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Leading buying agency, Black Brick to visit UAE and advise where to buy in London this year

Currently, 23% of Black Brick’s active clients are from the Middle East, with budgets ranging from £1.5m to £45m.

Black Brick, a leading London-based buying agency, is pleased to announce that its managing partner and founder, Camilla Dell, will be visiting the Middle East with a business trip to Dubai and Abu Dhabi at the end of January 2023.

A regular visitor to the region, Black Brick founder Camilla Dell will be leading the trip and meeting with potential clients and partners in the region, including several private banks, family offices, and high net worth clients. The primary focus of the trip is to update Middle Eastern clients on the London property market and raise the profile on the benefits of using a buying agent when considering purchasing property in London.

Currently, 23% of Black Brick’s active clients are from the Middle East, with budgets ranging from £1.5m to £45m. London is a highly attractive asset for Middle Eastern clients, due in part to its stable political environment, strong economy, and world-renowned educational and cultural institutions. The current weak pound is also making London property more attractive for Middle Eastern buyers, many of whom are dollar-based. The city offers a wide range of property options, from central London apartments to country estates, making it a desirable location for both personal and investment purposes.

In a year marked by unpredictability, Black Brick has still purchased almost £100m worth of property on behalf of clients from around the world. As the market becomes more cautious, half of these homes were sourced off market, up from a third in 2021, and the average discount on the asking price that Black Brick achieved for their clients was 4% or £40,000 per £1m. Half of Black Brick’s deals in 2022 were off-market, which can be difficult to access without professional representation.

In the past 12 months, seven out of ten of the homes purchased by Black Brick were apartments, compared to five out of ten in 2021. There has also been a resurgence of investor buyers, with one in five deals made on behalf of investors in 2022 compared to just six percent in 2021.

Black Brick has clients from a variety of nationalities, including the UK, the US, Africa, the Middle East and Europe.

Camilla Dell said, “We are excited to bring our expertise and unique approach to the Middle East and help clients in the region find their dream homes in London. Our commitment to excellent customer service and our focus on acting in the best interests of our clients make us a valuable asset in the London property market.”

Where to buy in London this year:

From historic West End enclaves with some of the best nightlife and shopping in the world on the doorstep, to leafy London villages with buzzy atmospheres and improving transport links – anybody considering buying a London home this year certainly has plenty of choice.

Picking the right postcode is a fine art – as well as considering the lifestyle and local amenities on offer, buyers need to have an ear to the property market ground to select a location with the staying power to ride out the inevitable ups and downs of the housing cycle.

To help you decide where to buy in 2023, these are Black Brick’s selection of the five key locations to watch over the next 12 months:

PRIME CENTRAL LONDON: MAYFAIR.

This roughly one mile square grid of streets and squares has been a prime London address ever since the late 17th century and clever curation of its public spaces and shopping streets means that when it comes to PCL Mayfair has firmly overtaken Knightsbridge as the place to be.

Stock is in short supply, and demand remains strong from both domestic and international buyers. Add to that the fact that few Mayfair vendors will be in a position of having to sell, means prices are likely to withstand any economic shocks the year may bring.

“Mayfair is one of those places where buyers are willing to pay a premium to live,” said Camilla Dell, managing partner of Black Brick. “They don’t expect to get big discounts.” Homes range from elegant townhouses to modern, ultra-luxury apartment buildings like Clarges Mayfair, Burlington Gate, and 1, Grosvenor Square.  The average sale price stands at £4.3m according to data from Rightmove. “One of the key things about Mayfair is the huge amount of investment that has been put into the area by the Grosvenor Estate – they are very particular about things like which shops go into Mount Street and – and there has also been a real explosion of exclusive new private members clubs and restaurants,” said Dell.

The delayed opening of the new Crossrail line at Bond Street in October has given Mayfair an extra fillip. “It will really appeal to buyers who come in and out of Heathrow,” said Black Brick property consultant Tom Kain.

PRIME LONDON FRINGES: NORTH KENSINGTON.

Samantha and David Cameron were early adopters of the W10 postcode, only leaving their family home to move into Downing Street in 2010.

Since then, North Ken has been on a quiet ascent. Golborne Road Market is a more peaceful, less tourist flooded, and altogether hipper alternative to Portobello Road, with pretty stalls and food trucks, artisanal cafes, restaurants, vintage shops, and boutiques.  This fact has not gone unnoticed by young British, European, and American buyers looking for a buzzy new neighbourhood to call home. And they are also cottoning on to the fact that they can get great value for money compared to Notting Hill, less than a mile away. In W10 a really smart property would sell for around £1,400 to £1,500 per sq ft said Kain. A similar property in Notting Hill could cost anywhere from £4,000 to £5,000 per sq ft.

UP AND COMING LONDON VILLAGE: HERNE HILL.

In the 1780s streets of fine houses were built in Herne Hill by wealthy merchants and bankers, earning it the nickname the “Belgravia of south London”. In more recent years it Herne Hill was overshadowed by the hipsterfication of its nearest neighbours, Brixton and Peckham. But as property prices there have swelled so buyers looking for value for money have started to explore Herne Hill.

What they have found is good quality period houses, plentiful green space, and an increasingly impressive range of gastropubs and restaurants. Little wonder that a ripple of young families – the “dogs and sprogs” crowd –looking for space and quality of life have adopted Herne Hill.

The most famous of these are, of course, Boris and Carrie Johnson, who are reported to have chosen a Edwardian villa on Stradella Road as their post-Westminster home.

The average sale price of apartments in Herne Hill last year was just under £500,000 according to Rightmove, with semi detached houses selling at close to £1.5m. Prices are now 10 per cent up on pre pandemic levels.

PRIME OUTER LONDON: ST. JOHN’S WOOD.

The jewel in the crown of north London, St John’s Wood with its affluent high street, amazing schools, and beautiful white stucco villas has long been a popular roost for families who tend to stay put for decades. “St John’s Wood has done really exceptionally well over the last 18 to 24 months,” said Dell.

The current average price for a flat in NW8 stands at just under £1.2m according to Rightmove, while semi detached houses fetch an average of just over £4.2m. And current sale prices are up 11 per cent compared to the 2018 peak. Beyond average prices, there have been some really super prime deals struck over the past couple of years. Three houses on the area’s premiere street, Hamilton Terrace sold for north of £20m, while unmodernised properties on the almost equally sought after Avenue Road are now trading for an exceptional £3,000 per sq ft.

“I think we will definitely see prices plateau this year, but this is the sort of area where people don’t need to sell if they don’t get the right price, so I don’t think we will see a drop off either,” said Dell. Historically one thing that SJW has lacked is prime apartment buildings to tempt local homeowners to downsize. Most local stock consists of dated mansion blocks.

There is clearly latent demand: homes at One St John’s Wood, a 12 storey building opposite Lord’s Cricket Ground, which completed in 2022, sold strongly at prices starting from £2.6m. And in November preparatory work finally started on the redevelopment of the St John’s Wood Barracks, which has been in the works for more than a decade. This 2.2-hectare site, formerly the headquarters for the Royal Horse Artillery, will bring 179 brand new homes to the market.

CROSSRAIL OUTPERFORMER: ACTON.

Ever since it was announced that London was to get a new train line, smart buyers have been eyeing this Victorian suburb as a natural step out from Notting Hill or Holland Park. And now that it is up and running its super-fast train links to the City and Canary Wharf are starting to tempt buyers who might once have preferred to live in Islington or Clerkenwell.

When the line is fully operational journeys to the City will take just over a quarter of an hour, and travellers can be in the West End in ten minutes.

These new arrivals have helped hike house prices in Acton by 59 per cent between 2012, when work on Crossrail began, and last year. And they have also contributed to a groundswell of organic local regeneration which is in the throes of transforming Acton from rather bland backwater into the new East Dulwich. Its de-facto high street, Churchfield Road, has become a hotspot for interesting independent shops and restaurants, galleries and gastropubs, many founded by new locals.

Acton has already had its fair share of investment – the £800m regeneration of the South Acton Estate to name but one – and more is to come. Transport for London is poised to start work on a £1bn scheme to build 850 new homes, plus offices, shops, and restaurants, close to the station which will give the gateway to Acton just the face lift it needs.

For more information about Black Brick and its services, please visit www.black-brick.com.

The new house price hotspots favoured by high earners

By Jayne Dowle

Wealth drivers — people with executive jobs — have long influenced house price growth. Now we reveal where they’re moving to next

If you want to follow the money, head to Dartford in Kent, Waltham Forest on the Essex borders, Trafford in Greater Manchester or Rushcliffe near Nottingham.

While gilt-edged London boroughs such as Kensington and Chelsea and Richmond upon Thames still attract the seriously wealthy, research from Savills finds some unlikely England and Wales hotspots where high-earners are making a huge impact on house prices.

Pulling together information from the 2021 national census and Land Registry house prices over the past ten years, the estate agency has focused on how an influx of “wealth drivers” (identified as managers, directors and senior officials, plus those in professional occupations) correlates to house price gains.

“Why did we do it? Because it’s a once in a decade opportunity to get your hands on this data,” says Lucian Cook, the report author and head of residential research for the estate agency. “The census is a really useful snapshot of household income. We’re already aware of some of the trends, but connecting the data with sold house prices allows you to investigate. It really tells us about the housing market and people’s life choices.”

Posh

Four London locations — the City of London, with 65 per cent of residents classed as high-earning, paying an average of £828,113 for a home; Richmond upon Thames (55 per cent, £976,160); Kensington and Chelsea (54 per cent, £2,409,454); and Westminster (53 per cent, £1,746,404) — top the locations with the largest concentration of wealthy residents. No surprises there then.

“These certainly are gilt-edged, although for different reasons,” says Guy Meacock, director of the buying agency Prime Purchase. “Kensington and Chelsea is London’s most cast-iron borough with a consistent density of high-income households and no weak spots; people will pay £50 million for one of the biggest houses on Upper Phillimore Gardens. It has enduring domestic appeal, although plenty of Americans are also interested.

“Westminster covers a wider cross-section of demographic and household income but includes top-end Belgravia and Mayfair — attractive to Middle Eastern buyers and ‘new money’.”

Meacock adds that the City of London is experiencing growth thanks to recent office-to-residential conversions creating handy pied-à-terres, and Richmond is a classic family favourite between town and countryside.

However, snapping at their well-shod heels is the city of Cambridge, fifth on the matrix of high-earners and high prices. As in Westminster, 53 per cent of homeowners in Cambridge are in the high-income bracket, but the average house price, at £557,714, is less than a third of that in the London borough — for now.

“In about the last four years we have seen a marked increase in buyers looking for houses in higher price ranges,” says Richard Freshwater, director of residential at the east of England estate agents Cheffins. “We have had a huge amount of people coming out of London — a lot attracted by the schooling and the fact that they can cycle to the station [the average rail journey time from Cambridge to London King’s Cross is an hour and 16 minutes]. However, it coincides with a massive change in the labour market. Increasingly, they are not having to go to their place of work every day.”

Getting posher

“When it comes to the rising ones in London, I could probably have told you without the data,” Cook says. “Less immediately obvious, boroughs such as Waltham Forest and Greenwich have seen quite significant increases, and so have Dartford, Bexley and Newham. London house prices are such that if people want to meet requirements for space, they will be pushed into areas they wouldn’t have previously considered buying in.”

Camilla Dell, managing partner at the buying agency Black Brick, says that a significant factor is lack of supply in better-established — but still, to some, outlying — family-oriented areas, such as Dulwich and Wimbledon. “The £2 million-plus market in Dulwich suffers from severely restricted supply, with many people staying for 20 to 30-year periods without moving,” she says.

However, it’s the Greater Manchester borough of Trafford — home to fancy, family-friendly Altrincham, Hale, Hale Barns and Bowdon — that tops Cook’s “Posh and Getting Posher” category, bringing together high-earners and impressive growth; 44 per cent here are top-flight professionals, a figure that has risen 28 per cent in a decade, underpinning a 73 per cent increase in house prices to an average of £417,306.

“The profile of the people I meet moving into the area reflects this,” confirms Philip Diggle, head of Gascoigne Halman’s Hale office. “But one key point is that I’m constantly acting for and finding properties for business owners. There’s a lot of entrepreneurial spirit in the north, people in control of their own destiny, rather than working for someone else.”

When it comes to a concentrated number of high-income households outside London and the South East (including Cambridge), Rushcliffe — centred on the Nottinghamshire town of West Bridgford — is highest, with 47 per cent, but its average house price remains a relatively modest £346,302.

“Until recently Rushcliffe wasn’t really on the radar, but the schools are good and it’s within easy striking distance to Nottingham city centre,” says Steven Gray, director of the local estate agency FHPLiving. “And the average house price hides some expensive properties — people are prepared to pay £625,000 for a Victorian semi with no parking.”

Cook also highlights Cardiff as gentrifying — more than a third (37 per cent) of residents are now classed as high-earners, a 19 per cent increase since 2011.

At £282,158, the average Cardiff house price also hides expensive individual homes. “The M4 corridor coming down towards Wales has been very busy,” says James Thomas, associate director at Savills in Cardiff. “And you can get to London [Paddington] from Newport by train in two hours — it’s really changed the way Cardiff is performing. We are lucky in that we have about six or eight suburbs that are really desirable, including Llandaff, Penarth and Cyncoed.”

Not so posh

Inevitably, Savills has also identified locations experiencing “entrenched challenges”, meaning less than 25 per cent of occupations are classed as high-earning, leading to subsequent low growth in house prices.

At the top is northeast Lincolnshire, where 21 per cent of residents are high-earning, representing a rise of 13 per cent over the past decade. In this period, house prices in local towns such as Grimsby and Immingham have risen by 38 per cent to a northeast Lincolnshire average of £160,528.

Tim Downing, director at the Lincolnshire-wide estate agency Pygott & Crone, says that recent opportunities — such as the offshore wind farm industry, the Freeport incorporating Immingham, Grimsby, Hull and Goole, and £20 million for Grimsby’s regeneration from the government’s Towns Fund — will help to turn this tide. “And going forward I would like to see a mainline service to London [from northeast Lincolnshire] and better train accessibility to Leeds and Sheffield,” he says.

Northeast Lincolnshire is followed by Bolsover in Derbyshire (23 per cent high-earners; £171,895 average house price) — handy for Sheffield and Leeds — and Walsall in the West Midlands (25 per cent; £213,391). All three areas have had a 13 per cent rise in high-earners since 2011.

Cook says that future activity depends on “whether the levelling up agenda can gain traction in these areas, because wealth is generated by employment”.

However, he predicts that the change in working patterns, with more people employed on an agile basis, will eventually lead to property searches over wider areas.

He singles out Exeter as a good example of this. “An area that piqued my interest in the South West, for example, is Exeter [where high-earning occupations have risen by 25 per cent in a decade, to 34 per cent of resident homeowners, rather than second-home owners]. The question is, does Exeter have the capacity to do a Bristol, where house prices have rocketed in the last ten years? It depends on the traction of higher-value earners. It might well be one to watch.”

 

The recession forecast: How will the property market fare in 2023?

Until the end of last year, the UK property market was going great guns. Prices were at an all-time high, even despite the fact that a pandemic had been raging for the best part of two years. At the start of 2020, the Bank of England feared that UK house prices could fall by 16 per cent; in actual fact, they went on a growth spree, jumping by almost 10 per cent in 2021 alone.

Then things began to change. War in Ukraine. Brexit fallout. The effects of Covid finally catching up with the economy. Cue a cost of living crisis, inflation, rising interest and mortgage rates… you know the drill all too well. January marks the fourth consecutive month that prices have fallen in London, and experts almost unanimously agree that the cooldown will continue, with one report by The Guardian forecasting drops of between 5 and 12 per cent (for the UK as a whole).

What will happen to the luxury property market?

All of that said, the luxury market is a different beast. Those purchasing prime property are less affected by the cost of living crisis and rising rates; research from Savills suggests that only a third of Prime Central London (PCL) homeowners have debt on their property. This means fewer forced sales and more holding of value. “Luxury, rare assets will always have demand over areas that are more susceptible, outside of prime central London,” says Camilla Dell, Managing Partner and Founder of independent buying agency Black Brick.

Dell forecasts that prices in prime London will drop two per cent this year, which is low, although she stresses that this should be taken with a pinch of salt: “Predicting property values is extremely difficult, particularly in a market like London where different property types and areas all factor hugely in determining how values will perform over time.” Even if the picture is worse than imagined, it may be a case of simply holding out, as inflation is predicted to peak in the middle of the year, meaning that “we should see some light at the end of the tunnel as we enter Q3 2023”.

Is now a good time to sell?

Buyers are hesitant at the moment, says Dell, and will probably “only take the plunge if they feel the deal/discount seems worthwhile”. So, the answer to the question? Only if you’re willing to be pragmatic on price, as “anything that is wildly overpriced probably won’t be considered at the moment”.

That said, demand is highly subject to where a property is located. London is a patchwork of neighbourhoods and many are retaining their value. The market is still active and even competitive for family homes with gardens in the £2-5 million range in suburbs such as Richmond, Wimbledon and Dulwich, for example.

On a more general level, buyers are looking for proximity to transport links, a good local high street and a park, according to Dell. “Post-pandemic, buyers want to feel like they are buying into a community,” she says. A premium is also being placed on properties with air conditioning as summers in London get hotter.

Is now a good time to buy?

If you’re buying in the current climate, you should make sure that your investment is a worthwhile one. Mayfair is always a good choice – a prime address since the 17th century, stock in this one-mile-square grid is in short supply, and demand remains strong. In prime outer London, look to St John’s Wood. Here, current sale prices are up 11 per cent compared to the 2018 peak.

If you want to be smart, Dell also recommends North Kensington, which she says “has been on a quiet ascent”. “Golborne Road Market is a less tourist-flooded and altogether hipper alternative to Portobello Road,” she continues. “Buyers are also cottoning on to the fact that they can get great value for money compared to Notting Hill, less than a mile away.” In W10, property sells for around £1,400 to £1,500 per sq ft; a similar property in Notting Hill could cost anywhere from £4,000 to £5,000 per sq ft.

Acton is another good choice. It has been the subject of considerable investment – including the arrival of super-fast train links to the City and Canary Wharf – and a £1 billion scheme to build homes, offices, shops and restaurants next to the station is in the pipeline. These new arrivals have helped hike house prices in Acton by 59 per cent between 2012 (when work on Crossrail began) and last year.

Finally, consider Herne Hill, says Dell: “It has previously been overshadowed by its neighbours, Brixton and Peckham. But as property prices have swelled, buyers looking for value for money have started to explore Herne Hill. Little wonder that a ripple of young families – the ‘dogs and sprogs’ crowd – have chosen this area.” The most famous of these is Boris and Carrie Johnson, who are reported to have chosen an Edwardian villa on Stradella Road as their post-Downing Street home.

It seems inevitable that prices will fall this year, and we shouldn’t expect more than above-inflationary growth for the next few years. However, the pinch will mainly be felt in the middle market, as opposed to prime London. That said, buyers will be more sluggish, and sellers should therefore be realistic about valuing their property. There are areas, however, that may, if not buck the trend, then outperform. Look for up-and-coming postcodes bolstered by great transport links, proximity to other areas and possession of other coveted features.

Read the article: https://luxurylondon.co.uk/property/property-market-forecast-2023-london-recession/

This is where to buy in London in 2023, according to a top buying agency

Looking for our 2024 guide? Our updated insights on London’s prime property market can be found here

 

North Kensington, Herne Hill, Mayfair, St John’s Wood and Acton have been picked out as the top places to buy in London this year.

PCL acquisition firm Black Brick – which bought almost £100mn worth of property on behalf of its clients in 2022 – has come up with the list of neighbourhoods to help buyers choose a location “with the staying power to ride out the inevitable ups and downs of the housing cycle”.

Mayfair makes the cut in PCL, having “firmly overtaken Knightsbridge as the place to be”. Low supply and strong demand means prices are “likely to withstand any economic shocks the year may bring”, said the firm, and the arrival of Crossrail has provided another big boost.

Elsewhere, buyers priced out of Notting Hill are directed to nearby North Ken, while Herne Hill is the top pick for the “dogs and sprogs” crowd south of the river, on account of its fine housing stock and plentiful green space.

Here’s the team explaining the rationale behind the selections…

Prime Central London: Mayfair

This roughly one mile square grid of streets and squares has been a prime London address ever since the late 17th century and clever curation of its public spaces and shopping streets means that when it comes to PCL Mayfair has firmly overtaken Knightsbridge as the place to be.

Stock is in short supply, and demand remains strong from both domestic and international buyers. Add to that the fact that few Mayfair vendors will be in a position of having to sell, means prices are likely to withstand any economic shocks the year may bring.

“Mayfair is one of those places where buyers are willing to pay a premium to live,” said Camilla Dell, managing partner of Black Brick. “They don’t expect to get big discounts.”

Homes range from elegant townhouses to modern, ultra-luxury apartment buildings like Clarges Mayfair, Burlington Gate, and 1, Grosvenor Square.  The average sale price stands at £4.3m according to data from Rightmove.

“One of the key things about Mayfair is the huge amount of investment that has been put into the area by the Grosvenor Estate – they are very particular about things like which shops go into Mount Street and – and there has also been a real explosion of exclusive new private members clubs and restaurants,” said Dell.

The delayed opening of the new Crossrail line at Bond Street in October has given Mayfair an extra fillip.

“It will really appeal to buyers who come in and out of Heathrow,” said Black Brick property consultant Tom Kain.

Prime London Fringes: North Kensington

Samantha and David Cameron were early adopters of the W10 postcode, only leaving their family home to move into Downing Street in 2010.

Since then, North Ken has been on a quiet ascent.

Golborne Road Market is a more peaceful, less tourist flooded, and altogether hipper alternative to Portobello Road, with pretty stalls and food trucks, artisanal cafes, restaurants, vintage shops, and boutiques.

This fact has not gone unnoticed by young British, European, and American buyers looking for a buzzy new neighbourhood to call home. And they are also cottoning on to the fact that they can get great value for money compared to Notting Hill, less than a mile away.

“In W10, a really smart property would sell for around £1,400 to £1,500 per sq ft,” said Kain.

“A similar property in Notting Hill could cost anywhere from £4,000 to £5,000 per sq ft”.

Up and Coming London Village: Herne Hill

In the 1780s streets of fine houses were built in Herne Hill by wealthy merchants and bankers, earning it the nickname the “Belgravia of south London”.

In more recent years it Herne Hill was overshadowed by the hipsterfication of its nearest neighbours, Brixton and Peckham. But as property prices there have swelled so buyers looking for value for money have started to explore Herne Hill.

What they have found is good quality period houses, plentiful green space, and an increasingly impressive range of gastropubs and restaurants. Little wonder that a ripple of young families – the “dogs and sprogs” crowd – looking for space and quality of life have adopted Herne Hill.

The most famous of these are, of course, Boris and Carrie Johnson, who are reported to have chosen a Edwardian villa on Stradella Road as their post-Westminster home.

The average sale price of apartments in Herne Hill last year was just under £500,000 according to Rightmove, with semi detached houses selling at close to £1.5m. Prices are now 10 per cent up on pre pandemic levels.

Prime Outer London: St John’s Wood

The jewel in the crown of north London, St John’s Wood with its affluent high street, amazing schools, and beautiful white stucco villas has long been a popular roost for families who tend to stay put for decades.

“St John’s Wood has done really exceptionally well over the last 18 to 24 months,” said Dell.

The current average price for a flat in NW8 stands at just under £1.2m according to Rightmove, while semi detached houses fetch an average of just over £4.2m. And current sale prices are up 11 per cent compared to the 2018 peak.

Beyond average prices, there have been some really super prime deals struck over the past couple of years. Three houses on the area’s premier street, Hamilton Terrace sold for north of £20m, while unmodernised properties on the almost equally sought after Avenue Road are now trading for an exceptional £3,000 per sq ft.

“I think we will definitely see prices plateau this year, but this is the sort of area where people don’t need to sell if they don’t get the right price, so I don’t think we will see a drop off either,” said Dell.

Historically one thing that SJW has lacked is prime apartment buildings to tempt local homeowners to downsize. Most local stock consists of dated mansion blocks.

There is clearly latent demand: homes at One St John’s Wood, a 12 storey building opposite Lord’s Cricket Ground, which completed in 2022, sold strongly at prices starting from £2.6m.

And in November preparatory work finally started on the redevelopment of the St John’s Wood Barracks, which has been in the works for more than a decade. This 2.2-hectare site, formerly the headquarters for the Royal Horse Artillery, will bring 179 brand new homes to the market.

Crossrail Outperformer: Acton

Ever since it was announced that London was to get a new train line, smart buyers have been eyeing this Victorian suburb as a natural step out from Notting Hill or Holland Park.

And now that it is up and running its super-fast train links to the City and Canary Wharf are starting to tempt buyers who might once have preferred to live in Islington or Clerkenwell.

When the line is fully operational journeys to the City will take just over a quarter of an hour, and travellers can be in the West End in ten minutes.

These new arrivals have helped hike house prices in Acton by 59 per cent between 2012, when work on Crossrail began, and last year. And they have also contributed to a groundswell of organic local regeneration which is in the throes of transforming Acton from rather bland backwater into the new East Dulwich.

Its de-facto high street, Churchfield Road, has become a hotspot for interesting independent shops and restaurants, galleries and gastropubs, many founded by new locals.

Acton has already had its fair share of investment – the £800m regeneration of the South Acton Estate to name but one – and more is to come. Transport for London is poised to start work on a £1bn scheme to build 850 new homes, plus offices, shops, and restaurants, close to the station which will give the gateway to Acton just the face lift it needs.

House of cards: why are so many property sales collapsing?

By Ruth Bloomfield

The number of deals falling through is rising

Moving house is said to be one of the most stressful life experiences, right up there with bereavement and divorce. But what about the stress of not moving? Amid the upheavals of the past few months increasing numbers have seen their property ladder dreams collapse around their ears.According to market analyst TwentyCi there has been a ‘sharp increase’ in the number of deals falling through. More than 90,000 agreed sales disintegrated between July and September, an 18 per cent increase on the same period in 2019.

Wendy and William Waterton know exactly what it feels like to be on the sharp end of a collapsing sale. In the past two years it has happened to them twice. The couple bought their one-bedroom starter flat in Woolwich, south-east London, for £320,000 in 2017. By November 2020, with a young family, they were ready for a larger home closer to family in north London.

They put the flat on the market for £325,000, but small flats without outside space were a hard sell during the pandemic. It was not until December 2021 that they accepted an offer of £315,000.

The couple packed their bags, planning to move in with relatives and start house-hunting once the flat was sold. They hoped to complete in March this year. ‘Then in February our buyers said they had found a property which suited their needs better – we had no idea they were still looking – and pulled out,’ said William, 30, a management accountant. ‘It was devastating.’

In May he and Wendy, also 30, who runs an online cosmetics store, steeled themselves for another attempt to sell and put the property back on the market. The couple and their two children also went ahead and moved in with William’s parents so the flat would be vacant.

Over the summer they accepted an offer of £312,000 and, once more, everything seemed to be progressing nicely. Then came the mini-Budget. By the end of that week, with the mortgage markets in turmoil, their buyer had pulled out.

To make matters worse the couple had used the Help to Buy scheme when they bought the flat, which means renting it out for a while is not an option. All they have been able to do is drop the price, to £305,000, and hope for a case of third time lucky.

‘Our fear is that it has now been on the market for so long that people will think there is something wrong with it,’ said William. ‘In reality it has just been a series of events – the pandemic, the war in Ukraine and the cost of living crisis – happening around us.’

Given the likelihood that interest rate rises will continue, and amid forecasts of substantial house price drops in 2023, it is likely that Wendy and William’s experience is going to become more commonplace, afflicting all sectors of the market.

In the north London suburbs veteran agent Jeremy Leaf, of Jeremy Leaf & Co estate agents, said his team have had to do some ‘severe arm-twisting’ to keep deals on track, particularly when dealing with anxious first-time buyers confronted with the prospect of higher monthly repayments. He agrees things could get worse before they get better, with the number of completed sales dropping off next year. ‘Buyer enquiries have reduced substantially since the mini-Budget and are only slowly starting to improve,’ he said.

Agents have started to hear whispers of the return of gazundering – the practice of attempting to renegotiate a lower price on the verge of exchange

Another breed of buyer, meanwhile, is keen to use the faltering economic situation as an excuse to try their luck. Camilla Dell, managing partner of buying agency Black Brick, has started to hear whispers of the return of gazundering – the practice of attempting to renegotiate a lower price after an offer has been accepted and a deal is on the verge of exchange.

In prime central London, she said, this approach tends to fail because few owners are so desperate to sell that they will take a last-minute lowball offer. ‘What has happened is that not only have the vendors said no, but they have also decided not to sell their property to that buyer, so it is not a strategy which is working,’ she said.

Beyond London, locations which were red-hot during the pandemic are now seeing a wave of deals fall through. Carol Peett, managing director of West Wales Property Finders, has noticed a string of properties ‘reappearing’ on the market a couple of months after going under offer. She blames the surveyors who carry out valuations on behalf of mortgage lenders who, she feels, have a habit of undervaluing properties.

‘In many cases, they send valuers from outside the area who do not understand the nuances of the local market,’ she said. ‘A property with a sea view may be three times more valuable than one in the same postcode without a sea view or slightly inland and down value accordingly. Unless people have a substantial deposit to cover the shortfall, the transaction falls through.’

In Cornwall, another lockdown property hotspot, Josephine Ashby, a director of John Bray Estates, said many discretionary second-home owners simply change their minds and withdraw property offers – and the way the UK buying system is designed can do so without penalty. Unfortunately, their decision can break lengthy chains of buyers and sellers, sending everyone back to square one.

‘Reservation deposits prior to exchange is an interesting idea,’ she said. ‘We see them frequently with new-build properties, but they could be used more for existing properties. This would make buyers think twice before withdrawing from a transaction they entered into.’

Jeremy Leaf thinks that vendors should have to produce an information pack giving details on their property upfront, to avoid would-be buyers discovering late in the game that a home suffers from subsidence or has a Japanese knotweed issue. He would also like local councils and managing agents to be encouraged to respond to queries faster; the more time spent chasing up information during the conveyancing process, the more time there is for buyer or seller to get cold feet or mortgage deals to expire.

Whatever happens over the next year or two, buying agent Nina Harrison, London specialist at Haringtons, who has been buying and selling property for 30 years, has comforting words for younger buyers shocked by the sudden deflation of the property market. ‘In 2023 I think we will see a dip which is something that Gen Zs have never experienced before – but as with all roller-coasters there will be a climb again,’ she said.

Gazundering backfires for buyers as deals collapse

One major London estate agency has seen 20% of its sales pipeline fall through as a result of buyers trying to renegotiate prices, reports acquisition firm Black Brick.

The practice of gazundering reared its head in the wake of the ill-fated mini-budget, but it doesn’t sound like vendors have been buying it.

“Some buyers treated the Truss imbroglio not as a problem but as an opportunity”, according to PCL acquisition firm Black Brick, as punchy purchasers lowered their offers at the last minute to push sellers into offering a deal.

Buyers’ attempts to renegotiate at the last minute are not working in PCL, says Camilla Dell

“I spoke to a large central London agency – they have seen 20% of their pipeline fall through where buyers have tried to renegotiate prices,” said managing partner Camilla Dell.

“What has happened is that not only have the vendors said no, but they have also decided not to sell their property to that buyer so it is not a strategy which is working”.

Opportunities to buy at distressed levels “will be few and far between,” she added, suggesting a “more constructive” way to approach the delicate negotiation process is to understand both what a fair market price is for a particular property and the needs of its vendor.

Despite the somewhat gloomy market conditions, if sellers do not have a mortgage or are simply testing the market, buyers are warned that a below-market offer is “highly unlikely to be positively received”.

Inevitably there will always be those keen to chance their arm and this, said Dell, means that while central London prices should remain fairly stable over the next few years, transaction numbers “may well tail off”.

Some investors and buyers ‘have a fixation on discounts and bargains’

Those holding out for GFC-level price falls are likely to be disappointed, she added: “Some investors, and buyers in general are really hoping that prices will come down 20%, like they did in the financial crisis…they have this fixation on discounts and bargains.

“But in Prime Central London only one in three people have taken debt to buy their properties.

“Frankly, they don’t need to sell, and if prices do come down they won’t.

“I know that is going to be very, very disappointing to some people, but buyers should be focussing on whether a property is the right home for them and their family, somewhere they are going to be able to live for ten years.”

Both Savills and Knight Frank expect PCL to outperform the rest of the country in the years ahead – with the least dramatic price correction in 2023 and the highest cumulative price growth to 2027.

House prices are falling. Should I wait to sell my property?

By Melissa York

After all the recent political and financial turmoil, we take the temperature of the residential property market.

After two years of rocketing house prices, the property market is coming back down to earth. The average house price in the UK decreased for the first time in 15 months, dropping £4,000 from £272,259 to £268,282, in October, according to Nationwide. The estate agency Savills predicts prices will fall by 10 per cent on average next year, and the number of sales will reach its lowest level since 2011.

“There are more price reductions at the moment than new listings,” says Jonathan Hopper, chief executive of the buying agency Garrington. “I think the scale and the shock of what’s unfolded politically and economically over the last six weeks has driven the message home that this isn’t a changing market, it’s a changed market.”

With prices expected to fall further in the coming year, sellers will be keen to sell while buyers will want to wait — creating an impossible standoff. So should you wait or should you bid low and go? Here’s our guide to where you have room to negotiate and the markets where you’ll be laughed out of a viewing for trying.

Will price falls help me as a first-time buyer?
Property values increased by 13.6 per cent in the year to August, according to official statistics, which means that if house prices were to fall by 5 per cent, this would just take prices in London back to August 2021 levels. Meanwhile, prices in Wales would drop to March 2022 prices.

Higher mortgage rates are going to hit first-time buyers at the lower end of the market hardest, because these are the buyers who need to borrow the most and are most likely to be feeling squeezed by the rising cost of living. As a result there are 27 per cent fewer buyers for properties costing less than £250,000 than there were last year, according to Hamptons estate agency, and 14 per cent fewer homes going on sale due to the increased price of moving up the ladder.

Record-breaking rents, however, mean it’s worth buying if you can. Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, a financial services company, says someone hoping to buy a £296,000 property may see the price drop £14,800 over the next year, but they would spend £13,944 renting the same property in that time. “When you bear in mind that all of this cash would go to a landlord rather than paying down the mortgage, it feels like less of a win,” she says.

Can I lower my offer after it has been accepted?
An offer isn’t legally binding until exchange of contracts in England and Wales. This is not the case in Scotland, where the accepted offer is legally binding, although buyers can make an offer subject to survey.

 

Fine & Country has this six-bedroom detached home in Shropshire for offers over £1 million, reduced from £1.2 million.

Once an offer has been accepted, the seller is legally bound to sell it to the buyer at that price. They do not have to accept a lower offer, they can simply quit the sale and put the property back on the market.

Gazundering, or lowering your offer just before exchange of contracts, is seen as bad form as it takes the seller back to square one and it can affect everyone in the property sales chain.

Long conveyancing times mean that some mortgage offers are expiring before exchange, forcing buyers to take on loans at higher interest rates than they had originally budgeted for. If this is the case, the seller may be sympathetic.

Where is there room for negotiation?
“It’s your boring, everyday, lower-price houses in a mundane town that are sticking around because those are where the buyers are having to tighten their belts,” says Carol Peett, managing director of buying agency West Wales Property Finders. “Any nice property is still selling incredibly quickly and smallholdings and properties with sea views are going way over asking.”

The hardest properties to sell, where there may be more willingness on the side of the seller to negotiate, are below £100,000 (Hamptons figures show they are spending 21 days longer on the market) and properties between £250,000 to £500,000 (18 days longer).

The cost of living crisis is motivating a new breed of seller at both ends of the property spectrum who may be open to negotiation. Empty nesters who used to be happy underoccupying large properties but are finding them increasingly unaffordable to run, and mortgaged buy-to-let landlords in the South East, where yields are typically lower than in the North, who are unable to raise the rent enough to meet their rising mortgage repayments, according to the Surrey-based buying agent Richard Winter.

“There are discounts on uniform new-build-type properties that can only compete with each other on price. We’re seeing classic developer incentives — part-exchange, chain-break — creeping back in,” Hopper says. “Properties that require a lot of work are out of fashion too, because of the rising cost of construction and materials, and the reliance on cash to get around higher borrowing costs.”

How much can I bid below asking?
Almost 7 per cent of homes have had their asking prices cut by more than 5 per cent, according to the property portal Zoopla. Average discounts and prices are a blunt tool, however, and should be used as a rough guide. It all depends what you’re buying and where.

So far this year, you were most likely to get an offer accepted under asking price on a sub-£100,000 (asking prices down 1.4 per cent on last year) first-time buyer purchase (down 1.4 per cent) in the countryside (1.3 per cent down), according to Hamptons.

Hopper says: “The big thing we’re seeing win negotiations is certainty. There is so much nervousness among sellers at the moment that being able to demonstrate that you are organised and you can hit deadlines is something that will give you room on price.”

“Four or five months ago, I had an offer accepted on a house at £1.75 million that went for over the asking price,” Winter says. “That fell through and went under offer four weeks ago at £1.65 million.”

An increasing number of properties are appearing on the property portals with asking price reductions as sellers face up to the harsh reality that the premiums seen during the pandemic, fuelled by the stamp-duty-holiday frenzy, are long gone.

Dominic Agace, chief executive of the estate agency Winkworth, says sellers need to be more “realistic . . . This doesn’t mean going backwards in prices, but instead not setting new records in the street.”

There will always be postcodes where demand outweighs supply. Hopper still sees four or five offers per property in the Cotswolds and Hampshire, but he is also seeing sellers that would traditionally wait for the spring putting their homes on the market now — or going off-market to test the waters — who are fearful of further rate rises in the new year.

Where are the best markets for buyers and sellers?
It’s best to be a seller right now at the lower end of the market in cities in the north and the Midlands, where value for money is better and house price-to-income ratios are lower.

More than a third (34 per cent) of properties in Britain attract three or more offers, Hamptons figures show, but the places where bidding wars are most common are in the North West (40.4 per cent), Scotland (39.3 per cent), the East Midlands (39.1 per cent) and Yorkshire (38.1 per cent). Buyer demand increased the most in the Old Trafford district of Manchester (48 per cent) and Liverpool city centre (30 per cent) between June and September, according to the data analyst PropCast.

It’s also a great time to be selling at the top end of the market, where buyers are largely insulated from mortgage rate rises because they don’t need a loan or they don’t need to sell. Properties worth £1 million or more are now selling 17 days faster than in October 2021, Hamptons reports.

In London, 5 per cent more homes are selling for above asking price than last year, and it was the region with the biggest rise in buyer demand, up 11.6 per cent on last year. PropCast data shows that the City of London and the West End are back.

With pandemic travel restrictions now a distant memory, international buyers have returned and are taking advantage of the slump in the pound. Camilla Dell, at the buying agency Black Brick, has recently done a number of deals in Notting Hill and Mayfair. “There’s a lot of international money swirling around. Most sellers are just really bullish at the moment in prime central London,” she says.

As for buyers, Savills predicts the biggest price falls in the next year will be in regions with the highest house prices where most of the market is reliant on credit. It’s for this reason that values are forecast to tumble 12.5 per cent in Greater London; 11 per cent in the east of England and the South East; and 10 per cent in the South West.

PropCast’s data shows that the biggest fall in buyer demand between June and September was in Totland Bay on the Isle of Wight (54 per cent drop), Deansgate in Manchester (40 per cent), Henley-in-Arden near Stratford-upon-Avon (37 per cent) and Amlwch on Anglesey (36 per cent).

Chris Druce, who produces the Prime Country House Index for the estate agency Knight Frank, says: “It’s getting back to a more classic market. Covid destroyed that seasonality, and I think this year we are returning to that quiet time during the winter and then it will ramp up again in spring when the houses start to look their best.”

How low will prices go?

Property prices are expected to continue falling as the cost of living crisis deepens with inflation and interest rates rising, but by how much, and how fast, is the subject of conjecture, writes Carol Lewis.

One of the most pessimistic forecasts has come from Simon French, chief economist at Panmure Gordon, an investment bank, who predicts that house prices will fall by 14 per cent over the next three years (or 29 per cent when accounting for inflation). Andrew Wishart, senior property economist at Capital Economics, a consultancy, expects prices to fall 9 per cent in 2023 and 3 per cent in 2024. Tom Bill, head of residential research at Knight Frank, believes they will fall by 5 per cent next year and 5 per cent the year after.

It’s not just prices that will fall though; transactions too will be hit. Lucian Cook, head of residential research at Savills, estimates that 190,000 fewer people will buy a home next year than this year. Hardest hit will be first-time buyers, with 110,000 fewer able to buy.

Q&A: Navigating the London property market

Experts in the Investec network explore the outlook for the London property market in the current economic climate.

As the UK economy continues to be subjected to inflationary pressures and rising interest rates, many of our clients are closely monitoring the property market to understand how these challenges may impact their investments and buying decisions in the coming months.

Here, Lucian Cook, Head of Residential Research at Savills, and Camilla Dell, Founder of Black Brick Property Solutions, explore how some of these inflationary pressures have impacted the property market, alongside Investec Private Banker Louise North.

Prior to the mini-budget, what factors have driven changes in the property market?

Lucian: During the pandemic, many people reassessed what they wanted from their home, and the race for space, the catalyst of a generous Stamp Duty holiday and the ability to lock in low interest rates drove price growth during this period.

Between March 2020 and June 2022, there was a significant divergence between the Prime Central London market where there was a lack of international demand, and regional prime markets. In Prime Central London, we saw a net price growth of 26% compared to a growth of 16% in the prime regional markets, and up to 21% in the prime country house markets.

More recently, as the London markets have begun to gather some pace, we’ve seen a slowdown in the prime markets outside of the city.

What is the current outlook for prime property in the UK?

Lucian: Much of what’s happening in the market has been driven by inflation expectations. Over the summer months we saw a significant change in the economic outlook, with an expectation that inflation might peak at highs of 13%.

More recently, we saw our seventh consecutive interest rate increase, bringing the base rate to 2.25%. This has put more pressure on people’s finances, while making people question the amount of debt they are comfortable with.

Against this context, we’ve seen a softening of people’s commitment to move within the short term. This has seen a notable increase of buyers ‘cutting their cloth’, with 29% of respondents to our most recent client survey saying they have reduced their budgets.

That caution has been exacerbated by more recent events and so it is likely see us enter a period of lower transaction volumes and a more price-sensitive domestic market; with some of the price growth seen in the past two years being eroded.  Central London is likely to be insulated from some of those pressures, given that buyers are much less reliant on debt.”

In terms of enquiries, what activity have you seen in the property market, since the mini-budget?

Camilla: The slump in sterling as a result of the UK’s ‘mini-budget’ has seen a rise of enquiries from buyers with funds in US dollars, who are looking to take advantage of the exchange rate. The enquiries have mainly come from buyers from the USA, Middle East and West Africa who are seeking homes in Prime Central London (PCL) with budgets which range from £3million to £20 million. These buyers will be purchasing at an approximate discount of 20% compared to the same period last year, a significant saving to say the least.

London remains a desirable choice for overseas buyers, particularly those from emerging markets, as it’s thought of a safe haven and has always provided reasonable yields combined with good long-term capital growth.

That said, there remains a supply issue in Prime Central London which is unlikely to disappear with the current drop in the pound, rising interest rates and inflation. Many homeowners with US dollar commitments will have purchased property when the pound was much stronger and will not want to crystalize their losses by selling.

Our view remains that we will see a “flight to quality” as we did in 2007/08. Buyers looking to diversify their wealth will be drawn to best in class assets. The main challenge will be finding those assets at reasonable prices.

We are yet to see evidence of price falls, but inevitably there will be some. We see this being limited to outer prime areas of London and in the sub £2m part of the market.

Given the supply issues that we’ve been experiencing, what is the best way for a buyer to find the right home?

Camilla: We recommend buyers use a buying agent as websites may not reflect the whole market. Forty-two per cent of properties we sourced for clients last year were not being openly advertised.

Buyers should also register with all of the estate agents in their area of interest and make sure that agents know that finance is in place as they are likely to prioritise organised buyers.

How are interest rate changes impacting the use of mortgages in the prime property market?

Lucian: While there is a lot of equity, there is still a relatively extensive use of mortgage debt in parts of the prime market. Within prime South West London, around two-thirds of buyers are using mortgage debt, whereas in Central London it’s at just over a third.  Here debt is more likely to be used on a discretionary basis as part of buyers financial planning.

Risk around interest rates has also seen an increase in buyers looking to fix their debt for a period of five years or more. As we move towards peak interest rates, we may see people locking into a variable rate to cash in on a potential fall in interest rates later down the line, especially given the recent disruption in the mortgage markets.

What is Investec seeing in terms of mortgage requirements?

Louise: Our approach to how we structure a mortgage means we can look at a client’s situation holistically and build a mortgage that suits their specific needs, so no one mortgage necessarily looks the same. That flexibility, coupled with the ability to get the transaction done quickly, is what helps in this type of market.

For example, some clients want to tailor repayment plans so that repayments coincide with liquidity events and support cash flow. We can also explore interest-only elements or fixed rate mortgage options for them.

We are familiar with complex income structures including a salary, bonus, foreign currency income or carry and this can help provide an accurate assessment of affordability and enable us to work efficiently. At the moment, this is especially beneficial for the banking or legal professionals we work with who want to leverage income in US dollars.

We’re encouraging anyone who wants to review their situation to get in touch to discuss the options.

Nick Candy flips £8.7m Mayfair flat to cash in on pound slump

In prime central London, it’s open season for wealthy investors from abroad with dollars to burn.

By Emanuele Midolo

The property developer Nick Candy has always had a talent for attracting new wealth. In the early 2000s it was Russian oligarchs; in the 2010s, with the creation of One Hyde Park, he added sheikhs and Chinese businessmen. Now the husband of the former Neighbours actress and singer Holly Valance is trying to lure wealthy Americans.

“Because of the pound slump it’s a unique time to buy prime triple-A real estate assets,” Candy, 49, says. He adds that this is “a once-in-a-lifetime opportunity”, with the pound expected to strengthen against the US dollar over the next few months.

Candy is personally hoping to cash in on the slump in sterling — the most severe decline in the history of the currency. He is selling a three-bedroom flat in the Mayfair area of London for £8.75 million. Having finished refurbishing the property two weeks ago, he opted to put it on the market immediately. “The size of the apartment is perfect,” he says. “It was just a bit tired and run-down; it needed a new kitchen and new bathrooms — it needed to be ‘Candyfied’.”

Land Registry records show that he bought the duplex in November for £5.6 million. The vendor was Bernard Looney, the Irish-born chief executive of BP.

“We were considering letting it, but we’d prefer to sell,” Candy says, adding that it had already been viewed by potential buyers, mostly from the US, Canada and the UAE. “It’s Mayfair, it sits by the Connaught Hotel, it will always interest international buyers. I’ve been told that the building has got six FTSE 250 chief executives in it.”

“As soon as the pound crashed against the dollar we got inundated with calls,” says Guy Bradshaw, managing director of Sotheby’s International Realty. “Dollar buyers hold the trump card these days . . . When you are a cash buyer, not having to worry about interest rates and mortgage products being pulled off the market, you’ve got an ace in your hand.”

Bradshaw adds that many such buyers are shrewd businessmen. “They say that if they buy now, at the current exchange rate, they pretty much have a guaranteed exit strategy in three to five years’ time, once the [value of the pound] goes back up,” he says. “They’re going to make a lot of money.”

Marc Schneiderman, director of the Arlington Residential estate agency, sold a John Nash terraced house near Regent’s Park to an American businessman last month. It had been on the market for £15 million, but the buyer eventually managed to negotiate the price down to £13 million. Combining that discount with the currency fluctuation, he has saved about $5 million on what he would have paid in March, when he first viewed the property.

“These are people who have been looking for properties for a while, some since the beginning of the year,” Schneiderman says. “They’re now flying in determined to buy. The US buyers have been reacting quicker, jumping on a plane and coming here, but Middle Eastern investors are following suit.”

Owners of large properties in London are moving quickly too. Rosy Khalastchy, a director at Beauchamp Estates in the capital, says that she had a number of instructions with vendors hoping to lure foreign buyers. “We have had about half a dozen new listings,” she says, “and we have also had a flurry of clients asking us to inspect their homes and keep them in mind should a dollar-based buyer want a property in their area.”

Khalastchy adds that she knows of 11 dollar-based buyers looking to buy super-prime properties in central London, each with a budget of between £70 million and £100 million. “From these buyers alone, this is potentially £1.1 billion worth of London real estate being sought due to the market conditions,” she says.

According to Savills, price growth in central London paused in the past quarter, with the figure down by 0.2 per cent on the previous quarter. But properties in the city valued at £10 million or more continued to outperform, recording year-on-year growth of 4.3 per cent.

“Our client list looks a bit like it did in 2007 and 2008, before the great financial crisis,” says Camilla Dell, managing partner of the Black Brick buying agency. “[Other than the Americans], a lot of them work in the oil and gas industry, and a lot are from west Africa. I think that we will see a ‘flight to quality’ as we did in 2007. Buyers looking to diversify their wealth will be drawn to best-in-class assets.”

Season of Change and Fair Exchange

The raking up of fallen leaves, long walks followed up by huge mugs of hot chocolate, log fires on chilly evenings.

In a period of seismic changes, a new monarch, a new prime minister, the most radical tax cutting budget since 1972 , it’s comforting to remember that some things in life stay the same.

Traditionally this run-up to Christmas is a busy time in the property market, many buyers and sellers have in mind the idea of starting the new year in a new home.

This year the bets are off. On the one hand Stamp Duty changes should stimulate the lower rungs of the property ladder, international buyers are back in action in London, and city pied-a-terre’s are back in vogue.

On the other, interest rates have hit a 14-year high of 2.25% and the cost of living crisis continues to dominate headlines, providing a counterbalance which should make for an interesting few months ahead.

Exchange rates exert a significant power of central London’s housing market, and the current weakness of the pound is inspiring buyers to move in on a discount property in the British capital.

On the 30th anniversary of Black Wednesday, the day when the UK crashed out of the European exchange rate mechanism, the pound sank to a 37 year low against the dollar, with £1 worth $1.1351.

On mini budget day sterling received another pummelling, falling to $1.09. Things haven’t been this bad since Margaret Thatcher was presiding over Downing Street.

Simultaneously, the pound also hit a 17-month low against the euro – at last count £1 equalled €1.12.

Whilst this is bad news for British businesses and holiday makers, and an opportunity for foreign exchange markets, it does give overseas buyers tremendous spending power in the UK.

Camilla Dell, managing partner of Black Brick Property Solutions LLP comments; “Currency is a massive driver for overseas buyers to purchase UK property, and that is not just American buyers but anybody who is pegged to the US$. When I look at the Black Brick client list it looks a bit like it did back in 2007 and 2008. A lot of our clients work in the oil and gas industry, and a lot are from West Africa.”

The flagging value of the pound means that, effectively, an overseas buyer spending £1m on a house in the UK today would make a saving of £270,000 (or 27%) compared to this time last year.

What these buyers are looking for is as diverse as their nationality. “They want everything from a pied-a-terre to a block of investment flats to a big trophy family house for £50m,” says Dell.

This overseas interest in London real estate is one of the reasons prices are continuing to rise.

According to the latest data from house price analyst LonRes, prime London property prices increased by just over 4% in the year to August and are just over 3% higher than they were before the pandemic.

New instructions, a leading indicator for activity, are up 5.5% year-on-year in prime London, and by a resounding 30% for homes priced at more than £5m.

“The make up of buyers in prime central London means that it does not necessarily follow underlying economic trends,” says Dell.

One potential fallout from the weak pound however maybe a further depletion in stock levels in a market that is already short on supply. Camilla Dell concludes: “Many owners of prime and super prime property in London are dollar based and purchased when the pound was much stronger. They will be reluctant to sell today and crystallize their losses. Any buyers currently circling and hoping for bargains and plentiful supply in PCL maybe in for a shock.”

How to secure a property bargain in this buyer’s market

By Alexa Phillips

House hunters now hold more power – here are the tactics to use

 

Savvy property hunters may now be able to secure steep discounts on their purchases as chains break down and rising mortgage rates hit prices.

Demand from buyers has dropped by a fifth in the last two weeks, according to the property website Zoopla, creating a buyer’s market in many areas.

House prices could already be falling due to spiralling mortgage rates, but lags in collecting the data mean the impact cannot be seen yet. A slump of 10pc is expected over the next two years, according to estate agent Knight Frank.

Jonathan Hopper, of buying agents Garrington Property Finders, said Britain is moving from a seller’s market to a buyer’s market.

“A couple of months ago, asking for a double-digit discount wouldn’t have happened anywhere in the UK; you’d get laughed at,” he said. “Now we’re in a market where sellers are open to those sorts of discussions because there is far more flexibility and a pragmatic approach starting to emerge in the market.”

 

How to grab a bargain

 

Mr Hopper said prospective homeowners can improve their chances of snagging a better deal by showing sellers they are a reliable choice.

“There’s a lot of uncertainty about people who’ve had mortgage deals pulled or haven’t re-checked their finances and don’t know if they can still afford what they thought they can afford,” he said.

“If you can demonstrate that you’re organised and a strong purchaser, preferably who’s willing to offer a degree of flexibility – because there’s a lot of sellers whose plans have been shaken – that’s very valuable and very attractive to sellers at the moment.”

He recommended that buyers have up-to-date information from their lenders and are not relying on a months-old “agreement in principle”, a precursor in the application process which gives a buyer an idea of how much they can borrow.

Banks have been withdrawing some agreements over concerns that borrowers can no longer afford the same mortgage size due to rising rates.

Mr Hopper advised against being overly aggressive on price at the outset of negotiations, which can alienate sellers. He said buyers should first take time to listen to what a seller’s motivations are. “For some it may be price, but for others it may well be timescales or flexibility,” he said.

He said buyers can then make a structured offer, preferably in writing, which outlines why they are the best solution for that seller, with supporting evidence.

One of his clients secured 9pc off the asking price of a property on Friday by offering them certainty that the deal would go through. “We were deemed the strongest bidder rather than the highest bidder,” he said. The buyer had a large deposit, evidence of proof of funds and an agreement in principle that was only three days old.

He said the seller was then able to negotiate a discount on their own purchase by showing that the chain was unlikely to collapse.

“A couple of months ago, greed would have trumped insecurity, but we’re now in a market where certainty of one’s position is more important than trying to squeeze the last pound out of something,” he said.

 

‘Wait and see’

 

Henry Pryor, another buying agent, agreed that aspiring homeowners could gain an advantage by pitching themselves as a reliable option. “But don’t rush, wait for the other side to come to you,” he said. “The balance of power is swinging very much in favour of buyers away from sellers.”

He advised against making a property purchase right now, calling it a “huge financial gamble”. He said: “You can buy a house today, but it will be cheaper tomorrow and even cheaper next year.”

He also advised against being fooled by price reductions on listings websites, which have increased in recent weeks. “The asking price is not a statement of value,” he said. “It’s like the handkerchief that a magician uses in a conjuring trick. Just because someone was asking for a pound doesn’t mean it was worth a pound.”

The difficulty for buyers is in knowing what properties are worth due to the changing nature of the market, he added.

Casper Harvard-Walls, of buying agency Black Brick, said some estate agents are deliberately choosing high asking prices knowing they will be negotiated down. Others are opting for lower asking prices to attract more offers, but may expect higher bids.

He recommended that buyers keep a close eye on sale prices in the area they want to buy in. “They can then compare what sold previously to what they’re being offered by the agent to build a picture and tailor their offer,” he said. He said this is a much smarter strategy than just making offers that are 10pc below the asking price.

What’s next for the UK luxury property market?

“With buyers and sellers still digesting what is going on, the UK housing market is a mix of those carrying on and those taking time to reflect – and mortgage status is playing a big part in that.”

That’s the view of Tom Bill, Knight Frank’s Head of Residential Research, commenting on the market disruption and mini budget delivered by Liz Truss’s new government a few short weeks ago.

Increasing mortgage costs and the wider cost-of-living crisis are now beginning to exert significant downward pressures on a rampant housing market that’s soared 23% since the onset of COVID-19 pandemic1.

“We’ve just experienced once-in-a-generation wealth creation through property, especially outside London, and with the cost of living and borrowing increasing a degree of correction is likely to take place – however, it’s also worth noting that there is still a supply problem, especially in London,” says Stephen Moroukian, Head of Product and Proposition for Real Estate Financing at Barclays Private Bank.

Britain’s mortgage burden, or the proportion of income spent on mortgage repayments, is another red-light flashing for the UK property market – with the average mortgaged household now left with “little or no wiggle room in their budgets”, according to UK Finance2. Estate agents are also busily revising their forecasts, with Knight Frank now expecting price falls of 10% over the next two years. While recent data from Zoopla suggests that demand for homes in the UK has fallen by a fifth since the mini budget3.

However, this cooling of the market is not expected to be uniform and across the board. It’s more nuanced than that.

 

London’s golden postcodes to shine once more?

Some of the UK’s high-end property markets could be better positioned to ride out any market uncertainty.

The dynamics of the prime central London market are a case in point. Wealthy buyers there tend to be cash-rich – two-thirds of all transactions in the golden postcodes of prime central London are purchased outright, according to the latest Savills deal-book data4 – while the capital’s high-end apartments and houses have long been a magnet for foreign investors, especially those now looking to use the strong US dollar to find good deals in the UK thanks to the weaker pound.

It’s also been a subdued market in recent times. Average prices in prime central London are still 13% below their 2014 peak5; by comparison, property prices across the rest of the UK have increased by more than 50% over the same period, and now stand at all-time highs6.

Prior to 2014, however, prime central London property unabashedly outperformed – generating returns of 300% in just two decades7. But it’s been something of a slog these last eight years. Everything from Brexit to tax burdens, a wide-spread escape to the country during COVID-19 and then the slow post-pandemic return of foreign buyers. Yet prices are now finally ticking upwards once again on the lure of London and return of city living, with annual growth of 2.3%, according to Savills8, despite a war in Ukraine and the uncertain economic backdrop.

“Obviously, any further recovery may now be put on hold due to the rising cost of debt and what it means for the wider economy – and if there’s a prolonged slowdown in activity – but prime central London property still remains pretty compelling especially if you’re buying in US dollars,” says Lucian Cook, Head of Residential Research at Savills.

Recent data from Knight Frank estimated that the effective discounts for US dollar buyers – or those from countries with currencies pegged to the US dollar, such as Hong Kong and many parts of the Middle East – are as much as 50% when compared to 2014 levels, with the largest discounts to be had on properties in Kensington, Chelsea and Notting Hill5.

Please note: Past performance is no guarantee of future performance.

 

But it’s the more domestic-oriented markets, where most homeowners have mortgages, that could experience significant price reductions in the months ahead.

“If you take Fulham as an example, and I really like the area, in the last financial crisis it was Fulham and areas like that which took the biggest price hits,” says Camilla Dell, Founder of central London buying agency Black Brick.

“It’s a very domestic market, with most people who buy taking on debt. All the properties and streets look broadly the same, with properties priced between £1.5 million and £3 million. But we think it’s these markets that are vulnerable to rising mortgage rates – with people not buying, and people needing to sell and lowering their prices in order to sell.”

 

The crunch from rising rates

During the era of ultra-low interest rates, it often made financial sense for someone who could afford to buy a property to take out a mortgage instead – to not only help with tax planning, but also so that assets were not locked up in property.

But with mortgage rates pushing up to 15-year highs, it may now be worth considering different strategies.

“There are a lot of factors at play right now,” says Cook at Savills. “It’s creating a mixed picture for what’s motivating buyers and sellers, and it’s all affecting relative spending power. That’s why good communication with your lender is absolutely crucial.”

 

Boom time for London rents

London’s high-end rental market has also seen something of a resurgence in the last 12 months – characterised by high demand, low stock and the return of overseas tenants. Average monthly rents are up 15.8% on last year, according to Rightmove9.

“Rents took quite a hit during the pandemic in central London,” says Dell at Black Brick. “But there’s a complete reversal of that trend now. The good news is that if you’re a landlord and don’t have much debt, you’re probably going to see some healthy returns coming through your property.

“And for those people looking at their options if they’re about to sell their house – becoming an accidental landlord and letting out their property could now be a tempting option especially with a weaker sales market.”

 

How likely is a house price crash?

UK house prices have suffered only two significant corrections in the last 40 years10. During the early 1990s recession with interest rates spiralling, house prices fell by more than a third11. While the great financial crisis of 2007-09 then wiped 20% off the value of UK property in just 18 months11.

But despite these shocks, UK house prices have been on something of a remarkable trajectory these last four decades – rising a staggering 1,300%10, six times the rate of inflation12. As history shows, the boom times certainly outweigh the busts (albeit past performance is never a guarantee of future performance).

The UK property market has a history of resilience. During the height of the pandemic, there were dire warnings from the Bank of England that property prices could crash following a near-total shutdown of the market13 – but not even COVID-19 could cool the red-hot market that followed. And as the pandemic has also shown, mortgage lenders now have more tools at their disposal that suggest they could act in similar ways again to curb the severity of any future downturn.

“There are good reasons why the impact on the market may not be as severe as in previous downturns,” adds Cook at Savills. “Lenders have learnt lessons from the pandemic and indeed from the 1990s. Mortgage affordability has also been stress-tested, so banks know homeowners should be able to absorb much of the impact of higher interest rates, even if they need to change their spending patterns.

“The key variable is how far rates go up and how long they stay there. If things stay higher for longer, there’ll be more stress on household finances for a longer period. But we’re still a little way away from that and before we make those judgement calls, we need to see how the mortgage market settles down, and how lenders respond.”

An aerial shot of the cityscape of London at daytime

Race for space is over, says buying agency

Black Brick has been ‘inundated’ with requests for classic two-bed flats around Hyde Park – and buyers aren’t even asking about a garden or balcony…

It was one of the key market trends to emerge during the pandemic, but a top buying agency has declared the “race for space” to be over.

“Now that the memory of long periods of lockdown is fading, the demand for larger homes with gardens, or at the very least flats with terraces or good sized balconies, appears to be petering out,” said Black Brick in an update to clients.

Camilla Dell: “I think that we can confidently say that the race for space is over”

The Mayfair-based firm has seen soaring demand for centrally-located pads, marking quite the turnaround for this type of stock.

“I think that we can confidently say that the race for space is over,” said managing partner Camilla Dell. “Flat searches are back on, when 18 months ago the market for flats was tumbleweed. Now our biggest request if for a classic two bedroom flat in a good building around Hyde Park. We are just inundated.”

First time buyers and students – often generously backed by the bank of mum and dad – are back out in force, along with those after a pied-à-terre, said Dell. “These buyers don’t even ask whether it has a garden or a balcony.”

Other firms have also picked up on a revival in PCL’s apartment market.

In August, London House reported that 78% of all prime London sales in 2022 had involved flats, compared to just 68% in the second half of 2021.

Investment firm London Central Portfolio recently suggested that buyers may look to capitalise on depressed values in the PCL apartment market, noting that while house values are just 1.7% below their 2015 peak, apartments are still 9% below. Urban living has regained its appeal for many prime buyers this year.

The latest price readings from Savills show the impact of returning demand for urban living across the capital.

The prime housing markets of north and east London, left behind during the race for space, were the strongest performers in the last quarter. By contrast, the leafier prime markets of south west London rose by just 0.3% over the last three months, the lowest quarterly price growth seen in this region in two years.

Knight Frank is confident the “escape to the country” trend will continue to support prime regional UK markets for the rest of the year, but is now forecasting a 5% drop-off in values next year.

Further Reading

How the race for space changed the PCL landscape April 2021.

Foreign Buyers Swoop in to Snap up London Homes Going Cheap

By Melissa Lawford

Dollar buyers cash in big savings as pound plunges

A plunge in the pound this year has brought a rush of American buyers hoping to snap up prime London homes with tens of millions in dollar discounts.

Demand from wealthy overseas buyers spiked following Chancellor Kwasi Kwarteng’s “mini-Budget”, which caused the value of the pound to tumble to a record low after it sparked fears of even higher inflation.

Sterling has since recovered to the level seen earlier in September, but it is still down by a fifth compared to its high in May last year.

Thea Carroll, a London buying agent, said: “The dollar buyer situation at the moment is a bit overwhelming. In the last three weeks it has hit a crescendo. [After the mini-Budget], the general consensus was that the opportunity cost of missing the currency exchange was greater than the future economic headwinds.”

Ollie Marshall, of buying agency Prime Purchase, noted a London house that was marketed new with a £55m guide price in 2016. When the pound was at its peak against the dollar in June 2016, just before the Brexit referendum, this was equivalent to $81m.

Since 2016, PCL house prices have fallen. The property has also lost its new build premium. Now, it is on the market for £35m.

When the pound hit a record low against the dollar on the Monday after the mini-Budget, with an exchange rate at 1.035, for an American buyer, this property cost $36m.

This was a saving of around $45m compared to five years ago – a drop of 56pc.

 

The Pounds Plunge Means Dollar Buyers Make Big Savings.

“Within 24 hours, my client was viewing the house, having flown 5,000 miles to see it,” Mr Marshall said.

Even if the sterling price of the property had not changed, a dollar buyer would have saved $24m compared to if they had bought at the 2016 peak.

The pound has since stabilised a little. Last week, the house’s dollar value was $40m.

Roarie Scarisbrick, of Property Vision, a buying agency, said: “Obviously there has been a pick up. Whenever there is a suppressed pound, the phone starts ringing. There are definitely a lot of people thinking this is deal time.”

He added: “In areas like Mayfair, Belgravia and Knightsbridge, the international-type properties that have been sat around for the last two years are now being hoovered up because of the currency rates.”

The British economic outlook might be turbulent, but London still looks favourable to some overseas buyers, Ms Carroll said. “The flight of Russians to Dubai means prices have become extortionate there.”

Camilla Dell, of London buying agency Black Brick, said: “The currency exchange rate has definitely helped. We can say to our clients that their stamp duty bill is effectively paid, compared to if they were buying this time last year.”

International buyer numbers plunged in the wake of the pandemic. At the start of 2020, overseas buyers accounted for 49pc of all sales in prime central London, according to Hamptons estate agents.

That share hit a low of 35pc in 2021, but then bounced back this year. In the first six months of 2022, the international buyer share in PCL was 48pc.

“Last year, 80pc of our clients were domestic. They were looking for family homes in the suburbs. Now that has been flipped on its head and at least half of our buyers are internationals looking in central London,” Ms Dell said.

“It’s Americans, buyers from the Middle-East, and from Africa – people who have made their money in oil and gas, in industries pegged to the US dollar, which are benefiting from the current crisis,” she added.

Yet the jet-set is not necessarily rushing to sign transaction contracts – they are circling.

“People are stockpiling sterling, getting ready to deploy when they have more clarity on the market,” Mr Scarisbrick said.

Ms Carroll said: “I am telling my clients to change their money now and acquire when the market is right.”

She noted buyers with budgets of £14.8m and £7m who exchanged their dollars into sterling.

Wealthy internationals are less dependent on the mortgage market, meaning buyer demand will be a little more shielded from the blow of rising interest rates.

“Prime central London markets tend to be underleveraged and much of the borrowing tends to be more related to tax and structuring,” Mr Marshall said.

But Mr Scarisbrick cautioned that the sector would not be immune to the turmoil of the past week and expectations for big rises in rates.

“They have a great win on the currency, but these people still need to borrow, it is not a pristine moment,” Mr Scarisbrick said.

The British Pound Is Sinking—and Its Luxury Market Is Rocking as a Result

By Mark Ellwood

Want to save 20 percent on a Newman Daytona, a bespoke suit or a suite at Gleneagles? Go ahead.

It was the second Paul Newman Daytona that David Silver had sold for £275,000 in less than two weeks that proved decisive. Silver owns the Vintage Watch Company, a Rolex specialist dealer that sits in tony Burlington Arcade, that two century-old strip of luxury boutiques in London’s Mayfair. Despite his British base, many of Silver’s customers are Americans—including both the Newman collectors. “They were clients who’d always hovered around wanting that watch, and never quite done it,” he says, of the much-prized model that he’d usually sell once every six months or so, perhaps, “But they saw they could save 15 percent just because of the dollar exchange rate right now, and that made them feel good about finally buying one.”

Those two canny watch collectors aren’t alone. Britain’s sterling has been wobbly on global markets since the unexpected result of the Brexit vote spooked currency watchers and drove it down by 20 percent or so against the dollar six years ago. But political turmoil in the UK, marked by the arrival earlier this month of its fourth prime minister since 2016, has caused even greater shocks. Initially, it dinged sterling down to $1.15 or so against the dollar, seemingly bottoming out there. Yet a risky fiscal gamble by new chancellor (and former financial analyst) Kwasi Kwarteng on Friday managed to worsen rates to historic lows which reached almost parity ($1.03 to £1) in early trading yesterday.  It was the lowest sterling’s slumped against the dollar since decimalization in 1972.

British luxury firms are seeing surges of business from dollar-touting buyers in response. “Our message to brands is that whatever you’re putting into your marketing, divert it to the US,” says Helen Brocklebank who runs British luxury trade association Walpole, “There’s already a strong customer base there, and a great deal of existing love, so you’re pushing on an open door. This is a chance to get that door pinned back on its hook, and stay wide open.”

Watch dealer Silver agrees; he estimates his business is up 30 percent this month versus September 2021.  He notes the coincidence of the Queen’s death, which had brought tourists to London who could then spend their powerful dollars in situ, and stresses that the UK’s role in luxury has always leaned more heavily on production than consumption. “The UK as a luxury marketplace is poor in comparison to the rest of the world—it always has been,” Silver says, noting that boutiques in Bond Street and around are mostly buoyed by tourists; Walpole’s data says that the luxury sector was worth £48bn to the UK economy when last surveyed, in 2019. Certainly, 75 percent of David Silver’s business comes from overseas, though he notes that some of his dollar-spending buyers don’t live in America: Some might be UK-based and paid by a US corporation, while others are from Asia, where currencies follow the dollar closely. Those customers are vacuuming up rare timepieces with gusto, he notes, since they’re well aware this is likely a window to buy. “It’s a temporary thing, because if this carries on, in two or three months, we’ll have to put our prices up and the benefits will be eroded,” says Silver, “But right now, they’re taking advantage of it while it’s there.”

Other luxury sectors have seen similar sudden upticks as he has in watches—the world’s secondary market for wine, for example, is traded in pound sterling, making snapping up a magnum or two right now a relative steal, notes Liquid Icons expert Lewis Chester. It’s timely that British sparkling producer Gusbourne Estate just released Fifty-One Degrees North, which costs £195 per bottle, he adds, which prices it alongside the most prestigious cuvée champagnes—or it did, until the recent tumble. “Older collectible malt whiskies are clearly in a boom,” he adds, “Like fine wine, rare whisky is seen as an inflationary hedge as a real asset, and also a currency hedge with price movements tending to be inversely correlated with the strength or weakness of the local currency.”

Edgar Harden runs the Old Spirits Company, where he hunts down such elusive one-offs across the liquor spectrum for a raft of global collectors. He’d been chatting with an LA-based buyer since June about a 4-liter bottle of Suntory from the 1970s, priced at £1,950. “The change in the exchange rate pushed them over the edge about two weeks ago,” he tells Robb Report, noting that his business this quarter is around one third higher than the same period next year, and a third of those buyers are new customers. Orders have increased since May, Harden continues, but August was the banner month—at least until now, with September likely to outstrip it. “The US has always been the most important market for my goods, but now it’s completely dominant because of the exchange rate,” he says.

The same is true on Savile Row, where tailor Simon Cundey of Henry Poole reports that many American customers have called him up in recent weeks and pre-paid for clothing that they’ll order when he arrives on a tour to New York, DC, Chicago and Boston starting next month. It’s been such a success, in fact, that Cundey says the firm is planning several Instagram activations this week to highlight the sterling-related advantage. “Anything around $1.40 to the pound has always been great for us, but it was at about $1.15 to the pound that people started calling up to pre-pay, but $1.10 or lower is a golden ticket,” he says, adding that it’s lured back many customers he hasn’t seen for 10 years or more. Buyers are increasing the volume of orders: four suits rather than one or two, or perhaps a sport coat and trousers alongside a suit.  A custom customer has typically been trading up, too, enjoying bespoke for the first time—and Cundey suspects they’ll stick with the higher priced option even as currencies return to more normal levels.

Nearby Lock & Co, the country’s foremost hattery, reports a similar surge in business, per MD Ben Dalrymple, who says that one sale this summer to an American was especially touching. It was a Californian visitor, whose father had owned a Lock & Co Coke hat (or bowler in common parlance).  “He had always wanted to own one of his own, for sentimental reasons, but he could never quite justify spending the money on something he thought he would not wear that often,” Dalrymple said, “But when he visited London this summer, he made a special visit to the shop and made the purchase, as it was proportionately much better value.”

Real estate isn’t immune to the impact, either, according to Black Brick partner Caspar Harvard-Walls, who specializes in premium central London (PCL) real estate. He says that 2020 and 2021 were dominated by domestic buyers, as a result of the pandemic which meant PCL, usually bought by foreign buyers, was soft. Q1 2022 saw the trend reverse in PCL: there was a 7.7 percent increase in the number of transactions above £5m in that period versus the same a year earlier.

After the usual summertime lull, Harvard-Walls continues, September has been unusually busy. “People buying second homes don’t decide to do it yesterday, but clients who were already thinking about buying are fast forwarding what they were doing,” he says. “I had a client three weeks ago, who purchased from us at the beginning of the pandemic and has just done his flat up, say to me ‘If you’re a dollar-based buyer and not going to be buying now, the question is when?’” Harvard-Walls also says he’s seen dollar-based UHNWers buy up sterling now that they don’t intend to disburse immediately. “It’s going to have a long-term impact on London. They might sit on their pounds for two years because they don’t have to do anything tomorrow,” he adds, “Property takes a long time to transact. So we won’t know the real result in this sector of what we’re talking about now until at least Christmas or the New Year.”

Kenneth Bening, who owns British caviar brand Exmoor, points to the increase in appeal for investment in his company from deep-pocketed US-based backers “We’ve got interest from potential suitors from the US, I’ll put it that way,” he tells Robb Report, cryptically. And Leo Turner from Heraldic crest specialist and luxury stationer Downey says his US-focused business is up 10-15 percent, whether by mail or Americans visiting in person. Many of them, it seems, may have taken a trip on a whim—or so Conor O’Leary, MD of Scottish hospitality icon Gleneagles, would predict.

He says that business at his original property, the golf-centric resort where Americans are the bulk of his clientele, will usually taper off by Labor Day or so (The new city center Townhouse is primed for more year-round business in central Edinburgh). Not so this year. “They’re still coming, well into September and October, and to Christmas, which is not typical at all,” he says, “And before, the typical American business would come to us six months out at least. Now, we’re seeing a really short lead time, where they make a quick decision to come over to the UK—people coming in October are booking as we speak, so it’s an ad hoc decision to jump on a plane to come on holiday. That’s what gives us the clue it’s about currency, as well as the volume.” British luxury chain Firmdale, known for properties like Ham Yard Hotel in Piccadilly, reports a similar pattern. “There’s very little rate resistance,” says director of marketing Craig Markham of dollar-based bookings, “The US represents the largest leisure and corporate sector for us, and bookings from the US are showing no signs of slowing down.”

They should continue at breakneck rates, too, even if the currency stabilizes as expected—most of these luxury-sector insiders said they presume sterling will climb back to $1.20 or $1.25. Buried in chancellor Kwarteng’s announcements was a stealth U-turn on a policy enacted by his predecessor Rishi Sunak in early 2021. Sunak abolished the ability for tourists to reclaim their VAT, or sales tax, claiming it would claw back billions for the British taxpayer; Kwarteng’s decision to reinstate this perk, likely from early 2024, has received  accolades from the luxury industry in the UK. It responded with horror at Sunak’s decision, and has spent the months since campaigning for its reinstatement, as Walpole’s Helen Brocklebank explains.

Walpole partnered with Bain on an extensive tourism report in 2019, which showed that UHNW tourism to the country was worth £30bn. The value isn’t simply in shopping: for every £1 a high-end visitor spends on goods, £8 is generated for the rest of the economy via hotel suites, high-end dinners and the like. International visitors to Europe typically visit 2.6 capitals, and London or Edinburgh had always been mainstays on those visits. The abolition of VAT-free shopping drove them more to Madrid or Milan, where they still enjoyed an EU-mandated tax-free spree.  “It’s a powerful ecosystem,” Brocklebank says, “Luxury could see how brilliantly we could contribute to post-pandemic recovery as a sector, yet the removal of that incentive was a huge impediment. One of our smaller but iconic whisky brands was regularly missing out on £100,000 per week in lost sales because of it.”

Henry Poole’s Simon Cundey calls the decision to allow visitors to Britain this same perk again “the icing on the cake.” He notes that he had several American bespoke clients who were caught off-guard when Sunak’s law change came into effect between fitting and completion. “They said I won’t take my garment with me now but ship it to the US. If they were going to pay tax on it, they thought it should be paid in their own country,” he recalls, “They were quite feisty about it.”

Of course, that rule change doesn’t come into effect for at least a year, but the appeal of buying in London, whether shipping home or otherwise, is undimmed now. In fact, Rolex deal David Silver says he’s even noticed a change in how his collectors approach a transaction, clearly driven by the value for money of spending dollars in the UK. “Everyone can tell the watch is going to be sold quite quickly right now, so none of the bargaining and negotiating takes place that you’d normally see. They know they’ve got enough advantage already.”