City A.M. Archives - Black Brick

DEBATE: In light of the results of the latest RICS survey, is the London housing bubble slowly deflating?

In light of the results of the latest RICS survey, is the London housing bubble slowly deflating?

By City AM Friday 15 September 2017 4:05am

Camilla Dell and Bruce Dear

Camilla Dell, managing partner at Black Brick, says YES.

The difficulty with surveys, whether they are from RICS, Nationwide, Halifax or others, is that each one is based on different sets of data and as such they can conflict with each other.

The London property market has been significantly affected by Brexit and the 2014 changes in stamp duty, particularly for higher value properties in prime central London. Knight Frank and Savills recently reported that prices have bottomed out, following reductions of up to 15 per cent across prime central London.

The biggest impact on the prime central London property market has been that many who own property don’t have to sell, and therefore we have see a reduction in volume and supply. This has supported prices in London.

However, the sign of a healthy market is the volume of transactions as opposed to the values, and this has certainly reduced in recent years. Uncertainty is expected to continue as we journey through Brexit and stamp duty land tax remains unreformed.

Bruce Dear, head of London real estate at Eversheds Sutherland, says NO.

Normal bubbles deflate, but the London housing market is not a normal bubble. It is an iceberg made of ultra-low interest rates, global capital inflows, and constrained supply.

True, there have been adverse signs: Foxton’s profits falling and deals for £1m+ homes stalling. But this “priceberg” will not shrink significantly without a substantial economic shock or material hike in interest rates.

Even with Brexit, neither looks immediately likely. Interest rates are at a 320-year low, making ultra-cheap mortgages.

Help-to-buy buoys the capital’s sub-£600,000 market.

Weak sterling, and some modest price falls, still give enthusiastic overseas buyers up to 25 per cent discounts on London homes.

Underlying all is a structural shortfall: every year we build about 20,000 fewer homes than London needs. This market is not deflating. It is going into a long term zombie high-price freeze.

London’s housing market is becoming Tokyo-on-Thames.

Focus On Clapham: Commons, good schools and cosy gastropubs means families stay put in SW4

By Melissa York

Clapham is not a straightforward neighbourhood. Unlike Dalston, it isn’t synonymous with hipsters; it isn’t known for its international wealth like Knightsbridge; and it isn’t the naturalised home of the English gent like Hampstead. It’s best described as a south London suburb that has welcomed wave upon wave of migration from other boroughs.

The Georgian villas surrounding its famous Common welcome the overspill from Battersea and Chelsea, while its terraces are overflowing with young families and fresh-faced 20-somethings, often renting their home with many others.

“It is estimated that a quarter of Clapham’s buyers come from one of three boroughs: Kensington and Chelsea, Hammersmith and Fulham, and the City of Westminster,” says Lauren Atkins, MD of The Malins Group, which is currently selling 24 apartments it’s built in an old metalworks in the area, “and there is a growing trend, for people searching between Chelsea and Marylebone, to end up buying in Clapham Old Town.”

According to Land Registry data, the average house price made its biggest leap in 2014, when it rose from £714,555 to £744,616 in a year. The average property currently sits around £760,600, with a year-on-year increase of 0.6 per cent, sitting slightly below the London average of 0.8 per cent.

This slow down is being seen in areas considered part of Prime Central London in particular, and though Clapham has not traditionally been seen as a paid-up member of that exclusive club, the Old Town, Abbeville Village and the streets running off Northcote Road (known by some as Nappy Valley) are certainly resembling them more and more.
“Having operated in Clapham for the past 10 years, I’ve seen the area change from being a new Londoner’s temporary ‘stop point’ to an established neighbourhood in its own right,” says David Law, sales manager at Foxtons’ Battersea office.

“Ten years ago, Clapham’s demographic comprised mainly of first-jobbers in their early 20s, buying or renting their first property with the help of mum and dad, and happily frequenting the likes of the local O’Neill’s on Clapham High Street.” Now, O’Neill’s is a Byron, its neighbour is Trinity, a Michelin-starred restaurant, and it’s surrounded by gastropubs with leafy gardens like The Stonhouse, The Jam Tree and The Calf.

This newfound gentility has led to more people climbing the property ladder within the area, Law adds, “so there’s a sense of growing up locally.” However David Fell, analyst at Hamptons International, says people are also staying put because of tough conditions in the prime market generally.

Families are also drawn to the area for good private and state schools and the active outdoor lifestyle afforded by the Commons. “We have bought there for many British and several French families, most of whom worked in banking or law and were upsizing from areas like Chelsea and Pimlico. The jump in house and garden sizes were really difficult to resist as they got so much more space and value for their money,” says Jo Eccles, MD at buying agency Sourcing Property.

Another buying agent, Black Brick, says Clapham is a “very diverse area”, from maisonettes and flats for around £600,000 to period family houses that command from £4m around the edge of the Common. “Indeed, an original 9,000sqft Georgian villa is currently available for £12m,” says partner Caspar Harvard-Walls.

Area highlights
Grab a well-earned moment to yourself in the triangular oasis of Clapham Common. There are cafes, a number of sports facilities, two playgrounds, a skate park and its bandstand is the largest in London. It’s also surrounded by a number of excellent gastropubs and restaurants. Among the latter is Dairy, a local favourite serving up British food from a robata grill with homemade bread in a trendy, upcycled setting. Afterwards, head to Venn Street Records for cocktails, live music and and sourdough pizza. For the perfect produce for your famous dinner parties, Venn Street Market offers fresh groceries, meat and seafood from independent suppliers from 10am to 4pm every Saturday. For gastropubs, you’re absolutely spoiled for choice; from the quiet cool of The Abbeville, to the colourful beer garden of The Falcon, to the much-loved Sunday roasts at The Railway Tavern, there’s one for every occasion.
Area guide

House prices Source: Zoopla
DETACHED
£1.136m
SEMI
£1.324m
TERRACED
£1.280m
FLATS
£584,563

Transport Source: TfL
Time to King’s Cross: 19 mins
Time to Liverpool Street: 22 mins
Nearest train station: Clapham Common
Best roads Source: Hamptons International
Most Expensive: Liston Road: £2,630,000
Best Value: Paradise Road: £247,750

Opinion: Important advice for the Bank of Mum and Dad – do your research and think about what your child wants, too

By Melissa York, City A.M.,

Rising house prices, together with stagnated salary inflation, have meant that more first time buyers are struggling to afford to get onto the property ladder, particularly in London where Hometrack data shows current property values are 85% higher than they were eight years ago. As a result, the “Bank of Mum & Dad” has become much more prevalent in helping their offspring onto the ladder, with the average hand out per child in London amounting to £24,800. So far this year, 20% of our clients have been buying for their children and we predict that this will increase by 10-15% over the next two years.

For those who plan on helping children financially, the first thing to work out is affordability. Some parents will have savings but others will need to borrow to help their children out. There are several ways to do this, for example, by remortgaging, or apply for a loan. Whatever option you decide, it’s a good idea to seek independent financial advice first.

For parents who want their children to repay the loan at some point in the future, drawing up a loan document is straightforward and it should set out the repayment terms, and any interest payable. It needs to be signed by both parties.

A common preference for parents buying for children is two-bedroom homes, and within close proximity to good transport links and other amenities. These offer a good future investment due to their broad appeal either for buy to let, first time buyer or professional couples. Areas such as Ladywell are proving particularly popular for first time buyers who are looking for value for money and within easy reach of Central London; we recently bought a two-bedroom property there for a client for £370,000. While there is a demand on new builds from first time buyers, we are seeing more of an interest in second hand properties which are often less expensive due to the premiums attached to new builds.

With so many ways to help your child get onto the property ladder, it’s important to put the time in to properly research the various options that are available. I would strongly advise carefully reviewing all potential risks and benefits and speak to your son or daughter about the option that is best suited to their needs as well as your own.
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Focus on Marylebone: No longer a modest pocket of London, W1U is now as expensive as Mayfair

It’s hard not to think about the Monopoly board when considering what the most salubrious areas are in London. Park Lane and Mayfair may be the highest prized, but in reality, they’re being outstripped by a train station.
Over the past 12 months, Marylebone has been the top performing area in Prime Central London, according to data by Knight Frank. From March 2016 to March 2017, house prices have risen by 0.7 per cent, which may not sound like much until you factor in that prices have dropped by 6.4 per cent on average across PCL.

“During a more challenging market, we found that buyers look outside their traditional locations,” says Christian Lock-Necrews, partner and office head for Knight Frank’s local branch. “Many found Marylebone in that period to be an area of London that represented best in class properties in a central London location, yet it allowed them to get more for their money than Mayfair or Knightsbridge.”

Indeed, Knight Frank’s report found that UK buyers were generally downsizing from Hampstead and Highgate or relocating from Mayfair, with some agents now saying it’s more popular than the toast of the Monopoly board.

“Marylebone used to be the ‘forgotten’ postcode and property prices were typically 30 per cent lower than Mayfair,” says Camilla Dell, managing partner at buying agency Black Brick. “There is now very little difference in pricing between the two.”

Data from David Fell, research analyst at Hamptons International, puts half of all sales at over £1m, with the most expensive property ever sold going for £12.75m on Blandford Street in 2014, which is surprising for an area not known for large houses, but its converted apartments in Georgian mansion blocks and Victorian terraces.

“Unlike most of its neighbours, Marylebone was never built for the super-rich,” adds Fell. “Terraces and squares were colonised by the comfortably well off. Homes were built one bay window wide with porchless entrances and few stucco details. Prices remain reflective of this social divide to this day with Oxford Street presiding over one of the largest price gaps anywhere in the capital.”

Historically, new builds have been relatively thin on the ground – there was a boom in the late 90s when the sidings of the railway station were converted into 380 flats – but a recent slew of high end homes have undoubtedly changed the character of the area. Notable schemes include Galliard’s The Chilterns, Ronson Capital Partners’ Chiltern Place, The W1 on the high street and Park Crescent overlooking Regent’s Park.
Portland Place has been singled out by Simon Deen, director of Aston Chase, as the most desirable street, saying it’s “fast becoming the Park Avenue of London.”

The retail offering in Marylebone is another big draw to the area for domestic buyers. Landowners Howard de Walden Estate and Portman Estate have been hugely influential in this area, curating a village atmosphere and a retail mix that’s 71 per cent independent. There are an impressive 83 restaurants in the area, including celeb-haunt Chiltern Firehouse, only pipped to the post by estate agents, of which there are 84.

The area’s increasing desirability (not to mention Crossrail, which will fling frequent flyers to Heathrow in under 30 minutes) has attracted a lot of new overseas buyers, too, largely from the Middle East, India and South Asia, according to David Adams, director of Humberts, who has been working in the area for over 30 years.
He adds that international investment has been fuelled by George Osborne as much as anything else. “The high stamp duty on property discourages British homeowners from moving locally, but it is more affordable for international investors buying with US-backed currency and those from low-tax regimes such as Dubai.”
Foxtons says its values the average one bed flat in Marylebone at £800,000, while family houses are commanding prices of over £2.5m.

Area highlights
Famous things first: the Chiltern Firehouse has overtaken The Ivy in recent years as the go-to place for celebrities to be papped. Yet, it’s not the only restaurant that’s been creating a stir; L’Autre Pied, Trishna and Orrery all have Michelin stars and Artesian has claimed the title of world’s best bar twice. Selfridges, while hardly a hidden treasure, is still an impressive local department store to call your own. It’s the second largest in the UK after Harrods in Knightsbridge. For a touch of culture, Regent’s Park Open Air Theatre is nearby and has become a fixture of summer in the city, fitting 1,200 people for each performance. Wigmore Hall is also on your doorstep, an intimate Victorian concert hall hosting chamber music and lunchtime recitals. Visit one of Europe’s finest art galleries in Hertford House. Admission to the Wallace Collection is free and is also home to a world class armoury.

Area guide

House prices Source: Zoopla
DETACHED
£1.196m
SEMI
£1.413m
TERRACED
£2.221m
FLATS
£1.383m

Transport Source: TfL
Time to King’s Cross: 12 mins
Time to Liverpool Street: 21 mins
Nearest train station: Marylebone

Best roads Source: Hamptons International
Most Expensive: Wyndham Place: £5.325m
Best Value: Frampton Street: £408,000

Focus on Clerkenwell: The City’s cooler cousin is celebrating its Design Week and anticipating price rises after Crossrail

By Melissa York

From 23-25 May, Clerkenwell Design Week will be upon us again. The annual event, with its artisan furniture makers and 3D-printing architects, will be the eighth celebration of the area’s transformation from post-industrial, City backwater to the home of more creative businesses and architects per square mile than anywhere else in the world.

And it hasn’t just found favour with businesses, but residents too, as increasing numbers of Londoners look to the design district as a desirable place to live. The local branch of Dexters estate agents says Clerkenwell “is the high-end face of edgy east London, with its eclectic mix of loft-style apartments, period homes and modern blocks within a commercial setting.”

The only thing to say about Clerkenwell’s housing stock is that it’s incredibly diverse. Foxtons notes that only 12 per cent of the property portfolio is freehold, which accounts for the popularity – and higher asking prices – for apartments and terraces. Property prices vary enormously, depending on the particular dwelling. This variation is due to the absence of a single masterplan to develop the area, as it was owned by over 100 different estates.

“Narrow streets lined with old industrial buildings saw Clerkenwell give birth to loft living in London during the early 90s,” says David Fell, research analyst at Hamptons International, who marks Manhattan Loft Corporation’s first project in Summer Street as a turning point. “Local developers were quick to follow, with warehouses vacated by artisans converted into flats for the legions of new City workers created by the 1980s Big Bang.”

The number of conversion schemes has meant two thirds of sales sold last year were new homes. While these conversions are still wildly popular, they are not all created equal. Jamie Burnhope, a buying consultant at Black Brick, says, “In the 80s and 90s, developers did not spend a lot of money maintaining the integrity of the buildings, and as a result, many lost their original character. There are only a few buildings that deliver the type of flat associated with the area, including 190 St John Street, Paramount Building, Ziggurat Building, 1-10 Summers Street and Warner House.”

But it’s not just the architecture that draws people to live in Clerkenwell; it’s the social life. Restaurants, gastropubs, boutiques and theatres have come moved in, and 80 per cent of its retailers are independents. “The main difference between what it used to be five years ago and now is how cosmopolitan and upbeat the area has become,” says Foxtons’ Josh Walsh. “It used to be seen almost as an extension of the City, buzzing during weekdays, but quiet at weekends.”

The area’s newfound vibrancy means it’s seen year-on-year house price growth of 7.7 per cent, according to Hamptons International data, which also recorded 102 sales of over £1m in 2016. Your average two bedroom flat will cost in the region of £950,000, around £2,500pcm to rent, proving a solid buy-to-let investment, according to Jo Eccles, managing director at Sourcing Property.

“Gross rental yields are much higher than other parts of London; we’re achieving on average 3.4 per cent for the landlords whose properties we manage and the investment properties that we bought have all let extremely quickly, typically to finance, tech and media tenants.”

Work is also nearly complete at Farringdon for the new Crossrail station, which is expected to arrive in 2018.
“From here you can walk into the City but creating that link between Farringdon and Canary Wharf is going to provide a huge change,” says Chris Rowe, sales manager at KFH Clerkenwell. “No one’s buying now knowing that they’ll then be able to get to work in a year’s time. People want to move in when the transport links are there, so I don’t think we’ll really see that jump [in prices] until it’s here. But they are definitely going to jump.”
But until that time comes, Clerkenwell will have to settle for being the City’s cooler, creative cousin.

Area highlights
There are more great local restaurants in Clerkenwell than you can wave a greasy spoon at. The Hawksmoor team are behind Foxlow, a modern European restaurant that loves its meat, while fancy French can be had at the Bleeding Heart, and its neighbouring pub and bistro. For a cracking brunch, head to The Modern Pantry, serving up cooked combinations that are a mile away from your standard eggs benedict, or go bottomless at the Bourne & Hollingsworth Building at the weekend. Smithfield, London’s oldest meat market, is as popular as ever, while Exmouth Market, on a semi-pedestrianised street, is its trendier neighbour. See some of the best dance companies in the world perform at Sadler’s Wells, the sixth theatre on the site since 1683, while the Charles Dickens Museum, near the border with Holborn, is also worth a look-in for original manuscripts and personal artefacts.

Area guide
House prices Source: Zoopla
DETACHED
£279,082
SEMI
£366,196
TERRACED
£934,883
FLATS
£803,010
Transport Source: TfL
Time to King’s Cross 3 mins
Time to Liverpool Street 5 mins
Nearest train station Farringdon

Focus On Bermondsey: River views, great food, warehouse conversions – what more could you want in SE1?

For centuries condemned as a slum, this centrally located area in Zone One has blossomed in the last ten years into one of the most artistic – not to mention delicious – parts of London. It reached its property peak this year, recording its highest ever sale with a property in Shad Thames – land first owned by the Knights Templar – selling for £4.7m.

Like much of the East End, industry that was deemed too noisy or dirty was sent to the periphery of the City and Bermondsey became known for its factories and textile warehouses. At one time, it was responsible for producing a third of all the leather in England but, by the mid-19th century, it was a notorious slum, particularly the area around St Saviour’s Wharf. Known in the Victorian era as Jacob’s Island, it was immortalised as the place where criminal Bill Sykes met a sticky end in Charles Dickens’ Oliver Twist.

The area known as Butler’s Wharf was heavily bombed during World War II and it wasn’t until the 1980s that it began to be redeveloped. It was a great success, and now Shad Thames, as it’s known, is an upmarket shopping district with many riverside restaurants and smart apartments lining its banks.

One Tower Bridge, an enormous Berkeley Homes development sitting in its own park where a penthouse is currently on sale for over £3.6m, is the pinnacle of this success and it’s set to be the site of a new theatre curated by former National Theatre artistic director Nicholas Hytner.

The opening of Bermondsey Underground station on the Jubilee Line only solidified the area’s distinct character from that of nearby Borough and Bermondsey Street is now a foodie fantasia. According to Hamptons International data, there are a whopping 66 restaurants and 63 cafes to choose from. The same data shows that year on year price growth currently sits at 11 per cent and 23 per cent of the market share is made up of first time buyers.

“Bermondsey has a high concentration of local authority buildings, in which privately owned apartments can be bought for under £650 per square foot,” says Jamie Burnhope of property buying consultancy Black Brick. “With the regeneration at Elephant and Castle and the continual growth of London Bridge, Borough, and Shad Thames, Bermondsey represents a very good-value option for any first time buyer wanting to be in a central location.”

Bermondsey’s obvious potential meant that many of its historic warehouses have been bought up by developers and have been turned into luxury flats.

Recent examples include the Old Grange Tannery, which has been renamed Corio by Linden Homes, 53 apartments at The Taper Building by Shape Real Estate, Crest Nicholson has two in close proximity – Snowsfield Yard and Brandon House – and duplex apartments are being sold from £1.6m at The Music Box by Taylor Wimpey.

Whether the postcode is SE1 or SE16 makes a big difference, too. Will Wisbey, from Hamptons International’s London Bridge office says, “You go to SE1 and you’re going to be paying up to £1800psqft, but in South Bermondsey, for a larger flat, you’re talking about £700-800psqft. SE16 is definitely the best place to go if you’re an investor.”

It’s this mix of architecture that makes Bermondsey so appealing to a wide range of buyers and will ensure it stays attractive in the future, according to Foxtons’ London Bridge sales manager Chris Venter.

“Bermondsey’s architectural styles point to key periods in the city’s history. From pre-war homes and ex-local authority houses to upmarket period flat conversions, warehouse conversions and recent developments, it is a melting pot of real estate traditions.”

View the online article here

Top tips for choosing the right tenant for your buy-to-let investment

So you’ve spent months searching for the perfect property investment and transforming it into a modern, comfortable home. Now it’s time to hand over the keys to a perfect stranger and hope they pay up. Or perhaps you’re upsizing and you’re hoping Mr Rando won’t destroy your beloved first home. But how can you be sure, really? If you’re going it alone, or you want to make sure your letting agent is up to par, here are some tips from the professionals who find reliable tenants every day.

Target the right tenant

“Tailor the look and feel of your property, and set the rent to suit your target market. If your property offers lots of space and is close to reputable schools or nurseries it is likely to appeal to a family, possibly with young children, and they will enjoy the freedom to make the house a home. What about a young professional? Likely to have a little bit more money to spend, they’ll be after a modern property that’s well placed for transport links, bars, cafés and entertainment. Regardless of the tenant profile, keep the décor simple – don’t show too much of your personal taste. You may like bold patterns, but your dream tenant might not – you don’t want to put them off.”

– Nick Vincent, Lettings Director at Proctors estate agents

Carry out some basic checks

“To find high quality tenants, we take references from their previous landlords to show that the tenants’ paid rent on time and they didn’t cause any damages. We also contact their HR department to confirm employment and then also ask for supporting documents from the tenant in the form of a payslip or signed contract. Finally, we ask them to provide us with a copy of their passport by bringing it into the office in order to make sure they pass Right to Rent checks.”

– Jake Willis, co-founder of London Shared

Be aware of Right to Rent

“Following the implementation of the Right to Rent scheme across the UK, a landlord or agent also needs to ensure the tenant has the right to reside in the UK. The requirement is ensuring that an original passport/VISA/residence permit is seen in the present of the tenant and known occupants. If an individual is a UK citizen, EU or EEA national, then they will automatically have the right to reside within the UK. These documents are only required to be valid at the commencement of the tenancy. Should either expire during the tenancy, then the landlord/agent should follow it up.”

– Neil Short, head of city residential at JLL

Use your gut feeling

“A tenant’s behaviour during viewings can be really telling. If they turn up late, they’re rude, and they point out every tiny part of the property which isn’t perfect, it may be a good indicator that they’re going to be quite a demanding tenant. Ask the letting agent how the tenant came across. Even if they’re offering the most money, you may decide that their attitude simply isn’t worth the extra £50 per week or so.”

– Jo Eccles, managing director at Sourcing Property

“Most tenancies that do go wrong, do so before the contract is even signed. By this, I mean that either the estate agent or the client have neglected to act on signals that a prospective tenant may not be up to par. The process of renting in London is relatively straightforward. It can be a red flag if a tenant makes this process complicated.”

– Tim Hassell, managing director at Draker

Meet your tenant face-to-face

“Try to actually meet your prospective tenants; as much as an agent might paint a very good picture of anyone who wants to rent your property, I’ve always felt that it’s good to put a face to a name. In my past experience, the tenancies where this has happened have always gone smoothly as people feel like they know who they are dealing with.”

– Anton Neil, senior lettings manager at Haus Properties

Make sure they can afford it

“As a guide, their annual household income should be at least 30 times the monthly rent if they are to comfortably pay the rent each month. Other factors to consider are the length of their current employment – this should be for at least the length of the tenancy so they can demonstrate a continued, fixed salary.”

– Chris Boswell, east London lettings director at Johns & Co

“Affordability is key; a stable tenant needs to be living comfortably, not over-stretched so we make sure that household income is at least double the rent.”

– Sophie Lau, head of sales & marketing at Fizzy Living

“Make sure that you see the reference checks that the agent you appoint carries out. It might seem like an obvious one, but a lot of agents do not show these reports to their landlords and they contain a lot of important information, such as credit score, credit history, as well as the questions asked to the previous landlord and the employers.”

– Anton Neil, senior lettings manager at Haus Properties

Especially if they’re from overseas or self-employed

“A frequent obstacle in the prime central London lettings market is that many prospective tenants relocate from overseas, which means they do not have any history in the UK. The best place to start is to check whether they are relocating with a company, who will act as guarantor, or whether they are moving on their own. If the tenant is self-employed and does not have a UK accountant who can verify and quantify their annual earnings, we would advise landlords to ask for payment in advance of the tenancy.”

– Tracey Cumming, head of lettings at Jackson-Stops & Staff

Be flexible for the perfect tenant

“Many landlords make the mistake of playing ‘hard ball’ with the rental price; their property is often not in optimum condition, and they can forget that the incoming tenant is paying rent to stay in the property. It is paramount to remember that a tenancy is a ‘two way street’ and a mutual respect between a landlord (and their agent) and tenant is crucial to ensure both parties work together to maintain the property.”

– Sophie Amasha, property manager at Black Brick

Focus on Clerkenwell: Prices soar on the City’s edge.

While the Square Mile is London’s historical home of trade and finance, Clerkenwell on its northern edge is clearly the design equivalent. Since the Industrial Revolution, the area has housed craft workshops, printers, clockmakers and jewellers.

The area is celebrating its rich design heritage this month with the sixth annual Clerkenwell Design Week from 19 to 21 May. Today also sees the end of Made in Clerkenwell, an event which saw 100 artists descend on two Victorian studios to show off their handmade crafts. The brutalist architecture of the Barbican Arts Centre Festivals aside, the area remains a popular place to live for architects, graphic designers and artists, which could be down to the abundance of studio space and industrial warehouses – a trait it shares with its eastern neighbour Shoreditch.

Another similarity is the fact it gentrified around the same time in the mid-90s and has held on to its creative businesses. “Thanks to its wealth of advertising agencies, publicists and recording studios, Clerkenwell still attracts the creative crowd,” says Alex Taniewski-Elliott, manager at estate agent Fyfe McDade. “They now rub shoulders with the new wave of City workers wanting to live and play in a vibrant area with soul, character and the added benefit of being able to walk to work.”

Developers and landlords have also been zoning in on the area in the past five years. This is due to a number of factors; house price value rises around the City fringes; upcoming projects like the rejuvenation of Smithfield Market, Exmouth Market and Barts Square near London Wall; and the arrival of Crossrail at nearby Farringdon, which will be the only station with access to Thameslink, London Underground and the new high-speed east to west train service when it’s completed in 2018.

Property search agency Sourcing Property also pinpoints the area as “especially popular with our buy-to-let investor clients” as it’s constantly in demand with renters, too. “The investment properties we’ve bought have all let extremely well and quickly,” says managing director, Jo Eccles, “typically to finance, tech or media tenants, with an average gross rental yield of around 3.6 per cent.”

Current prices range between £1,000 psq ft to £1,400 psq ft, according to Jamie Burnhope, a buying consultant at Black Brick, but he foresees this number rocketing skywards in the next five to ten years. “With all the new developments in Clerkenwell,” he says, “I see no reason why prices could not catch up with those in Soho.” FIVE REASONS TO MOVE TO THE AREA There’s loads of great architecture. From high-ceilinged loft living to listed Victorian period houses, there are plenty of unique homes

Take a walk on the south side

Affordable housing in Zone One is becoming something of a rarity in London, but look just south of the river and you’ll find one area in particular that’s still a decent prospect for first-time buyers looking for a good investment.

Paul Bent, sales manager at Kinleigh Folkard & Hayward’s London Bridge branch says young professionals are starting to catch on to the opportunities in Bermondsey and they’re flocking there in growing numbers.

”Bermondsey is becoming an increasingly popular hub for young professionals who want to be centrally located but benefit from access to good transport links, but who also want a local community feel with vibrant bars and restaurants. While flats and trendy apartments are hugely sought after among this young demographic, equally popular are freehold houses which are in demand among young families and professional sharers.”

The catch here is that the area was bombed intensely during the Second World War, decimating many of its industrial warehouses and period homes, so these properties can be “as rare as hens’ teeth,” according to Bent.

But if you can get your hands on one along Fort Road, Alma Grove, Reverdy Road and Lynton Road, then they can achieve impressive premiums, boosting house values anywhere between £650,000 to £850,000.

For buy-to-let investors, the housing stock is just as diverse as the residents, with two bedroom flats commanding anything from £340 per week to £795 per week, depending on size and specification.

Property website Zoopla names King Stairs Close towards Rotherhithe and Bermondsey Wall West towards London Bridge as the highest value streets, with houses selling for over £1m in each. Zoopla also notes that average house prices have increased by nearly 20 per cent over the past two years, adding approximately £81,000.

But there’s still plenty of space to accommodate lower earners at the other end of the market, says Jamie Burnhope, buying consultant at buying agent Black Brick.

“Bermondsey has a high concentration of local authority buildings in which privately-owned apartments can be bought for under £600psqft. With the regeneration at Elephant & Castle and the continual growth of London Bridge, Borough and Shad Thames, Bermondsey represents a very good value option for any first-time buyer wanting to be in a central location.”

Tips for bagging yourself a new-build bargain in a difficult market

By Jeremy Hazlehurst

Purchasing a property from a developer is never an easy thing. Jeremy Hazlehurst asks three experts for their buying advice:

POLLY COLDWELL, DEPUTY EDITOR OF FIRST TIME BUYER MAGAZINE:

1) Ensure the property is big enough for your belongings. Check that there is somewhere to put your hoover, etc. Garages have shrunk as well: measure it to make sure your car fits.

2) New builds are rated for their energy, water and waste under the Code for Sustainable Homes. Check the rating to get an idea of the property’s energy efficiency and utility bills. A lot of developments now use solar power, which can bring down your bills substantially.

3) Housebuilders often offer incentives. Some are beneficial, such as George Wimpey’s 10 per cent deposit match, but others are gimmicks. Don’t be lured in by gym memberships or retail vouchers – a house should be able to sell itself.

4) Check the service charge. It’s often hard to see what you’re getting in return. Find out who is responsible for managing the building and ask what the service charge covers before you move in.

5) The quality of new builds varies depending on the developer and the specification. Talk to others who have bought on the same development or through the same builder and get their feedback. Unlike builders or estate agents, residents are likely to be upfront and honest.

CAMILLA DELL, MANAGING PARTNER OF LONDON BUYING AGENCY BLACK BRICK PROPERTY SOLUTIONS:

1) Check if the developer is in good financial shape. You don’t want to be buying from a developer with a likelihood of going bust. If the developer is struggling, you can use this to negotiate hard and get a good deal.

2) Check how many units are going to be built and where. Ask to see a full site plan. You don’t want to buy a flat with a great view only to have another building spring up in front of you.

3) Check where the affordable housing element of the development is going to be. If you are next door to this, it will affect the value and re-sale value.

4) Ask when completion is going to be and ask your lawyer to try and negotiate some protection if the developer doesn’t complete on time. Never use a solicitor recommended by the developer.

5) If you are obtaining bank finance then there’s a risk that the flat will be worth less than the original agreed price by the time it is finished. If this happens, the bank will only lend to you based on the value of the finished flat, and you might have to inject more equity. Try to agree with the developer that if the flat is worth less once completed, you can re-negotiate.

MARTIN BIKHIT, MANAGING DIRECTOR AT ESTATE AGENT KAY & CO:

1) Try to buy in a smaller development. When you come to sell it is less likely that there will be other similar properties on the market and it’s likely you can get a better price.

2) Beware of artificially low service charges – these often creep up over time, particularly if you have to pay for services such as lifts, a gym or a concierge.

3) Buy the best that you can afford in the development. A flat that has a better view and is on an upper floor will ultimately appreciate at a better rate.

4) Buy in an area where new builds a scarce. Your investment will benefit from a premium resale price in the medium term as it will still be the newest that is available. If something newer is going to spring up next door in the next 12 months then your new build will not be as attractive.

5) If there is car parking available always buy one, particularly if the number of flats exceeds the number of spaces available

If you can’t find a new home, it’s time to call the troubleshooters of the property world

THE news this week that Garrington – the property search firm owned by Phil Spencer of television’s Location, Location, Location fame – has gone into administration, might lead some to believe that the age of the buying agent is at an end. But that couldn’t be further from the truth. While the glory days of motoring around the country in a sports car looking at fabulous farmhouses might be a distant memory, those who have to move house, for family or job reasons, are more willing than ever to spend money to find that elusive new home. In this market, buying agents are coming into their own.

Camilla Dell of London-based property agent Black Brick Property Solutions says that her company has seen a 47 per cent rise in new potential client enquiries, and a 40 per cent leap in clients, compared to this time last year. Another, Middleton Properties, which specializes in country properties, says that it has already taken on almost half as many clients in 2009 as it had in the whole of last year.

USING CONTACTS

Buying agents do two things. Firstly, they help you find a property. Their contacts often mean that they are able to find out about properties that are not on the open market. They will also use their connections in the property industry and with previous clients and vendors to hunt out good properties that are not even for sale, to see if they can encourage a sale. Secondly, when they have found a property, they will use their skills and knowledge to negotiate you the best price. For these services, agents typically charge around 1 per cent of the eventual purchase price of a property. They are, in short, the troubleshooters of the property world.

QUALITY STOCK

The primary reason that buying agents are in demand right now is a lack of quality housing stock. “The only things on the market are ultra-distressed properties, or things that are left over from last year that still haven’t sold, which may be overpriced and not great – the good stuff is off the market,” says buying agent Simon Barnes. “You may have to dig a little deeper, but properties are there to be found and sales are happening.” Barnes gives the example of a £7m house in Notting Hill that was being sold for lifestyle reasons, but the owners wanted to keep the sale quiet because they didn’t want others to know that they were selling. The buyer, too, was keen to keep the sale private because he felt that splashing that sort of cash in the current market looked extravagant. Barnes put them together, negotiated a price, and the deal was done.

PROPERTY SEARCHING: BUYING AGENTS’ TIPS

Most importantly, before even beginning the property search process, have your financing prepared and you solicitor primed. Those who can move fastest get the best deals in this kind of market, meaning that cash buyers are naturally at a huge advantage.
Avoid new build developments at all cost – these are perhaps the biggest no-no in a falling market. People who put deposits down or even exchanged at the peak of the market last year are getting their fingers burnt now as the projects come to completion. Banks are re-valuing properties significantly below the agreed purchase price, leaving buyers contractually committed and financially stranded.
Don’t carry on sitting on the fence expecting prices to fall further. Vendors are now pricing houses much more realistically, so the big drops in the market are behind us. Buying a home is about good sense rather than pure deal-breaking – if you see something you like, get moving.
Understanding the market is extremely important, though traditional methods – for instance using the land registry as a guide to what has recently sold in an area – have become irrelevant. You can end up overpaying too, particularly on homes put up for sale last year that have still not sold, so be wary and do your research.
For sellers, be realistic about pricing, and realistic about the buyer. Look for proof that the buyer has their finances in place, and make sure you know what percentage of their offer is mortgage and what is equity – be sure that they can proceed quickly.

Mark Parkinson of Middleton Advisors explains another reason why a buying agent can be handy: they can make sure you are the first to view a property. Buyers, he says, “recognise that it’s a tight market place where getting to the house first, and potentially being the only person to see a house, is of paramount importance.” As long as the transaction is discrete and the price offered is fair, then Parkinson says that a surprising number of owners are open to this.

PROPERTY MINEFIELD

When you have found the property you want, getting a good price is always tricky. At the moment, it can be a minefield. For a start, as Simon Barnes says: “Now it is very difficult to determine the value of a property without impartial advice, and it’s important to remember that the estate agent acts on behalf of the seller and will only have their requirements in mind.” Because of this, a lot of buyers are simply assuming that properties are all massively overpriced and they can go in low and get a bargain. Not so. “At the moment, people are defaulting to 30 per cent below the asking price,” Dell says, “but the penny has dropped and vendors are already offering more realistic prices so you have to be careful about jumping in too low.” Making an offer that a vendor considers insulting is a sure-fire way to ensure that he will decide not to do business with you. Getting a buyer with knowledge of the market to help you can be handy. “A buying agent will look at who the vendor is, why they’re selling, what offers they’ve previously had, and identify whether the price is realistic,” Dell says. Indeed, this is becoming the focus of the selling process. “For the first time ever, we are being retained simply to negotiate a property that clients have already identified for themselves,” she adds. Now that the property boom is over, the buying agent is no longer a glamorous luxury. In this market, they are becoming a necessity.

So, would you like a sports car with your new property, madam?

By Jessie Hewitson

AS THE MARKET GETS TOUGH, AGENTS ARE ENTICING BUYERS WITH GOODIES.

Throwing in a free Mercedes with the sale of a luxury penthouse is nothing new, but it is getting more common. Against the backdrop of a rapidly weakening market, developers are having to work harder than ever to sell – often resorting to incentives that if it took place in the City might raise eyebrows.

At the high end, even Candy & Candy, the developers behind luxury property One Hyde Park, have delayed marketing and selling their latest project, the Grosvenor Waterside.

They had the launch party, but then put the whole thing on hold. The main reason was that they weren’t confident they would achieve the prices they wanted – and didn’t want to be seen reducing prices.

It’s for just this reason that developers are increasingly offering sweeteners to encourage buyers to get out their chequebooks.

Incentives of this kind include booking a celebrity chef to cater the launch party and offering to stock the wine cellars before buyers move in – or throwing in a free Bose home entertainment system or holiday with each sale.

LAVISH LAUNCH

“It used to be much more common in the commercial market, but now it’s happening a lot more in the residential market too,” says buying agent Robert Bailey. “The days are long gone when developers would sell 90 per cent of their properties on the first day and 10 per cent on the second, so now they are having to use every trick in their marketing book.”

It’s not only a question of hooking buyers, either. As Bailey adds, “Developers are having to work harder just to attract estate agents to their launches, too. Unless a developer does something lavish the agents will see the development in their own time, and the property sits around and doesn’t get sold.

“I’ve been to launches where we’ve been given Thomas Pink shirts, iPods and John Lewis vouchers. As for the buyers, I’ve heard of developers throwing in reduced mortgages, holidays and cars to incentivise people to buy.”

A house in Clapham being sold by Savills estate agency is a good example: the developer hired chef Tom Aikens to cook for the launch. Another development Savills is selling in St James’s – for £8.85 million – saw a champagne-fuelled launch party.

“The developers in question, Manhattan, are known for throwing lavish parties, so they always get a good turnout,” says Charles Lloyds, of the Sloane Street office. It seems that it works, too. “The launch for this flat saw 110 agents in attendance,” Lloyds says.

BUBBLES AND NIBBLES

But will it be enough? It seems that even the promise of champagne and Michelin-starred nibbles isn’t always enough to tempt agents to a launch. It’s not yet full-on panic, but it’s not that far off. Developers are leveraged up to the hilt, and have obligations to the banks.

Which means that there are opportunities for brave investors, especially ones who are willing to sink their cash into new-build.

“We are starting to get calls from agents on behalf of developers offering bulk deals,” says Camilla Dell, of Black Brick buying agency. “Developers are needing to ‘de-risk’, and this means selling off-plan in bulk.”

If there’s a car thrown in, who can argue?