By Liz Rowlinson

International buyers account for a considerable proportion of those spending money in London on property, from Hampstead to Mayfair.

For centuries, London has been a magnet for incomers from all over the world. The 17th century brought Huguenots, Sephardic Jews and the Irish; the 18th saw influxes from the Americas; and the revolutions of the late 19th century brought refugees from across Europe. Today, the city’s benign tax regime and gold-standard property market lure the 50 different nationalities currently house-hunting in central London and redrawing the ex-patriate map.

At the top end of the market, overseas buyers now account for 60% of purchases in Mayfair, Knightsbridge and Hampstead, according to Knight Frank. The Russians are most active at the top, with Knightsbridge and Mayfair tempting the most. Tim Macpherson, head of London residential sales at Carter Jonas, agrees, adding: ‘They go for mostly flats and penthouses in portered buildings in Mount Street and Lowndes Square, as well as Park Lane and the Eatons [Square and Place]. They prefer these areas to Chelsea, and spend £3 million to £30 million.’

They also like kerb appeal, and go for the best-looking buildings, according to Roarie Scarisbrook of buying agents Property Vision. ‘In the mid 1990s, oligarchs began fighting over the most impressive properties, and now, their newly monied neighbours from Kazakhstan and Uzbekistan are copying them by buying statement houses and the most glitzy and secure apartments.

These offer the ultimate status symbol. Highly serviced buildings with doormen that tip their hats appeal to Russians -for example, Trevor Square, Lancelot Place, Hans Crescent and The Knightsbridge.’ Last summer, the city’s reputation as a safe haven for wealth also attracted a wave of Greek tycoons keen to transfer their assets out of troubled Athens.

Although, traditionally, Greeks have bought in Bayswater and north London, the new ‘cash Greeks’ have made a real impression on Mayfair in the first half of the year, according to Peter Wetherell of Wetherell. ‘Properties in Grosvenor Square were in high demand as the Greeks prefer large, lateral apartments in a portered block as pied à terres.’ Camilla Dell of Black Brick Property Solutions adds that Greeks and Cypriots are also buying investment properties: ‘They’re buying 20-odd one- or two-bedroom flats in the £500,000-plus price range, with high rental yields.’

Indians are now 20% of her client base, and share the desire of the Russians and Hong Kong Chinese for prestigious addresses in smart, portered blocks. ‘Indian buyers especially like Onslow Gardens and Onslow Square and buildings with grand entrances. Hong Kong Chinese clients want a front door facing north, for the correct feng shui.’ For Americans, Hampstead has been the big hit, according to Marcus Oliver of Chesterton Humberts, and they have recently accounted for 80% of foreign buyers in the area. ‘There’s an American School in nearby St John’s Wood, and young buyers like high-end properties just off the High Street in roads such as Cannon Place. They love the quintessentially English feel of the Village, Kenwood House and the family-friendly Heath.’

For Italians, a tribal love of world-class shopping and stylish bars has meant a 30-year love affair with Chelsea, according to Ed Mead of Douglas & Gordon. ‘A series of domestic tax amnesties has brought northern Italians, especially the Milanese, seeking elegantly proportioned conversions and traditional houses. They like areas where they can be seen out and about-around Sloane Square, especially Sloane Gardens and Draycott Place-and spend £500,000-£1.5 million.’

The French cluster around the Lycées of South Kensington and Wandsworth, as well as Battersea. ‘They go for the rows of large family houses (especially off Trinity Road, Clapham Northside and Northcote Road),’ says George Franks of Douglas & Gordon.

• The French like to live laterally, as they do in Paris
• Russians rate sleek and high-end decor, the latest gadgets and fingerprint recognition systems
• Indians and Nigerians like their kitchens to be separate to cut off cooking smells
• Far Eastern buyers need new-builds (period means water and heating problems)
• The Italians must have period; they hate modern
• Chinese love new-build waterfront properties, especially around Tower Bridge

By Carla Passino

Adding extensions is a popular choice for those who need more space but don’t want to sell their house.

It will make your home more spacious, more easily sellable and possibly even more beautiful. An extension is one of the most valuable improvements you can make to your property, so long as you do it properly, accurately — and legally.

‘The most common mistakes people make when building an extension are doing the work without getting planning permission from the local council; thinking that the extension qualifies for permitted development rights when it doesn’t; and building something which aesthetically doesn’t work with the overall look and feel of the rest of the building,’ says Camilla Dell of Black Brick Property Solutions.

However, she adds, the good news is that these mistakes can easily be avoided by doing some thorough research in advance.

The first and most crucial step to take after you decide to build an extension is to get the planning right. New regulations that came into force in October 2008 classify extensions as permitted development work. This, together with the fact that a new wing can add value or speed up the process of selling your property in the future, has conspired to make extensions particularly mouth-watering.

What people don’t know, however, is that the permitted development rule only applies if more than a dozen conditions are met. Among others, the new wing, together with other buildings, should not take up more than half the land around the original house; it shouldn’t be higher than the highest part of the room; and it should have no verandahs, balconies or raised platforms.

So far, so simple, but some other limitations get really technical and can be confusing for the layman—for example, the one that sets the maximum depth of a single storey rear extension to ‘three metres beyond the rear wall of an attached house and four metres beyond the rear wall of a detached house.’ Or the one that requires side extensions to be ‘single storey with a maximum height of four metres and width no more than half that of the original house’.

By Carla Passino

Despite tight credit lines and limited stock, buyers have the upper hand in today’s falling market, but only some can take advantage, says Carla Passino

Buyers with cash in hand are in the best position to take advantage of the current climate. ‘Vendors are more likely to accept a lower offer on their property from a cash buyer than a higher one that’s subject to obtaining a mortgage,’ says Camilla Dell of London buying agency Black Brick Property Solutions. ‘Cash buyers are king.’

This is especially true if your cash is in a foreign currency. Savills calculated that between September 2007 and January 2009, the average cost of prime central London property dropped by 42% for Euro buyers and 43% for dollar ones. Miss Dell says that one of her clients secured a Belgravia house, marketed in 2007 at $21.2 million (nearly £11million), for just $11.3 million.

With no currency to leverage, sterling cash buyers can’t match these savings, but they can get good deals. ‘They’re in a strong position,’ says Matthew Allen of Fisher German. ‘They may be able to get a better property than they could have previously imagined.’ Add to this the fact that interest rates have hit an all-time low of 0.5%, making it less attractive to keep money in a savings account, and it’s easy to see why cash purchasers are returning to market.

‘In the past couple of weeks, we’ve seen a lot of cash buyers, because they’re not getting enough interest from their savings accounts,’ says David Adams of Chesterton Humberts. Some of them are buying to let because rents, although much weaker than in the past, are still appealing compared to the yield on savings accounts and the uncertainties of the stockmarket. Others are purchasers in their fifties who want to help their children get a foot on the property ladder and know they can now obtain excellent value for money.

Opportunities for investors

Beyond stimulating the cash market, the Bank of England’s sixth consecutive cut in interest rates has also opened up opportunities for mortgage buyers, provided they can persuade banks to lend to them. Cheaper mortgages mean property is once again appealing to investors ‘because the yields are starting to stack up now that interest rates are so low,’ Mr Adams explains. Of course, investing in these troubled times requires prudence. Buyers need to acquire a property with good rental prospects, because the letting market is very crowded. And they must commit to it for the medium to long term, as they’re unlikely to see any capital gains if they resell in the immediate future.

The joint effect of low interest rates and substantial drops in property values can also benefit upsizers. ‘The money they can save on their upward purchase will more than outweigh the money they lose on selling their smaller property,’ says Miss Dell. Upsizers looking to move from London to the country can reap the greatest benefits. ‘At the top of the market, there was never as much of an arbitrage between London and the country as people thought,’ says Mark Parkinson of Middleton Advisers. ‘Now you should get more in the country for the value of your London house than a couple of years ago.’

That said, there are surprisingly few upsizers around. ‘The savings you can make by upgrading should bring a lot of people to the market, but there aren’t many,’ says Mr Adams. ‘It’s partly because they’re worried about their jobs, and partly because of the lack of mortgage products, as banks remain reluctant lenders.’ With credit so limited, Stamp Duty works as an additional deterrent. ‘These days, banks are no longer willing to lend on Stamp Duty on top of the house price,’ explains Mr Adams.

Top tips to make the most of the market

• Cash buyers should ‘be wary of buying with too much emotion, as this may lead to paying more than a property’s market value,’ says Mr Allen
• Euro and dollar buyers must consider the possible effect of further currency fluctuations, and, if buying to let, assess how much a sterling rent will be worth when they convert it back into their own currency
• Sterling investors should be wary of the rental market becoming too saturated
• Establish a good relationship with estate agents, as stock is being sold off-market. ‘It’s important to have a rapport with the agents and not just be a name in their database,’ says Mr Adams

Despite gloomy figures from many industry bodies, Black Brick are predicting that 2009 could present some tantalising opportunities.

However, London remains a diverse market says Black Brick. While prices in Hackney, Lambeth and Lewisham fell by as much as 3% in December, Westminster saw a drop of just 0.3%. Liam Bailey, head of residential research at Knight Frank commented: As many prime properties are unique and only occasionally come up for sale, we believe activity will increase as overseas buyers realise the home they have had their eye on for some time is now available at a much reduced price.As the appeal of London endures in comparison to, say, Dubai, Black Brick are looking forward to a resurgence in 2009. Camilla Dell, Managing Director of Black Brick said: We are taking calls on a daily basis from existing and prospective clients wanting to know if this is the right time to jump back into the market. And we are already seeing investment buyers signing exceptional deals that in six months time will be harder to find. View and premium or Find.

By Cheryl Markosky

THE HIGHER END OF THE PROPERTY MARKET IS HOLDING UP, AS DEMAND FOR THE RIGHT HOUSE IN THE RIGHT AREA CONTINUES TO DRIVE PRICES

With the gap between the super-prime and mainstream markets widening, so too is the differential between property types, says a new study.

As the number of property transactions fall, the quality of property becomes ever more crucial. This focus on ‘best in class’ will play a major role over the coming months, with ‘average’ property forced into greater discounts than their higher quality counterparts.

Factors such as location, proximity to noisy roads and the amount of modernisation required will be key negotiating tools for discerning buyers, reports top-end house finder Camilla Dell of Black Brick Property Solutions in its latest news bulletin.

‘The gulf between different types of properties has widened considerably. Period conversions in prime areas are showing impressive resilience despite difficult conditions, whereas prices of new build and off-plan properties in secondary locations are beginning to soften,’ she says.

Mrs Dell points out that prime central London is unlikely to suffer from a ‘crash’ because the majority of owners are affluent and unlikely to become ‘forced sellers’ (those who have to sell due to death, divorce or a change of job).

Nonetheless, even in the most desirable areas vendors will at some point have to lower their short-term expectations as the financial sector and the economy retrench, Mrs Dell believes.

‘For investors with an eye to the future, it is an exciting time to gain a foothold,’ she explains.

The report also suggests fears regarding the ‘non-dom’ situation – where non-Brit High Net Worth Individuals leave UK shores for tax purposes – has turned out not to be as serious as predicted.

With year on year sales of super-prime (greater than £10 million) property rising by 35% in the three months to May, the top-end remains in rude health.

‘Last year, overseas buyers accounted for 79% of our client list, but so far this year our clients have been exclusively international and primarily owner-occupiers.

‘Many are from emerging markets or oil-rich nations and their search for a home in London remains relatively unaffected by the credit crunch or changes to the UK’s tax regime. From our experience, the international influence remains a welcome force in UK property,’ adds Mrs Dell.