Wealthy buyers in London are increasingly shunning luxury homes for cut-price dilapidated properties in the hopes of making a tidy profit.
Buying agency Black Brick, which identified the trend, said buyers are looking to find the best possible deal on their London home, enabling them to achieve better value for money and the potential of long-term capital growth.
The agency said wealthy individuals are currently reluctant to pay £4,000 to £5,000 per sq ft on a new luxurious property in prime central London. Instead, they are purchasing dilapidated properties – apartments and houses – which can be renovated, thereby minimising risk and increasing their value.
“We are seeing an increase in properties coming onto the market which are being sold because a family member has passed away or that have been in a family for 20-30 years and handed down to the next generation,” said Camilla Dell, managing partner at Black Brick.
“Although it is a buyers’ market at present, these properties have still gone up in value considerably since they were purchased many years ago and therefore sellers are willing to take a deal or reduced rate on their home.”
Black Brick recently completed a deal for a British client who purchased a property in Kensington for their growing family, which is in need of renovation.
The house was sold with planning permission to be almost doubled in size through a basement extension, developing the side and the rear of the ground floor level as well as a loft conversion.
Black Brick secured a 19% discount of £1.1 million for the property, with contracts exchanged at £4.85 million.
“There are some excellent deals to be had at the moment, particularly from vendors who are highly motivated to sell,” said Dell. “That’s why as buying agents, we always find out who the seller is, and what their reason for selling is. This enables us to negotiate far better discounts for our clients.”
She added that the agency is also seeing some large discounts being applied to new build properties which are due to complete in the next two or three months and the seller wants to flip it before completion.
“We are advising buyers that if the right deal can be sourced, now is a great time to be buying, but realistically given the costs of acquisition, investors need to be looking at holding onto to the property for a minimum of five to 10 years before they see significant growth in its capital value,” Dell said.
DealMakerz thinks it is a wise move to buy dilapidated properties in need of upgrading, as it’s possible to find some great deals. Buyers increasingly want to put their own stamp on their home, and renovating is one of the best ways of doing this.