble dryer and washing machine stand in the way? There is a solution: the garage. The number of projects specifying multi-functional utility rooms has tripled over the past two years, according to Graeme Smith, head of retail and commercial design at Life Kitchens (life-kitchens.co.uk). “Utilities have evolved from a place to store and do laundry to space that allows homeowners to keep unsightly items such as chest freezers out of the main kitchen,” he says.

  1. Boot room

Caspar Harvard-Walls, a partner at Black Brick, a buying agency (black-brick.com), says that boot rooms, once the preserve of grand country houses, have found new popularity during the pandemic as a place to store all that newly acquired outdoor gear, plus everyday detritus of family life: “Once they were purely functional spaces, but now bespoke joinery and underfloor heating have transformed these rooms into the envy of those whose hallways are piled high with kids’ shoes, school bags and buggies.” Look to Ikea for streamlined contemporary storage systems such as the smart matt-black Bror, from £51, www.ikea.com.

  1. Dog room

If you’ve acquired a dog during lockdown, you’ll be familiar with the mess by now. A dedicated and bespoke dog room in the garage could be just what you both need. Fit a deep sink such as a Rangemaster Classic Belfast 1 Bowl White Fire Clay Ceramic, £154.99 from Tap Warehouse, tapwarehouse.com, and a spray tap. The Milano Mirage Modern Deck Mounted Pull Down Spray Kitchen Tap in chrome is £91.99 from The Big Bathroom Shop, bigbathroomshop.co.uk.

  1. Uber-storage

Hold on a minute. There’s an obvious use for any garage and that’s proper storage. Fitting industrial shelving and racking — try Big Dug, bigdug.co.uk — will help you to organise everything from Christmas decorations to camping gear. You will need to check walls and floors are sound and capable of taking heavy loads.

But the best bit? This process could free up loft, cupboard and cellar space and kickstart a whole reassessment of the internal space you have available for other improvements, such as a loft conversion, en suite or basement conversion.

  1. Potting shed/flower room

If you’ve outgrown your garden shed and your garden isn’t huge, converting the garage into a practical undercover gardening space could be a fruitful move. You might not even require a Lawful Development Certificate under permitted development, or planning permission, because the garage is essentially still being used for a utilitarian purpose with no extra services. But do check with your local council to be sure.

  1. Loggia

An attached garage can be easily converted to a loggia — an outdoor room with a roof and open sides — that evokes warm evenings in Tuscany, but with the security of a solid roof above when the heavens inevitably open.

“We’re finding an increasing number of our clients are incorporating the modern-day loggia into their property design projects,” says James Upton, managing director at Westbury Garden Rooms. “Homeowners want to introduce a loggia to create a modern entertainment space that gives their evening dinner parties and summer dining experiences some added ‘wow’ factor.”

  1. Man cave

It doesn’t have to be neon-lit or naff. Maximise wall space by choosing electric underfloor heating over radiators. Sound-proofed insulation would be welcome, especially if the garage is attached. To classify as an “outbuilding” under permitted development rules, a man-cave must not contain sleeping accommodation. It doesn’t, however, say anything about comfy leather armchairs or campbeds for the boys.

  1. Bar

File under “man cave”? Not necessarily. There are two ways to go. Treat the garage as a separate space away from the house. In which case, pay careful attention to access — you may have to rework paths and patios. You might also create an all-year-round space by taking out the back wall of the garage and replacing with bi-fold doors to open fully to the garden. Or, take a “whole house” approach. Look at extending the entire ground floor by knocking through the dividing wall and reconfiguring internal space.

  1. Gym

Lockdown prompted millions to get fit, but with gym doors locked for months garages became the go-to workout space. Rob Clarke, a director at motive8, a national gym consultancy m8group.co.uk, says a home gym in the garage saves money on fees and travel time, allows for a personalised exercise regime and is safer for social distancing. “Garages make great gyms but can be quite dark, installing a window and the use of mirrors is key to maximising light and creating a welcoming environment.” You should also pay special attention to ventilation.

  1. School room/play room

Use colour to create a stimulating yet calming environment. “While yellow is a great learning colour because of its ability to increase concentration and memory, green is a great addition because it can increase reading speed and a child’s understanding of text,” says John Hannen, spokesman for the Education Endowment Foundation, a charity (educationendowmentfoundation.org.uk). If you’re after a more calming vibe, Hannen recommends Farrow & Ball’s St Giles Blue, a clean and vivid hue.

  1. Teenage study/hangout

It might be tempting to simply shove them in and throw away the key, but creating a study/hangout space for teenagers is really a good idea because it gives them their own space. You can line the walls with funky and inexpensive plywood and hang bikes and surfboards from the rafters, but key to the success of this project is adequate electrical sockets and wi-fi provision. Always use a NICEIC-registered electrician for installations. Find one at niceic.com. Ask a local wi-fi specialist for advice on getting — and staying — online, because you’ll have to supplement existing provision for the extra room.

  1. Business premises

If you’re planning to bring the office home permanently, you might decide to set up shop in the garage. Creating a business premises means you are likely to need Change of Use approval from your local council. Also, check that there are no covenants in your deeds forbidding the use of your home as a business address. Keep future buyers in mind too, says Pollack: “As well as mains water, power and lighting, purchasers look for underfloor heating, air conditioning and fully networked and integrated spaces.”

  1. Rental accommodation

You need good planning advice here. Homeowner Christopher Pearson was recently refused permission by the Yorkshire Dales National Park authority to turn his detached garage in the village of Linton, near Skipton in the Yorkshire Dales into a one-bedroom Airbnb guest suite. Local housing need and policies favouring more sustainable visitor accommodation, such as yurts, were cited.

In Bournemouth however, Matt Annen, a director of Pure Town Planning, puretownplanning.co.uk, has achieved approval for a client’s mixed-use conversion, part Airbnb/part office. Success, he says, is partly down to retaining the façade: “There are no external additions or alterations so no changes to the physical appearance of the outbuilding in the street scene.”

Need to know

Garage conversions cost £1,400-£1,800 per sq m (excluding VAT) to a shell finish, says Michael Holmes, spokesman for the Homebuilding & Renovating Show, homebuildingshow.co.uk: “Converting a typical single garage of 18 sq m would cost £25,000-£32,500 (excluding VAT), but an integral garage to a relatively new home might cost only £18-30,000 plus VAT. A typical 33 sq m double garage would cost £46,000-£59,500 (excluding VAT).” Also factor in professional fees for architectural design and building regulations, with likely costs of £2,500-£3,500.

A garage conversion can be completed in six to eight weeks with careful planning, so make sure that materials such as doors and windows are available to suit the schedule, says Holmes. But it may take longer if remedial works need doing to the structure itself.

The responsible homeowner will always check with the local planning authority before starting a garage conversion. “If the garage door was to remain, with no other structural changes or addition of windows for example, it’s unlikely you would need permitted development rights,” says Phil Ruffle, head of architecture at Munday + Cramer. “However, removing walls, adding windows or making other significant changes would bring you into the planning realms.” Check if you can carry out the work using your rights under permitted development, for which you apply for a Lawful Development Certificate, or whether you will require to apply for planning permission. Find more information and costs here: 1app.planningportal.co.uk.

You’ll need building regulations approval for heating, lighting, insulation, damp-proofing, ventilation and fire precautions, whatever you do. “Some people leave a bit on the front so they can put their bikes in,” says Anna Thompson, spokesperson for Local Authority Building Control. “But you still need building regs approval for the bit you convert, no matter how big it is. That applies to everything and anything.”

Tell your mortgage company that you’re converting the garage, and also your buildings and contents insurer. But there is no need to inform Land Registry or have your deeds updated, unless the conversion extends the footprint of the buildings, says Matt Walker, real estate partner at law firm Gowling WLG.

End of stamp duty holiday unlikely to dent Middle East interest in British homes

By Alice Haine

Pent-up demand from the region will continue to fuel UK market, say analysts.

December 2014: Former UK chancellor of the Exchequer George Osborne reforms stamp duty land tax (SDLT), replacing the slab system with a blended rate scheme, with the top rate increasing to 12 per cent from 10 per cent:

Up to £125,000 – 0%; £125,000 to £250,000 – 2%; £250,000 to £925,000 – 5%; £925,000 to £1.5m: 10%; More than £1.5m – 12%

April 2016: New 3% surcharge applied to any buy-to-let properties or additional homes purchased.

July 2020: Chancellor Rishi Sunak unveils SDLT holiday, with no tax to pay on the first £500,000, with buyers saving up to £15,000.

March 2021: Mr Sunak extends the SDLT holiday at his March 3 budget until the end of June.

April 2021: 2% SDLT surcharge added to property transactions made by overseas buyers.

June 2021: SDLT holiday on transactions up to £500,000 expires on June 30.

July 2021: Tax break on transactions between £125,000 to £250,000 starts on July 1 and runs until September 30.

For buyers of UK property hoping to cash in on a government tax break, completing the transaction is a race against time.

The stamp duty land tax holiday in England and Northern Ireland, which was first unveiled by Chancellor of the Exchequer Rishi Sunak in July last year, allows the first £500,000 ($697,747) of a purchase to be exempt from the levy. Similar initiatives have been unveiled in Wales and Scotland.

Stamp duty extension: Should Sunak include overseas investors?

With the tax break ending on June 30, tapering down to £250,000 from July 1, there has been a surge in buyers seeking to complete their transactions before the deadline and bag a saving worth up to £15,000.

“We are hearing of conveyancing lawyers working through the night at the moment to try to meet the deadline,” Camilla Dell, managing partner at Black Brick, which helps Middle East investors purchase property in the UK, tells The National.

“However, not all will make it – there are just days to go until the stamp duty holiday ends and over 700,000 transactions going through the conveyancing process.”

While Middle East investors “have certainly benefited” from the tax bonus, Henry Faun, partner and head of Knight Frank’s Middle East private office, says its removal will not dent the “strong appetite for UK property“.

“The holiday has been positive for buyers but when it ends, we see the strong interest for UK property from the Middle East region continuing as normal,” he says.

Tax is already an issue for Middle East investors interested in UK property. The government bumped up the levy for non-resident investors by 2 per cent in April. This was on top of an existing 3 per cent for buying a rental property or second home.

Despite a further tax increase from June 30, Mr Faun says strong demand for UK property “will not be quelled”, with the main drivers for interest being the country’s consistent market, ease of language, a good education system and lifestyle.

One issue actually preventing transactions with Middle East buyers is the UK’s traffic light system for travel, with most countries in the region on the red list, meaning a 10-day hotel quarantine for anyone who intends to fly in to view property.

“There is significant pent-up demand across the Middle East for property in the UK and specifically London,” says Mr Faun.

“While we conduct digital viewings, live tours and 3D property walk-throughs, many clients prefer to travel and view the properties in person before committing to the purchase.”

Ms Dell says the end of the stamp duty holiday will have a negligible effect on the appetite of Middle East investors for UK property as many are unable to travel anywhere, due to them being in red-list countries.

Camilla Dell of Black Brick says a £15,000 saving does not make a huge difference to a Middle East buyer “spending many millions on UK real estate”. Courtesy Black Brick

Those proceeding with deals at the higher end of the spectrum will also be unfazed.

“I do not think a £15,000 saving makes a huge amount of difference to a Middle East buyer spending many millions on UK real estate. They tend to be more concerned about other taxes such as inheritance tax, capital gains tax and, of course, currency rates,” says Ms Dell.

However, the stamp duty deadline is much more of an issue for buyers in the UK rushing to complete deals before the deadline.

Some are resorting to extreme measures to ensure they complete in time, such as cutting corners on essential surveys for flood threats or subsidence.

About 50,000 buyers are at risk of missing the deadline, according to property website Zoopla.

Meanwhile, demand for removal vans has increased by 200 per cent before the deadline, compared to the same time last year, according to website AnyVan. Some buyers are putting possessions in temporary storage as the cost of moving home doubles.

Conveyancers have also raised fees to cope with the surge in demand.

“One thing is abundantly clear: the stamp duty holiday has had a material effect on England’s housing market,” Danni Hewson, A J Bell financial analyst, tells The National.

“Figures from the Office for National Statistics show a record number of transactions across the UK in March as people in England raced to beat the original deadline.”

Mr Sunak introduced the stamp duty holiday in July last year to help bolster the property sector as the UK’s wider economy was hit by the economic fallout of the Covid-19 crisis.

The tax saving and pent-up demand for property sent the market soaring, with property prices rising by 8.5 per cent last year.

The original March 30 deadline for the end of the tax break was extended by Mr Sunak in his latest budget statement to prevent the market from falling off a cliff as the country was still under tight Covid-19 curbs at the time.

In May, prices surged to a high of £261,743 on average, according to the Halifax House Price Index, up 9.5 per cent from the same month a year earlier and equal to £22,000 over 12 months.

With buyers “on a clock once again”, house prices are “on fire”, with more records set to be broken as the June deadline approaches, says Ms Hewson.

The end of the full stamp duty holiday is unlikely to halt momentum either, she says, because the scheme is tapered so that people “snapping up property between £125,000 and £250,000 will still save cash until the end of September”.

Insight – what does the 2% SDLT surcharge mean for overseas investors?

To no-one’s surprise, there haven’t been petitions or concerted pressure from the public, MPs and trade bodies regarding the introduction of an extra 2% stamp duty surcharge on non-UK buyers from April 1 2021.

The surcharge, announced in Chancellor Rishi Sunak’s first Budget last March, was widely expected, although some anticipated it would be higher.

While many operating at the prime end of the property market – where overseas purchasers make up a big chunk of buyers – were unhappy with the introduction of the extra surcharge, there has been no intense lobbying to government to reverse the decision, more of a grudging acceptance.

As mentioned, this isn’t really a surprise when you consider it will mostly be wealthy overseas individuals and companies who will be affected by the change, and public sympathy for such a cause – particularly at this time – would be very low.

That said, it’s not just rich overseas investors who might be impacted by the change. As HMRC concedes in its own policy paper – New rates of Stamp Duty Land Tax for non-UK residents from April 1 2021 – ‘most individuals will be clear as to their residence status for the purposes of SDLT but some individuals with more complex affairs or who have regular periods in and out of the UK may require additional advice and incur additional costs in determining their tax liability’.

What’s more, it adds: ‘Customer experience could be negatively impacted as this measure may create complexity for individuals in establishing the rate at which SDLT is payable on their property purchase. To support, we will produce guidance setting out how individuals can determine their residence status and whether they are entitled to claim a refund.”

“This measure may impact family formation, stability or breakdown by increasing upfront costs for some non-UK residents purchasing a home in England or Northern Ireland. It could affect customer decisions around the type and location of property purchased.”

Expats who have residence or dual-nationality elsewhere, or those who move between countries on a regular basis for work or investment purposes, could find themselves affected. The legislation is likely to prove very technical and nuanced, with some potentially forced to pay the extra stamp duty even when this shouldn’t be the case.

What is being brought in and who is likely to be affected?

The new measure will introduce new rates of stamp duty for buyers of residential property in England and Northern Ireland who are not resident in the UK, and will also affect conveyancers and other professionals who advise on such transactions.

The new rates will be 2% higher than those that apply to purchases made by UK residents, and will apply to purchases of both freehold and leasehold property, as well as increasing SDLT payable on rents on the grant of a new lease. The stamp duty will be on top of the 3% owed on second and buy-to-let homes and the normal rates of stamp duty everyone must pay when purchasing a property in the UK (outside of the current stamp duty holiday, which is set to end on March 31 2021).

Operationally, the measure will apply to land transactions with an effective date of April 1 2021 or later, but where contracts were exchanged prior to March 11 2020 but complete or are substantially performed on or after April 1 2021, transitional rules may apply.

Transitional rules may also apply where a contract is substantially performed on or before March 31 2021 but does not complete until April 1 2021 or later.

As was stated in the Conservative Party’s 2019 manifesto, the revenue raised – previously stated by Sunak to be around £650 million each year – will be put towards tackling rough sleeping, with the main objective of the policy being to make house prices more affordable, ‘helping people get onto and move up the housing ladder in line with wider objectives on homeownership’.

Theresa May first mooted the measure at the Tory Party conference in October 2018, to make it easier for domestic buyers to buy homes that might otherwise go to wealthy individuals or companies from abroad, who then keep them as investments (often known as Buy to Leave) or rent them out at ’inflated’ prices.

Previously, the government pointed to figures which show that 13% of new London homes were bought by non-residents between 2014 and 2016, while it’s also stated that it’s unfair that foreign individuals and companies who do not pay UK tax can buy homes as easily as those who already live here and contribute.

The surcharge introduced in April represents a beefing up of the 1% tax consulted on during Theresa May’s time as Prime Minister, but a slight downgrading of the 3% proposal put forward by the Conservatives during 2019’s election campaign

It was stated that, under those proposals, a wealthy overseas buyer of a £1.5 million home in London would pay £183,750 in stamp duty compared with £93,750 for a Londoner buying the property for their own use.

Brexit has already caused a decline in the number of properties owned by overseas companies in England and Wales, and the future double whammy of Brexit and the 2% surcharge – plus the current travel restrictions caused by Covid – may dissuade overseas investors from investing money into the UK. Equally, some expats who have been living elsewhere and now want to return to the UK may find it much harder to buy without facing increased levels of stamp duty.

We will only know how many people will be affected, and how smooth the system functions, when it has been introduced and has had time to bed in.

There has been no mad rush from overseas investors to purchase homes before the new stamp duty is introduced as of yet. The fact that there will have been more than a year between the announcement of the measure and its implementation has allowed investors plenty of time to prepare, while some suggest it has largely been baked into the market already.

For the prime London market, the pandemic has meant a mixed picture. Astons, an international property and residency consultancy, recently claimed the sold prices of homes in some prime London locations have collapsed by up to 40% during the pandemic, while other prime London postcodes have seen sold prices soar – in one case by 54%.

Knight Frank said at the end of last year that it believed the conclusion of a Brexit deal before the end of the transition period meant that 2021 would see more international buyers in the UK, but that was before Lockdown 3.0 and much tougher border controls and restrictions on travel were introduced. It also seems likely that the extra surcharge will have some kind of dampening effect on the market, as a further deterrent to overseas investment.

How will the market function after the introduction of the 2% surcharge?

Camilla Dell, founder and managing partner of buying agency Black Brick, believes the 2% surcharge for overseas buyers will have some impact.

“It’s unlikely to be the same as we’ve seen before, when typically, stamp duties have been absorbed into the market,” she says.

“There will certainly be some parts of the market that will be more vulnerable to the 2% surcharge from April 1 and will see prices come down in line with the increase. This includes high-density new-builds in secondary/tertiary parts of London which are very much focused on the overseas buyers’ market, for example Battersea Power Station, Canary Wharf and Lillie Square.”

Will the new surcharge along with Covid and Brexit have a dampening impact on overseas investment in Britain moving forward?

“It’s difficult to remember the last time a client asked about what impact Brexit is going to have on the London property market, so we feel this is less of an issue this year,” Dell comments.

“In terms of any impact on pricing, we believe it’s been baked into the market already and prices are unlikely to be affected by Brexit now we’ve left the EU, secured a deal, and established that the hundreds of thousands of people that were predicted to leave the city haven’t.”

She adds: “For our overseas clients, what’s more of a concern to them is the foreign exchange rate and some of that advantage has evaporated for US dollar clients as sterling has strengthened this year.”

In terms of the pandemic, Dell says her clients are not worried about its effect on property prices, ‘it’s more about staying safe on viewings’.

“What we’re seeing is the really serious buyers coming through; gone are the window shoppers, so what we’re seeing are committed and serious domestic and overseas buyers which is really positive,” she continues.

“Despite the current lockdown and new travel restrictions, overseas buyers will still be coming to the UK looking for purchases, including from countries such as the US. The pace at which Black Brick has signed new clients so far this year is extraordinary and a sign that appetite for London property is still strong. Since January 1, Black Brick has acquired six new clients – four from overseas (including the US and Africa) and two from the UK.”

 

London house prices: are there property bargains to be had in the big city?

The magnetism of living in the capital is losing its power. Is now the time to make your move, asks Melissa York

The magnetism of living in the capital is losing its power. Is now the time to make your move, asks Melissa York

To walk around the streets of central London today is to know what it’s like to be in a zombie apocalypse. Streets empty, shops closed, pubs forlorn, the desertion would have been unthinkable only a year ago.

Like the rest of the country, the city is in national lockdown, but what will it look like when restrictions do finally ease? Blinded by the big city lights, will we happily hand over half of our salaries again to live in shoebox flats with no outside space, or will we decide that there’s more to life than theatre and fine dining?

This isn’t just a London problem. In New York, 300,000 residents have fled, many of them to warmer, low-tax states, reports the US Postal Service. The same number could leave our global metropolis, according to PwC’s latest economic outlook paper. It would be the first time that London’s population has fallen since 1988.

And that’s a conservative estimate: a survey by the London Assembly carried out in August — as in, two lockdowns ago — found that 4.5 per cent of Londoners, or 416,000 people, said they would definitely move out of the city within the next 12 months.

Many already have. The number of homeowners buying outside of London hit a four-year high in December, despite the housing market being closed for nearly two months, according to data from estate agency Hamptons International.

As a result, there are more homes on sale. London is the only region in the UK that has seen an increase in supply of new properties coming to market.

Even with buyers rushing to get sales through before the stamp duty holiday deadline, in the first two weeks of the year there were 12 per cent more homes to buy in the capital, says property portal Zoopla; nationally, there were 12 per cent fewer.

Most of these are flats, with owners trading up to houses for more space and investors selling off their buy-to-lets in the face of falling rents amid talk of a change to capital gains tax in the upcoming budget.

 

Space is at a premium now, so bargain hunters are much more likely to get a discount on a flat than a house. At the end of last year the price of a flat in prime London fell 1.3 per cent compared with the same period in 2019, but house prices increased 5.7 per cent, according to data analyst LonRes.

Indeed, there was a 6 per cent rise in the amount spent on houses in London’s top postcodes in 2020 compared with 2019: this in contrast to flats, where purchasers spent 15 per cent less.

One buy-to-let investor we spoke to said he recently bought a one-bedroom former council flat built in the 1980s in Archway, north London, for £374,000. The couple he bought it from, fleeing to the suburbs, paid £420,000 for it in 2016.

“I think it’s a combination of wanting to meet the stamp duty-holiday deadline, outward gentrification and people reaching a certain age and wanting that lifestyle change,” he says. “I believe in London.”

Does this mean values are set to go the same way as rents? Are there, in fact, bargains to be bagged in London?

As always, it depends what you are buying and where. Research by Swiss bank UBS suggests that a third of London listings have had their price reduced, up from a quarter in June.

A heatmap using data from PropCast, which looks at the percentage of homes under offer to see where demand is highest, is flooded by an icy blue all along the central boroughs that line the River Thames.

Drill down into individual boroughs and it’s clear that the highest share of reductions are happening centrally, rather than in the outer London villages. Prices are down as much as 23 per cent in Westminster and 14 per cent in Islington, UBS says.

Buyers looking for discounts, or looking to upgrade to a bigger home, would do well to look in areas where demand has fallen the most since January 2020.

In east London, PropCast data highlights the Olympic Park in Stratford (20 per cent fewer homes under offer) and London Fields (10 per cent) as good places to negotiate. King’s Cross (26 per cent), Camden Town (14 per cent) and Holloway (19 per cent) have seen double digit falls in north London.

South of the river, buyers are going cold on Herne Hill (15 per cent) and Stockwell (18 per cent). Out west, Holborn (30 per cent) and West Kensington (15 per cent) have seen a notable drop-off in buyer demand.

Hamptons International figures show that the competition increases the farther out you go. Overall, London homes are only spending three days longer on the market than other homes in Britain on average. But in Zone One homes are languishing for nine days longer; and in Zone Two they are taking more than a month longer to sell, at 34 days.

With fewer international buyers around, UK investors are snapping up homes in prime locations for a relative steal. Camilla Dell, the founder of buying agency Black Brick, says she’s negotiating on a bulk buy of properties inside Battersea Power Station for a UK buyer, who foresees long-term value there.

One overseas client of hers was looking for a modern two-bedroom flat in Belgravia, central London. Dell says she found one in Ebury Square and watched the value tumble from £4.25 million to £3.7 million. She then negotiated during the last lockdown and knocked another £378,000 off the asking price.

What’s more, house prices in inner London are expected to catch up with those in the suburbs eventually. A five-year forecast by estate agency Savills predicts house price growth of 17.5 per cent by 2024 in London’s poshest postcodes, and growth of 18.1 per cent in the suburbs over the same period.

The long-term value of a central London property is apparent from the number of international owners shelling out large sums to property management companies to look after their empty mansions.

One such business, Eccord, says it is being hired, or being asked to pitch for, one super-luxe property a week, often owned by international families prevented from travelling to the UK as a result of border restrictions.

“A Middle Eastern family appointed us to manage their 10,500 sq ft house in Knightsbridge, which they purchased in March 2020 for £35 million, and are now unlikely to visit for another two years,” says founder Jo Eccles.

A portion of international buyers are buying sight-unseen, but the vast majority are still not prepared to spend millions on a property they cannot view in-person, even to avoid the 2 per cent foreign buyer stamp duty surcharge coming in in April.

Although 300,000 existing Londoners are expected to leave, the same number of British Overseas passport holders in Hong Kong are expected to apply for fast-track British citizenship. Many of these people will be professionals — business-minded — and they will want to live in London.

Investment advisory London Central Portfolio says there has been a 41 per cent increase in traffic from Hong Kong to its website in the past six months and almost 60 per cent of its buyers from the region are looking for a home rather than an investment.

There was similar interest after the British handover of Hong Kong to China in 1997, says Ed Lewis, head of London residential development at estate agency Savills. “What’s distinctive at the moment is that they’re thinking about where they would like to live and the wellbeing of their family.”

With this in mind they are looking at two and three-bedroom apartments, with average budgets around £700,000, says Lewis, putting them firmly in competitive London village territory.

There is increasing evidence that, in the end, this won’t be seen as a flight from the city, but a race to the suburbs. “If you’re a professional that has a budget between £600,000 to £700,000, then I can see how the thought of selling up and having a three- or four-bedroom house outside the city appeals,” says Dell, from Black Brick. “But you make that move at your peril. Will we all be working from home in five years? I doubt it. And once you’re out, it’s a lot harder to get back in.”

Dell says she senses that more homes will come on to the market once the vaccines work their magic because people are put off by restrictive viewings and a less-than ideal sellers’ market.

Even if working from home becomes the norm, the textiles factories of Shoreditch, now some of the city’s most sought-after homes, are testament to London’s rich history of turning commercial space into residential.

“I think people will be desperate to live in the centre again. Every time there has been a partial unlocking, you can’t get a restaurant booking for love nor money,” says Lewis from Savills.” Once this is over, people will remember how cool London is.”

Another overlooked demographic are the millennials and Gen Z, who have been working from home and quietly adding to their deposits for almost a year now.

“Twenty-year-olds are not going to want to sit on Zoom calls in their parents’ house in Surrey any longer than they have to,” Weir says. “They will want to get back here as soon as they can. London has constantly reinvented itself and it will do it again.”

Estate agents report busy January, as buyers rush to beat stamp duty holiday deadline

By Joanna Bourke

A number of estate agents have reported a good performance for January, as buyers raced to get deals over the line before the stamp duty holiday deadline.

The stamp duty holiday, which was launched last July to help boost the housing market following the first lockdown, is due to finish at the end of March.

New data from Nationwide today said annual UK house price growth slowed for the first time in six months in January. It slowed to 6.4% last month, from 7.3% in December.

Robert Gardner, Nationwide’s chief economist, said: “To a large extent, the slowdown probably reflects a tapering of demand ahead of the end of the stamp duty holiday, which prompted many people considering a house move to bring forward their purchase.”

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But some estate agents recorded a busy January as purchasers look to complete deals before March 31, while one housebuilder said demand looks encouraging from buyers unlikely to meet that deadline.

Chestertons said comparing January 2021 to December 2020, it conducted 21% more viewings, and agreed 18% more sales transactions.

Nick Barnes, head of research at Chestertons, said: “Following a record December, the sales market has maintained momentum throughout January.”

Winkworth, which has 60 branches in London, said 2021 got off to a strong start, with the number of sales agreed in January outperforming the Boris bounce of last January when there was a surge in sales following the decisive outcome of the General Election.

Visits to  Winkworth’s  website last month were up 20% year on year.

Meanwhile housebuilder Crest Nicholson’s boss Peter Truscott recently said the company will be monitoring how demand is when the stamp duty holiday finishes at the end of March. But he added: “The evidence so far is we are still making plenty of reservations for completions that go beyond the stamp duty deadline.”

A number of people have reassessed their housing needs during lockdowns, with some wanting more outdoors space for example.

Camilla Dell, managing partner at agent Black Brick, said the company had its busiest January since it was launched in 2007.

How changes to Britain’s stamp duty scheme affect Middle East property investors

By Alice Haine

Buyers that complete purchases before March 31 can make significant savings

When Dubai resident Mohy Shams heard about UK finance minister Rishi Sunak’s stamp duty holiday for residential property purchases last July, he jumped at the opportunity to make a saving.

Briton Mr Shams, who has lived in Dubai since 2014, already owns five properties in the UK and two in the emirate as part of an investment portfolio.

By completing his deals ahead of March 31 when the tax break ends, Mr Shams will only pay £8,400 ($11,497) in Stamp Duty Land Tax (SDLT), on a £100,000 property in Stockton-On-Tees, Country Durham and a £180,000 off-plan home in Bicester Village, Oxfordshire.

After the deadline, not only will the tax holiday disappear, but Mr Shams will also be subject to a 2 per cent surcharge on purchases by non-resident buyers. If he had waited to close the deals, this would have bumped his total tax bill up to £15,100, meaning he will make a total saving of £6,700 by completing earlier.

“The stamp duty holiday encouraged me to pull the trigger before March 31 because I was getting a great deal,” said Mr Shams, a senior executive at a global research company.

Britain’s property industry ended 2020 on a record high, with prices up 7.3 per cent from 2019, according to UK bank Halifax, the highest growth in six years as the property market surged amid a raft of policy measures and a shift in how people want to live.

However, the “stamp duty cliff edge” could see the sector’s services industry lose billions of pounds due to collapsed deals, according to property analysts TwentyCi.

One in five of the 457,358 purchases made subject to contract at the end of 2020 are likely to fall through, while 31,250 of the 125,000 sales agreed this month will likely be abandoned.

Additionally, the end of the holiday has caused a backlog in transactions as the logistics of the housing market have not been able to keep up with demand.

While it is unknown how Mr Sunak will tackle the stamp duty holiday in the March budget, there are calls to make the holiday permanent or scrap the tax altogether.

However, David Hannah, founder and principal consultant of Cornerstone Tax, said this is “unrealistic given the levels of public debt and the £12 billion tax take it generates each year”.

“But having such a strict cut-off point, particularly in such a turbulent and difficult housing market and economic climate could result in a catastrophic drop in demand and prices,” he said.

Under the current tax break, people buying homes worth up to £500,000 in England and Northern Ireland pay no stamp duty, with a reduced rate of between 5 and 12 per cent for homes above that value. For someone buying a £500,000 property, the saving is worth £15,000.

If the property is a buy-to-let or a second home, an additional 3 per cent SDLT applies.

But after March 31 the holiday is scheduled to disappear, with overseas buyers having to also price in the extra 2 per cent surcharge.

“Basically you are paying an extra 5 per cent as an overseas buyer,” said Camilla Dell, managing partner at Black Brick, which helps Middle East investors purchase property in the UK. “This is because they must pay the 3 per cent for buying a buy-to-let or second home as well as the additional 2 per cent.”

Henry Faun, partner and head of Knight Frank’s Middle East private office, said the new surcharge is expected to “apply to non-resident buyers regardless of the type of buyer (e.g. company or individual) subject to very few exceptions for specific collective investment vehicles such as REITs [Real Estate Investment Trusts]”.

Mr Shams, whose portfolio is set up under a limited company, said he will continue to invest in the UK despite the increase.

Other buyers could be put off, says Louise Reynolds, who runs Property Venture, a property agency based in Surrey where she acts as a buying agent for expatriates looking to buy in the UK.

She experienced a flurry of interest from clients hoping to make a saving in the run-up to the SDLT changes.

One Dubai client with a budget of about £250,000 hopes to save £6,700 in stamp duty by getting the deal across the line before March 31.

“The surcharge will really make expat investors think twice. They will be more price sensitive and may well only move if they can get distressed stock to try and compensate for the increase in tax,” said Ms Reynolds.

“All of these fees can be offset against capital gains tax when they exit so it’s not completely lost money but it depends on what their strategy is. Certainly in the high price brackets, it’s going to make a big difference.”

However, Ms Dell said the tax changes will not deter her high net worth buyers who are shopping for central London properties.

“The stamp duty holiday has been a nice to have but it certainly hasn’t made the difference to whether any of my clients want to buy or not,” said Ms Dell, whose clients target properties worth over £1 million.

“Effectively it saves them £15,000 so in the scheme of things it’s not a game changer. The ending of it for my clients is almost irrelevant. It has far more relevance for people buying outside London for below £500,000, where every penny matters, as opposed to the high net worth overseas buyers.”

Instead, Ms Dell said the focus is to beat the deadline for the 2 per cent surcharge coming on April 1 for anyone who is not tax resident in the UK.

“That has far more consequence than the ending of the stamp duty holiday because basically you are paying an extra 5 per cent as an overseas buyer as you have the 3 per cent plus the additional 2 per cent,” she said.

As a result, Ms Dell said the company had a very busy start to the year with six new clients coming on board with a total combined budget of more than £20m.

“I’m seeing really strong levels of demand and trying to do these transactions when you are not living here is a challenge with travel restrictions, quarantine – there are all sorts of barriers,” she said.

“Having said that, London, even with this additional 2 per cent surcharge is still pretty competitive in a global context when you compare property taxes here with New York, Singapore, Hong Kong or Sydney,” she said.

Mr Faun of Knight Frank agreed that his UK-focused clients will be unfazed by the tax changes.

“If there is an additional closing cost, we expect our clients who may currently take a five to 10 or more years investment horizon to extend this a little,” he said.

“The demand for homes in London and the UK is an emotional purchase for Middle Easterners to use for themselves and their families to enjoy whilst in the UK, usually on holiday. For the relatively small changes coming up, we do not foresee this having a significantly dampening impact on the demand for UK homes.”