Post-pandemic city exodus? These property hotspots are bucking the trend

Post-pandemic city exodus? These property hotspots are bucking the trend

By Liz Rowlinson

City living has suffered during the pandemic, but some village-like pockets have thrived

In the past year, many of us who live in towns or cities have been forced to embrace a more local way of life. Working from home, we’ve become regulars at our local coffee shops, or at neighbourhood businesses we rarely used before, patronising those on our doorstep instead of rushing off to the office for a Pret al desko.

This idea of communities that offer everything we need within a quarter of an hour’s walk, without getting in a car – the so-called “15-minute city” – is the dream of many town planners. It has been created anew in the community of Poundbury in Dorset, championed by the Prince of Wales, and is being sketched out in Fawley Waterside, a project it inspired on the site of a former power station in Southampton.

Prince Charles embraced the term “urban village” 20 years ago, yet there are dozens of vibrant villages within cities that have evolved organically. Many have become highly desirable places to live, even before the pandemic accentuated the appeal of “staying local”.

Properties in such areas can cost nearly double the average house price of their city, according to data from estate agency Savills. While the current property boom has been characterised by buyers fleeing urban life for more rural or suburban areas, small pockets of cities are holding their own.

Frances Clacy, of Savills, said: “Rather than turn their backs on the ambience and amenities of the city altogether, there are signs that some buyers want the best of both worlds.” Here, we find some of the best 15-minute cities.

Manchester

Just four miles south of the city centre is Didsbury, an area that is big enough to offer more than the one village. While East Didsbury is the most affordable option, there is also Didsbury Village and West Didsbury. In the latter, the average house price is £336,494, according to Savills.

Helen Tabor and her family have lived in the area for 12 years. “West Didsbury is more bohemian, with many independent shops on Burton Road, while the Village is more family-orientated,” she said.

With three parks, good schools, sports clubs and the famous “Didsbury Dozen” pubs, there is enough on the village’s doorstep to make the 40-minute peak-time drive into the centre of Manchester a rare event. “During lockdown, sitting outside the café in Fletcher Moss Park along the river has helped us keep our sanity,” said Mrs Tabor, 50.

There are plenty of late Victorian homes to choose from, with two-bedroom flats for sale from around £400,000, three-bedroom semis at £550,000 and new detached six-bedroom houses up to £2.45m. These prices are far higher than comparable suburbs around Manchester.

Sheffield

West of Sheffield city centre are the villages of Dore and Totley. Here, buyers pay a hefty premium to live in this ancient rural enclave on the edge of the Peak District that is popular with families for the Ofsted “Outstanding” rated schools (local resident and Olympic athlete Jessica Ennis-Hill is an alumna of King Ecgbert secondary).

Dore and Totley have all the amenities necessary to make sure you rarely have to leave: pubs, Indian restaurants, the all-important fish and chip shop, a hairdresser and a car mechanic. A train from Dore and Totley Station is only six minutes into Sheffield.

Katrina Wooltorton rents in Dore with her boyfriend, Jon, who has recently graduated from university. “Within five minutes, you are into Ecclesall Woods, or it’s only 10 to the village of Hathersage, sitting in the beautiful Hope Valley in the Peak District,” said Ms Wooltorton, 23. “We love the community feel of Dore.”

However, it’s not great for first-time buyers. “When we buy our first home, it will need to be in a more affordable area – such as the village of Dronfield – before we hope to move back again.”

To buy a small detached house, you’ll need £450,000, according to James Ross, of agent Eadon Lockwood & Riddle. “We are seeing a lot more buyers from down south. The market for three-bedroom houses at £350,000 to £500,000 is really strong, but you can pay up to £2m.”

Bristol

In northern Bristol, separated from fashionable Clifton by the thoroughfare of Whiteladies Road, is Redland, another popular village within a city. Chandos Road is cherished for its restaurant scene, although the Michelin-starred Wilks has shut permanently because of the pandemic.

Good local schools will continue to draw families, said Francine Watson, of estate agent Knight Frank. “You get more for your money, plus bigger gardens and more off-street parking in Redland than in Clifton,” she said. Family homes cost £600,000 to £1.4m.

London

The capital is fringed with urban villages that have recorded some of the highest levels of activity within the city during the pandemic. Camilla Dell of Black Brick, a buying agency, said: “Buyers that might have bought in central London have been looking at Richmond-upon-Thames, Kew, Wimbledon, Chiswick, Hampstead, East Sheen and Dulwich. Access to parks has become more crucial.”

Dulwich, in south-east London, has been especially popular since the pandemic started, although the area has always been in demand, with house prices steadily growing.

The average property value in the area grew 1,150pc between 1995 and 2017, which was the highest in the UK, according to Knight Frank.

The area has an abundance of parks, and while the hub of Dulwich Village has Gail’s Bakery and the Crown and Greyhound pub, there are more shops and restaurants along Lordship Lane in nearby East Dulwich.

A good choice of independent schools is another draw, but state options such as the Charter School North Dulwich and Dulwich Hamlet Junior School are also pulling buyers from outside the area, said Christoper Burton, of Knight Frank. “The family house market in Dulwich Village is around £1.4m, but you get more value for money in East Dulwich, where there are plenty of smaller Victorian terraces from £700,000.”

Further west, sandwiched between the River Thames and the green spaces of Sheen Common and Richmond Park, is East Sheen. It has everything you may need: a Waitrose, a library, cafés such as Valentina Italian Deli and great schools, which is just as well as this area of west London is not very well connected.

Demand for East Sheen Primary and Sheen Mount Primary keeps property prices up, and values are higher “Parkside” – close to Richmond Park, said Michael Randall, of Savills.

“You’ll pay over £1.2m for a four-bedroom family house in the school catchment areas, or £1.7m to £2.5m for one of the bigger Edwardian houses near Richmond Park,” he said.

“But people love this area as you tend to get bigger gardens and more lateral space than in nearby Barnes or Richmond. Buyers coming out of central London like the slightly slower pace of life.” And it looks like they will pay a premium for it, too.

From private chalets to penthouses: property trends for the ultra rich in 2021

Will it be a £66m penthouse or a two-bed home on a remote Greek island? Experts predict what the ultra rich will be investing in for 2021

By Zoe Dare Hall

After a tumultuous year, what lies in store for London’s prime property market in 2021? And where will the wealthy be looking to invest? The experts share their knowledge.

London calling

For many City workers no longer needed at their desks, 2020 was about an escape to the country. 2021 will see the reverse, thinks Camilla Dell, managing partner at Black Brick buying agency. “Half of them stayed commutable in the Home Counties. The other half moved to Somerset, which is risky if you are suddenly called back to your desk at 8am tomorrow,” says Dell. 

Most didn’t sell up in London, though; they just bought the country house too – which is just as well because in 2021, “the masses will flood back to the city,” Dell adds.  

Post-Covid – or, at least, post-vaccine – London will also see the return of overseas buyers. For UK buyers with serious money, their absence currently opens up opportunities in prime central areas such as Mayfair and Belgravia. “Apartment prices in central London’s golden postcodes have fallen by 8.2% in five years and houses are down by 1%. There are no viewings taking place and none of the usual audience is here. But by next summer, it will be more competitive again,” says Dell. 

Some foreign buyers will feel compelled to tie up purchases before that, though, as April sees the introduction of an extra 2% stamp duty for non-UK residents. “We currently have two overseas UHNW buyers who are unwilling to travel at the moment. One has a budget of £40m-£60m for a family house, so will save at least £1m if he buys before April,” says Marc Schneiderman, Director at Arlington Residential in St John’s Wood.  

Wealthy UK-based buyers are keeping the super-prime market ticking over nicely until foreign buyers can travel again, though. “Despite the vaccine, expect more house moves, upgrades and a continued search for space in 2021,” says Liam Bailey, global head of research at Knight Frank. “London is seeing a surge in demand for larger houses. The £10m+ market is very strong and this strength will continue into 2021.”

End-user buyers will be looking for areas with easy access for weekend escape – given many have invested in holiday homes in England instead of abroad this year. That trend is already in evidence Television Centre in White City, where a number of owners flee to their Cotswolds homes every Friday. Flats in the latest Architects Series cost from £3.4m through Savills

East London is also “one to watch”, says Camilla Dell – and handy for a weekend home on the Suffolk coast. “People who wanted to live in leafy parts of north London – especially those working in the media or tech – now prefer to be East,” says Dells. Long & Waterson in Shoreditch – with apartments from £715,000-£2.16m through Savills – is just the kind of new development they’ll like, she thinks. 

Ultra-prime London launches

London has its fair share of landmark schemes launching, or completing, in 2021 – and views over Hyde Park are a common theme. 

Mayfair Park Residences sees the world’s first Dorchester Collection homes, with Clivedale’s scheme of 25 apartments and townhouses on Park Lane – priced from £4.25m – overlooking Hyde Park. They have access to the adjacent Dorchester hotel’s services, whether it’s 2am mojitos delivered to your door, use of the 10,000 sq ft health club, or dinner at Wolfgang Puck’s first European restaurant, CUT. 

On the park’s Bayswater side, Fenton Whelon’s Park Modern sees 57 new one-to-six bedroom residences overlooking the park and Kensington Palace Gardens. Prices start at £1.95m through Knight Frank.

And in late Spring, expect completion of the £66m penthouse at The Bryanston, Almacantar’s new super-prime parkside scheme in Marble Arch. Other apartments in the high-rise designed by Rafael Viñoly start at £2.6m. 

Among the historic landmarks undergoing transformation is The OWO, formerly known as The Old War Office, which will be home to London’s first Raffles hotel and 85 Raffles-branded residences. No prices have been released yet, but with its historical pedigree, prime St James’s location and kudos of being Raffles’ first ever branded scheme, these will be properties to watch. 

The Herculean task of reinventing Battersea Power Station reaches a pivotal point in Spring 2021, as it’s when the first residents will move into the reinvented Grade II* listed Power Station. The development also sees the opening of the new Northern Line tube station in Autumn.  

Brand new but inspired by the Georgian proportions of Thomas Cubbit’s historic Belgravia homes that surround it, Qatari Diar’s Chelsea Barracks launches its townhouse collection, with the six-storey properties priced from £38m. Each house features a swimming pool that runs under the entire length of the garden, and some have their own mews house. 

Alpine hotspots

In early 2020, ski resorts were considered Ground Zero for Covid in Europe, but in 2021 they will be among the hottest places to invest. What we buy – and how we use it – is changing, though. 

While old-style après-ski is out of the question because of the virus, buyers want to bring the party back home, so large private chalets are in hot demand, “especially those with five-star entertaining areas and wellness facilities,” says Giles Gale, founding director at Alpine Property Finders. With the catered chalet model also largely impossible, and the communal aspect of hotels out of favour, in-chalet/apartment hotel services are on the rise, says Gale. He suggests Manali Lodge in Courchevel 1650, a new luxury apart-hotel residence, where three-bed apartments cost from €2.02m. 

Ski properties aren’t just for Christmas any more, either. Month-long or even entire-season stays will become more popular next year, with work-from-home culture rife among wealthy digital nomads on the slopes, says Jeremy Rollason, head of Savills Ski. Many will seek a large, lateral rental apartment first, so they can try before they buy. 

Buyers shouldn’t expect many bargains in the leading resorts, though. “Covid has increased our appreciation for the natural environment and prices in the top 10 resorts have increased by an average of 7.2% this year, despite the pandemic,” says Rollason. Courchevel 1850 tops the prime price league at €25,000/m2 – making it 60% more expensive than prime Paris. 

For price growth and new development opportunities, Knight Frank tip the French Alpine resort of Saint-Martin-de-Belleville in 2021, overtaking last year’s winner, Val d’Isere. The small Swiss resorts of Grimentz and Champery will also be in demand, says Knight Frank’s head of Swiss Alpine sales, Alex Koch de Gooreynd. “International buyers are looking at Switzerland as a permanent base because of its handling of the crisis and the lifestyle it offers. The appeal of owning a Swiss property is now strengthening too with interest rates negative and Swiss banks effectively charging clients to store their capital,” he says.  

Hotspots for sun, sand and sea lovers

Marbella is ensuring it looms large on the super-rich radar in 2021 with the launch of Epic Marbella, Fendi Casa’s first ever European scheme of branded residences. The 56 apartments of up to 1,000m2, plus 400m2 terraces with private pools, cost from €2.5m-€7.5m and sit on a prime seaview spot on the Golden Mile, near Puerto Banus. There are Fendi touches throughout, from logoed wardrobe handles to rugs, and the five-star amenities include the biggest swimming pool in a European residential development, according to developer Carlos Rodriguez of Sierra Blanca Estates. 

Barbados has also sealed its place in the spotlight in the coming year as the 2020 launch of its Barbados Welcome Stamp – a 12-month work visa, costing $2,000 per person and aimed at digital nomads – has proved a big PR coup for the island. So far, three quarters of international relocators are first-time visitors to the Caribbean island and aged under 45, according to Terra Caribbean. 

For those seduced into buying, Apes Hill, under new ownership, re-opens in November after a £24m upgrade. It promises to be “the best golfing experience in the Caribbean” and include a new club house, a fitness and paddle sports centre, farm shop and three/four bed villas from £1.15m. 

Greece is also garnering a reputation as a UHNW hotspot with such five-star branded schemes as Amanzoe – where two-bed villas cost from €3.2m and – launching in 2021, by the same developers, Dolphin Capital, in partnership with Kerzner International – the One&Only Resort on Kea Island, with turnkey two-bed homes from €3m. The Kilada Country Club, near Amazone in Porto Heli, is another Dolphin Capital resort on its way, with 260 golf residences set around a Jack Nicklaus course. 

Greece also offers the most affordable Golden Visa programme in Europe – newly-relevant to British investors as we wave goodbye to the EU. 

Biggest property bargains on offer since financial crisis in London’s most expensive postcodes

By Marianna Hunt

Prices for prime homes in the capital have slumped, with supply soaring and fewer buyers around.

Prices of London’s most expensive homes are at the lowest level in seven years, with some buyers able to strike bargains not seen since the financial crisis.

In October values of property sold in the priciest postcodes of the capital fell by 3.3pc compared with the same month last year, according to LonRes, a data provider. This means that prices per square foot for the capital’s most exclusive homes are now the lowest they have been since 2013.

These drops in the capital buck the national trend, as Halifax bank’s latest index suggests average house prices have risen by about 7.5pc in a year in the recent “mini-boom”. 

The number of properties on the market in prime central London is up by 68pc compared with last year, LonRes found. However, sales agreed have not risen in tandem, as international buyers have been unable to visit during the pandemic.

As a result, bargains are available the likes of which have not been seen since the financial crisis, said Camilla Dell of Black Brick, a buying agent. “This time, it’s even better because there are fewer buyers around to compete with. There are not many moments I’ve seen where you can get these kinds of deals. ”

It is in the city’s “golden postcodes” – traditionally prized spots such as South Kensington, Knightsbridge and Belgravia – where you can find the best bargains, she added.

“These areas have been hard hit by coronavirus. Firstly because they’re traditionally dominated by overseas buyers.

“Secondly because properties here are mostly flats without outdoor space, which is not what domestic buyers are after at the moment,” she added. “One agent who is trying to sell a £40m home in Belgravia said it was like tumbleweed.”

In Knightsbridge and Belgravia, prime property prices are currently 16pc lower than they were at their peak in 2014, according to private bank Coutts’ London luxury property index. It uses data from LonRes, which found that the cost of property in the area is now £1,886 per sq ft – the lowest it has been since 2011.  

In South Kensington prices are down by 16pc from their peak, the lowest they have been since 2012.

“Fulham and Earl’s Court have been particularly hard hit this year because they have lots of new-builds, which traditionally get snapped up by international buyers,” Ms Dell said. Prices here are down by 19.2pc compared with peak levels.

London’s leafy suburbs have fared better thanks to their larger homes and bigger gardens. In Wimbledon, Richmond, Putney and Barnes prime property prices have risen by about 4pc in the past year, according to Coutts. Homes in these areas take on average 135 days to sell – a month faster than the rest of the prime London market. As a result the premium buyers pay for a luxury property in the city centre compared with its outskirts has dropped from 91pc in 2019 to 82pc this year.

Falling demand in SW and W postcodes has opened the way for bargains. Ms Dell recently secured a two-bedroom apartment in Ebury Square, Belgravia, for a client for £3.32m – with a discount of £1m (22pc) off its original asking price.

Jeremy Gee of Beauchamp Estates, a property firm, said he was currently trying to find a buyer for an off-market property in central London that had a £10m discount. “It is 16,000sq ft and would normally cost about £40m but the buyer is only asking £30m,” he said.

Savills, the estate agency, has predicted that prime property values in the capital will jump 17.5pc by 2024, ending a long downward trend.

The firm’s Lucian Cook said: “The data suggests that the top end of the market remains poised for recovery as soon as international travel resumes and London’s streets regain their normal buzz. The successful development and distribution of a vaccine against Covid-19 is an important part of this.”

While some are worried that the city will lose some of its shine following Brexit and the introduction of an extra 2pc stamp duty surcharge for overseas buyers in April, others are more confident.

“London isn’t the cheapest city for property taxes, but it’s far from the most expensive either,” Mr Gee said. Buyers in London do not have to pay holding taxes on their properties, as they do in New York, Madrid or Paris. “There’s a lot of pent-up demand from international buyers, and extra stamp duty won’t put them off,” he added.

Footballers turning to hotels as coronavirus shrinks supply of pricey rental homes

By Melissa Lawford

Premiership players with budgets of £15,000 per month are finding it difficult to rent in the footballer zone south-west of London

Footballers in the Home Counties are having to move into hotels ahead of the new season as the supply of high-end rental homes has dried up.

Alex McLean, head of the sports team at Knight Frank’s relocation services business, said that a lack of pricey properties to rent along the A3 corridor out of south-west London means “a lot of players are ending up in hotels”.

Accommodation budgets of Premiership players, who often opt to rent, especially at the start of their club contracts, often exceed £15,000 a month, said Mr McLean. But the pandemic has shrunk local supply in their favoured towns, which include Oxshott, Esher and Cobham in Surrey.

This means that newly-signed players, such as Thiago Silva and Ben Chilwell who are moving to Chelsea, may find it difficult to rent a property near the club’s training ground in Cobham.

James Dodds of Grosvenor Billinghurst, a Surrey estate agent, said: “I can’t remember a time when there was this much movement in the super high-end rental market.” Footballers in these areas also have to compete with wealthy workers at nearby tech firms.

The post-lockdown property “mini-boom”, driven by Chancellor Rishi Sunak’s stamp duty holiday and a shift to working from home, means that many high-end homeowners are taking the opportunity to sell their homes now while prices are high, and renting until prices fall when the impact of the recession bites. The sales market had been sluggish for several years before the pandemic.

In the three months to August, the number of homes worth more than £5m for sale outside central London doubled compared to the same period in 2019, according to Knight Frank.

Meanwhile, between April and August in the south-west corridor, which includes areas such as Ascot and Cobham, the number of high-end rental properties coming to the market fell by 20pc compared to the same period in 2019. For homes renting for more than £15,000 per month, the number fell by 55pc. 

The footballer zone along the A3 is an anomaly: across London and the Home Counties, over the same period, the number of overall rental listings jumped by 28pc year-on-year. 

Within the capital, the contrast is even more stark. Camilla Dell, of Black Brick, a buying agency, said landlords who have recently renewed tenancy agreements in London have had to accept 10pc and 20pc rent reductions. “Flats without outside space are faring the worst,” she added.

There is more demand than usual from footballers to rent big homes in this area, and some are moving there because they want more green space after lockdown. “Chelsea has spent a lot of money on new players, but there are also footballers for the London clubs who have decided to move out this way,” said Mr Dodds.

There is new demand for pricey rental homes in this area from footballers at south London clubs such as Crystal Palace and Millwall as well as Chelsea, Fulham and south coast teams such as Bournemouth and Southampton, said Mr Dodds.

The footballers looking to rent now are late to the trend. When the pandemic started, “there was a snap reaction from some very, very wealthy Londoners to rent a Surrey mansion,” said Mr Dodds. 

“We had a chap where there wasn’t a figure for a budget, we were trying to negotiate him renting a whole hotel and its cottage in the grounds. The deal was going into a couple of hundred thousand pounds a month,” said Mr Dodds.

But while demand for luxury rentals has spiked, supply has dropped. 

How to play the pandemic property market and buy a bargain

By Melissa Lawford

Agents are reporting a sales surge, while analysts are forecasting imminent price falls. Is there a way to make the most of the difference?

The property market is on a rollercoaster: while agents have reported a surge of demand and deals since restrictions were lifted in England, analysts have forecast deep price falls this year.

So is there a way to take advantage of these peaks and troughs?

One way to do that is sell up now, while the market is in a frenzy, then rent while biding time as prices fall – and then snap up a bargain.

This is what Theo Taylor, 71, plans to do. He has lived in Hemel Hampstead, Hertfordshire, for 20 years with his daughter and his wife, who passed away last year. Before coronavirus hit, he was preparing to downsize to Wiltshire with his dog, Pebbles. 

“Now, I’m thinking of selling this year as planned, trousering the cash, renting in Wiltshire and then buying over the next year with the added leverage of being a cash buyer,” he said.

e is about to put his house on the market for £765,000, and intends to move west with a budget of £600,000 to £650,000. He wants to wait until he finds a home that he really wants, and then will be able to move quickly.

But he could benefit from falling house prices, too. “I think prices are going to fall,” said Mr Taylor. “The furlough scheme will end soon, and when it does I think there will be significant redundancies and business closures, and when that happens I think the property market will go down.”

Is now the best time to sell?

Buyers have rushed back into the market in England since the restrictions were lifted. Agreed sales are nearly at pre-lockdown levels and sellers are so optimistic that in May, asking prices were 1.9pc higher than in March, according to property portal Rightmove.

 

David Ruddock, of estate agents Carter Jonas, said that while pent-up demand is driving the recovery, it is not just rooted in lockdown. “It has been building since the middle of last year, long before the pandemic began,” he said. Buyers had been holding off since the June 2016 referendum to see what would happen with Brexit and were just starting to return to the market after the decisive Tory election victory brought more clarity in December. 

There is also a new group of buyers who have become dissatisfied with their homes during lockdown, said Mr Ruddock. 

But the effects of the coming recession have not yet filtered into the market. Nine million people currently have their wages supported by the government and one in seven mortgaged households are currently protected by a mortgage holiday. When these measures end in the autumn, there could be a spike in forced sellers, and a major hit to buying power.

Lenders are certainly expecting the recovery to have a short life expectancy. The building society Nationwide has forecast a 13.8pc drop in house prices and has withdrawn mortgages to buyers with less than a 15pc deposit accordingly.

The current huge level of demand and the pessimistic outlook suggest that now may be the best time to sell for some time. 

How will price falls vary across the market?

These forecasts are largely for the UK as a whole, but there will be major differences in house price changes across the country and at each stage of the property market.

The entry-level section of the market will likely be worst hit, said Mr Ruddock. First-time buyers are most likely to be affected by redundancies. They are also most reliant on the availability of lending, and mortgages for those with small deposits are scarce. The number of agreed sales at the lower end of the market is not recovering at the same rate as those of prime homes.

Meanwhile, values in rural areas are more likely to hold their value. The markets here are less vulnerable to changes that affect buy-to-let investors and overseas buyers, who are currently held back by travel restrictions and face a new stamp duty charge. Affordability here is already better than in the cities, and rural markets will benefit from new demand for homes with outdoor space.

Camilla Dell of Black Brick, a buying agency, said: “A lot of people want to move out of London now that they can work from home.” 

In the capital, “the market has already dropped,” she added. “The deals we had agreed pre-Covid have been renegotiated by about 5pc.” Large-scale new build developments will be particularly vulnerable to further falls.

When will price falls bottom out?

“Playing the market is a risky strategy, as timing the bottom of the market is something nobody can predict,” said Ms Dell. “I think we are looking at a few months.” 

Estate agents Savills and Knight Frank have both forecast that house prices will return to growth in 2021.

The housing market’s recovery will be closely tied to the UK’s economic strength. But the relationship between the two is not necessarily always one of cause and effect. Analysis by Deutsche Bank showed that during the global financial crisis, GDP started to fall in March 2008 and bottomed out in June 2009 – a gap of 15 months. Meanwhile, house price falls started earlier in September 2007 and lasted for a longer period of 18 months. 

In this case, however, GDP has fallen first, with a plunge of 20pc in April; perhaps this time around, an eventual rise in GDP could be a precursor to a house price recovery.

But even if a buyer calls the market right, they could be held up by a lack of available homes, said Ms Dell. When a market is falling, sellers are also less keen to list their properties, meaning that pickings are slim.

“It is a bit like going to the Harrods sale,” said Ms Dell. “Yes, the discounts are bigger, but is there anything you want to buy?”

How to avoid getting into negative equity if house prices fall: the latest property advice

House prices are likely to fall, which means buyers with high LTV mortgages could find themselves with assets worth less than they borrowed

By Melissa Lawford

Analysts disagree on how much UK house prices will fall due to the coronavirus outbreak and subsequent market freeze, but the consensus is that they will take a hit.

Many buyers are worried about getting into negative equity as soon as they have purchased their homes. This means that you own a property that is worth less than what you borrowed to pay for it.

Buyers who have purchased with high loan-to-value mortgages are most at risk. If you have purchased just 5 per cent of your property with cash, for example, you will quickly be in negative equity if house prices fall by 13 per cent, as forecast by the Centre for Economics and Business Research (CEBR).

But that would not mean that you have to immediately sell your house at a loss. Here, we look at your options, and what buyers can do to protect themselves.

What happens if you get into negative equity?

“The biggest misconception about negative equity is that people think they’re suddenly going to be repossessed,” says Nick Morrey, of John Charcol, an independent mortgage broker. “That couldn’t be further from the truth.”

If you are able to wait out the market until prices climb, you should be fine. “Over every five year period, prices have ended up higher, even if there is a crash in the middle,” says Morrey. 

Most analysts are predicting a “V-shape” economic recovery after lockdown is lifted, and both Capital Economics and Knight Frank expect house prices to return to growth in 2021. “If you do get into negative equity, hold on,” says Tim Hyatt, of Knight Frank.

Most lenders have removed high loan-to-value mortgages for new purchases, says Morrey, but it is still possible to find options for transfers, as these don’t require the lender to send a valuer to the property. If your mortgage deal is coming to an end, talk to your lender about what options you have for switching.

If you’re not able to transfer, you will be moved to a standard variable rate mortgage when your current deal ends. While the costs could be higher than what you were paying before, the difference will be mitigated by the fact that the Bank of England base rate is currently at a historic low of 0.1 per cent.

What if you have to move house?

If you’re in negative equity and you can’t sit tight, your situation is more problematic. You will need permission from your lender to sell if the sale price is likely to be less than the remaining value of the mortgage. And you will be personally responsible for making up the difference in value.

A better option is to contact your lender and ask for consent to let out the property, says Morrey. In other words, you can become an accidental landlord. 

Be wary that rental values are likely to take a hit, particularly with the expected influx of stock from the short-term lettings market with the collapse of the travel industry. But hopefully, the rental income can cover your mortgage payments and free up your disposable income so that you can rent elsewhere while you wait for property prices to recover.

Is now a good time to negotiate a deal?

The Government has issued strong guidance against all but essential house moves during lockdown. While sales can still technically proceed, the market is a minefield. Many chains are falling through and some buyers can’t meet their completion dates.

When lockdown lifts, however, some buyers might consider the market an opportunity. If house prices are falling, “you’re likely to be able to make a cheeky offer,” says Morrey.

There just might not be much stock to take a punt at. After a crisis, “we will always see a bit of distressed selling,” says Camilla Dell, founder of the London buying agency Black Brick. “There will be some undoubtedly, but I think it will be few and far between.” The Government’s measures to protect earnings, mortgage holidays, and low interest rates will mean fewer sellers will be forced to take big price cuts.

If you are trying to negotiate, “the key to success is understanding your seller”, says Dell. If you know why, or how urgently they need to sell, you have more bargaining power.

You will also have an advantage if you “can demonstrate that you can move quicker, and anyone sitting on cash is in a great position”.

For those that aren’t may find that they simply can’t buy. Lenders have withdrawn high LTV mortgages from the market en masse. The available mortgage offering has shrunk by nearly a third and you will likely need a deposit of at least 20 per cent to secure lending. 

Which parts of the country will be safest to buy in?

In the immediate term, the impact of coronavirus and the lockdown will be “very much uniform across the country,” says Lawrence Bowles of Savills Research.

When the restrictions lift, however, “we would expect equity driven markets to recover first,” he says. In prime central London, for example, people are more likely to buy with cash rather than with a mortgage, so purchasers will be able to move more quickly.

Recovery will also be dependent on the local employment markets. According to analysis by the CEBR, 48 per cent of the UK population works across the sectors most affected by the coronavirus lockdown: manufacturing, construction, retail, hospitality and other service sectors.

But their concentrations are highest in particular regions. In Yorkshire & the Humber and Northern Ireland, 60 and 59 per cent of workers are in these industries respectively. Disruption to the job markets here is likely to have a bigger impact on the local housing markets, according to CEBR. 

Buy-to-let investors prepare to swoop on housing market downturn

If house prices fall, investors can pick up properties with higher yields. Especially as rents are unlikely to fall as much as sale values

By Melissa Lawford.

The property market is in limbosales are on holdlandlords are struggling, and mortgage searches last month were down 44pc on the previous four-week period, according to the online provider Twenty7Tec.

But some buy-to-let investors are spotting opportunities, and are getting their deals lined up for when the restrictions on purchasing are lifted. The share of buy-to-let mortgage searches on Twenty7Tec saw a small uptick last month. In the capital, prospective investors are “circling”, said Camilla Dell, managing partner at London buying agency Black Brick. “There’s a lot of cash swirling, looking to swoop in,” she said.

While analysts are not anticipating a house price crash, they are forecasting some falls in the short term. The latest survey by the Royal Institution of Chartered Surveyors (Rics) suggested sales expectations in the next three months are the lowest ever recorded.

Savills has forecast a short-term price drop of 5-10pc. “You need only look at the rate that lenders have pulled out their mortgage offering,” said James Tucker of Twenty7Tec. Nearly a third of the mortgage deals on offer have been retracted.

For buy-to-let investors, short-term price falls mean long-term yield increases. In London and the South East, high property prices have meant low yields, leading to an exodus of buy-to-let investors to the North, seeking higher returns. But falling prices have already been boosting rental yields.

House prices in the borough of Kensington and Chelsea were 11.1pc down year-on-year in the last three months of 2019, according to estate agency Hamptons International. This meant the borough recorded the second-largest jump in rental yield of all local authorities in the country. Yields climbed 1.5 percentage points in two years, to 4.2pc.

Similarly, property prices in the City of London fell by 1.7pc, which helped boost yields by 1 percentage point over two years to 5.2pc. If price falls continue, London could open up again to domestic landlords who will be able to get higher long-term yields on their investments. This may even be enough to offset the effects of the reductions in tax relief on buy-to-let mortgages which have seriously hit investors’ pockets since their phased introduction began in 2017.

This is particularly the case because rents are unlikely to take the same hit. Rents do not move in line with house prices, said Gráinne Gilmore, head of research at Zoopla.

After the last financial crash, “the rate of decline in rents was more modest than capital value for homes,” said Ms Gilmore. “When house prices dipped into negative territory in 2011, rents were growing at the strongest pace in four years.”

When the sales market is stalling, people are more likely to hold off on purchases and stay in rentals. “When there is uncertainty, the rental market comes into its own,” added Gary Hall, head of lettings at estate agency Knight Frank. It has forecast that house prices will fall by 3pc over the course of 2020, and that London rents will stay constant. There is an opportunity for investors here, said Angus Stewart of the digital buy-to-let broker Property Master, “as long as they’re sufficiently liquid”.

Those looking to invest will find that they have new competition: short-term landlords are being squeezed by the collapse of the travel industry, and there is already an influx of these properties to the long-term lettings market. Another point of competition could be vendors who are unable to sell their homes if there is a downturn, and so may become accidental landlords.

But Mr Hall is bullish. “Last year we had eight applicants to every rental property listing,” he said. He does not anticipate that rental supply will outstrip demand.

So where will be the best places in the country to invest? Hartlepool in County Durham has the highest rental yield of any local authority in the country, according to Hamptons International, at 11.9pc. The average house price is £113,160. Meanwhile, Pendle in Lancashire has recorded the largest jump in yield growth in the last two years, up 1.6 percentage points to 10.1pc.

When it comes to investing, Mr Hall recommends new stock. “We agreed 27 tenancies last week and the majority were new-build,” he said. Tenants feel more comfortable moving into unoccupied properties, he added. Developers with cash flow problems might also be more open to negotiations on sale prices.

But perhaps the most important factor for investors in the wake of the lockdown will be local employment rates, said Aneisha Beveridge, head of research at Hamptons. These will underwrite rents during the coming months. While the biggest cities will be safer bets, the current winner is the local authority of Eden in Cumbria, which currently has an unemployment rate of 1.6pc. The average house price is £198,480, according to Hamptons.

Why London’s imminent property boom is not all that it seems

Why London’s imminent property boom is not all that it seems 

By Melissa Lawford

Typically, after the Christmas break, the housing market in London is “an absolute desert,” says Simon Barry of Harrods Estates. This year is a different story, he says. In the wake of the Tory election victory, estate agents seem instead to find themselves in an oasis.

Even the Russian buyers are coming back.

Sales of luxury homes have spiked in the capital, a market which has long been in the doldrums. In the month after the election, sales of £2 million-plus homes have jumped by 69 per cent year-on-year, according to analysis firm LonRes.

Everyone is waiting for the surge to translate into price rises. “It is happening, we can feel it happening on the ground,” says Caspar Harvard-Walls, a buying agent at Black Brick. “Straight away, sellers who would have maybe taken 5 or 10 per cent off their asking price now won’t budge.”

New listings are now being set a few percentage points higher than they would have been this time last year, he adds, so “we have to be a lot more aggressive in negotiation.” Soon, he says, “people will begin to think they have missed the bottom of the market.”

So is the London property market about to go bonkers?

The headline figures of the latest HMRC stamp duty receipt data are utterly boring. Overall, in the last three months of 2019, total sales volumes in the UK moved by less than half a per cent. 

But look closer: from October to December, the number of £1 million-plus sales jumped by 12.8 per cent on the same period in 2018 to a total of 5,300. “That is the highest number of £1 million-plus residential transactions for the last quarter of a year in at least the last decade,” says Lucian Cook, research director at Savills. 

The implications for the luxury sector of the London market are huge. The largest concentration of these properties is in London and the South East, says Cook, and the numbers likely reflect “the banked sales after the election”.

Rightmove reported that January was its busiest month ever, and said that agreed sales in London jumped by 26.4 per cent on last year’s total.

While the biggest jump is in the number of super-expensive prime London homes sold, the boost is not just in the glitzy heartlands. LonRes found that in January, sales of homes in “prime fringe” areas, such as Clapham and Southwark, were up by 28.4 per cent year-on-year.

But there is a major caveat: the number of homes sold might be up, but prices are still down. Prime London sales prices were 5.5 per cent lower in January than the year before, according to LonRes. This is a time to buy a bargain, and while some vendors may well be taking a punt at hiking their prices, but they are certainly not the ones who are currently making sales.

And if they do raise their asking prices, this will likely start to stall the market again. “A sustained pick-up in activity depends on sellers keeping price expectations in check,” says Cook.

Across London, “affordability will be a limit on price growth,” says Neal Hudson of research firm Residential Analysts. Demand might be up in the capital, but that does not change the purchasing power of buyers, particularly first-timers, who are limited by mortgage regulations and prices that are still sky-high compared to wages.

The election result was not necessarily the turning point that it has been hailed as. The HMRC figures suggest that the momentum currently taking over the market started over the summer, and continued through the rest of the year. Typically sales fall off after September.

Calling the recent rise in London sales a ‘bounce’ is a misnomer, says Barry. “The momentum has been building for months.” That shows that, certainly in the wider London market, the right pricing of a property matters more than political clarity.

Sellers should also note that the current pick-up in activity is nowhere near as big as it sounds. “Prime central London is recovering off a low base,” says Hudson. Both 2018 and 2017 had weak ends of the year. The numbers “in part simply reflect things being not as bad as they were,” he adds.

There are also some more hurdles on London’s horizon. Brexit trade negotiations will bring back the uncertainty the the election result temporarily pushed away, says Cook. 

There is also the government’s pledged introduction of a 3 per cent surcharge on overseas buyers. This is likely to “put buyers off at the lower end,” says Hudson. It will be the foreign investors buying one- and two-bedroom buy-to-let flats who will see their yields significantly hit by the extra tax. 

As for the multi-millionaires, they will simply refuse to pay the extra, says Barry. When stamp duty goes up, “it’s been vendors who pay most of it [by lowering prices],” says Barry. “We have seen the market fall from a great height since the 2014 stamp duty changes.” 

London is also part of a wider story of global prime real estate. “There are signs that prime markets across the world are struggling,” says Hudson. He notes the downturns in Vancouver and New York in particular. The rule of the old guard could simply have come to an end.

“We could see a stronger market for a number of months,” says Hudson. As there is a shortage of homes on the market and a low turnover of property, it doesn’t take much for transaction growth to filter into price rises. “But that trend for rampant growth that we saw from 2010 to 2014 is unlikely to return.”

How the skies became the last word in super-rich real estate, from home viewing via helicopter to people-carrying drones

By Zoe Dare Hall

The sheer drama of driving – let alone parking – in cities, along with a bigger push to be healthy and walk or cycle instead, is seeing super-rich buyers increasingly willing to forego off-street parking spaces with their multi-million pound mansions. But access to a private jet or helicopter, on the other hand, has never been more desirable – particularly when it comes to viewing properties. 

Private aircraft ownership is on the rise, driven by the US (New York is the private jet capital of the world, according to Knight Frank’s Wealth Report 2019, with nearly 67,000 flights taken in 2018 from Teterboro airport, 12 miles from Manhattan). 

The number of global billionaires is on the up too, and jet owners spend about 1% of their wealth on private aircrafts, with an average of $16.4m per plane, says Knight Frank. 

Travelling by private jet isn’t so much a status symbol as a matter of pure practicality, I am told by London agents who are increasingly seeing their clients buy from the skies. 

“Every minute counts. Ultra high net worth clients live much faster lifestyles and private travel allows them to fit in more activity – and of course do things in comfort and style,” says Camilla Dell, director of Black Brick buying agency. It’s the norm among London clients spending £20m or so on a country estate, she adds, to travel by helicopter rather than car. 

With Battersea the only place to land a helicopter in central London, a chopper only really comes in handy when viewing in the countryside. Oxfordshire-based buying agent Jess Simpson says her clients use private jets or helicopters all the time. 

“It might not be obvious, as they’ll use an airport near the property, then travel to the property by helicopter or car. But it’s a great time-saver and you see so much more from the air than the road,” she says. “Many buyers in the £20m+ market search a wide geographical area, so viewing by helicopter is the only way to cover the distance.”

In the south of France, getting to know the lie of the land from the air is commonplace among UHNW buyers. “It means no queuing, no delays, no fuss,” says Tim Swannie, director of the French buying agency Home Hunts, who says a helipad is on the shopping list of most of his wealthiest clients. He is marketing a five-bed house with a helipad in St Jean de L’Esterel, with views over the Bay of Cannes, for 9.85m euros.  

 

“One financier recently sent a friend to view six properties for him in one day, spread across the Riviera and Provence, so he chartered a helicopter,” says Swannie. When the buyer came to inspect in person, he landed his jet at Cannes private airport, saw the properties, snuck in lunch in a Provencal chateau, then was back in London by late afternoon. “The next day, he bought a villa in Cannes and a hunting domain near Aix-en-Provence,” says Swannie.

Some property owners even carry out luxury home renovations by private jet. “One couple were restoring a house on the French Riviera. They sent two planes loaded with antique furniture and art from Geneva and City Airport and we arranged the logistics in France,” says Swannie. 

As flying privately becomes more desirable among the wealthiest property buyers, so too are properties that offer places to land their helicopter – or borrow a plane. South Florida saw a 35% increase in private jet travel last year, according to ISG World’s Miami Report. 

In Miami, competition for UHNW buyers is fierce among the city’s super-prime, starchitect-designed schemes. One way to set yourself apart from the rest is to offer access to the skies.

At One Thousand Museum Residences, designed by the late architect Zara Hadid, developer Louis Birdman describes the need to offer an amenity that isn’t typically offered in Miami – and the answer is a private rooftop helipad. 

“There are virtually no private skyscrapers in the US that have such an amenity. We have buyers from Latin America, Europe and New York where transportation by helicopter is far more common and they have chosen to buy here for the convenience,” says Birdman. Residences start at $5.8m through One Sotheby’s International Realty

The Ritz-Carlton Residences, Miami Beach – priced from $2m for a two-bed condo to $40m+ for a 10,000 sq ft villa – offer Miami’s first navigable marine helipad on Biscayne Bay, enabling buyers to view the property by air, and residents to schedule helicopter shuttles through the concierge. 

“The helipad is a three-minute ride away by day yacht – then owners can get to and from the airport in just a few minutes, or take a trip to the Keys or the Bahamas,” says Ophir Sternberg, CEO and founding partner of Lionheart Capital, the resort’s developer. 

“We often see international or out of state buyers requesting helicopter tours, allowing them to view the layout of the surrounding neighbourhood and proximity to landmarks such as the airport, major highways, schools and the beach. It also allows buyers to see the project from a 360 degree vantage point,” Sternberg adds. 

And at the Turnberry Ocean Club on Miami’s Sunny Isles Beach – where residences cost $3m-$35m – buyers have priority access to the private jet facility at Opa-Locka Executive Airport, including aircraft maintenance and a full-service concierge. 

“It’s the only residential condominium development that provides a true private FBO (Fixed Base Operator) as an amenity to our buyers – and many people are purchasing directly from the skies via plane and helicopter sales tours,” says Bruce Weiner, Head of Fontainebleau Development. “Many of our residents would fly private regardless, so the access is an added benefit that allows them to land private, just minutes from home.” 

Meanwhile, in Greece, super-rich buyers island-hop by chopper. New luxury developments with private helipads include One & Only Kea Island – where two- to five-bed residences cost from €3m-€7m – and Amanzoe in Porto Heli – whose turnkey villas on one- to five-acre plots cost from €3.2m for two bedrooms – both schemes through Sotheby’s Realty. 

“We have flown clients by private jet to Athens and then taken a helicopter to Amanzoe for a 24 hour viewing experience,” comments Guy Bradshaw, director at UK Sotheby’s International. 

Developers in Dubai have taken private aviation for property buyers one step further. Bradshaw reports that Omniyat, developers of The Dorchester Collection Residences in downtown Dubai, where two-bed residences start at around £3.1m, have partnered with Aston Martin to create the first people-carrying drones. 

Satisfying the UHNWI’s need for speed and one-off experiences, these futuristic, self-driving machines are surely a marketing tool no super-prime scheme – with enough space to land – should be without. 

Indian buyers pile in to London’s property market on the hunt for vastu-compliant homes

A vastu-compliant north London house, £9.5m with Arlington Residential.

By Andrea Marechal Watson

Vastu, often seen as an Indian version of feng shui, dates back thousands of years. Tips for house construction include performing puja rituals on auspicious dates, preferably after consulting an astrologer.

The location and shape of the plot, light, water and internal arrangements of doors, windows and rooms are considered vital to ensuring the health and well-being of occupants.

Vastu has begun to pop up on the UK’s highly international property market. “Feng shui is a big thing for many of our clients, who will not set foot in a property unless it has had the once-over from their feng shui master,” says Penny Mosgrove of Quintessentially Estates, an estate agent. “A similar set of principles exist in vastu shastra.

“This year I was asked to find a home in Notting Hill that was vastu-compliant. There had to be various ‘main’ entrances, no bathroom near the main door, doors that were not black, a door that opened in a clockwise manner and an entrance that had not got a shoe rack near it, nor a bin.

“All mirrors needed to be on the north wall and social rooms needed to face north or at least north-east. At the centre it required a brahmasthan, which is a space for reflection without any obstructions to it.” Eventually, the right house was located and bought.

A flat in north London, £5.8m, with Arlington Residential.

There is a growing Indian community in London, active at the middle to top end of the property market. Following changes in 2015 to the Liberalised Remittance Scheme in India, which increased the capital that buyers can bring into the UK to $250,000 (£195,000) per person per year, there was a surge of buyers.

“Indian buyers are still very prevalent in London – especially when you look at the wider number of Indians that are buying, known as non-resident Indians,” says Camilla Dell, of buying agency Black Brick. “Indian resident buyers are still somewhat limited in what they can spend on an overseas property due to exchange control in India. Although the rules have become more relaxed, families are only allowed to transfer $250,000 per family member per year outside of India.

“So a family of four, after two years, would have a budget of $2 million to spend on a property. Non-resident Indian buyers are not subject to the same restrictions and so tend to have higher budgets.”

“We noticed a significant increase in Indian buyers over the last six months,” adds Simon Garcia of Quintessentially Estates. “The softening of prices and fall in the value of sterling both played a part, as many trade in dollars.”

Pimlico and Westminster accounted for around a third of all purchases by these families, both as investments and homes. Marylebone, with its boutique shops and village feel, is also popular.

Around half of Indian buyers search for vastu-compliant properties, and for those who do, it’s a deal-breaker for a sale. “This continues to be very difficult to fulfil, particularly on properties that are already built,” says Dell.

Marc Schneiderman, director of estate agency Arlington Residential, recently sold an £8 million house in St John’s Wood to an Indian family after they dismissed several other houses due to their orientation. “Their vastu adviser inspected the house and made suggestions such as removing the water fountains in the garden and repositioning furniture,” he says.

There are advantages to buying in a new development. “Last week [we] concluded a deal for a non-resident Indian client on an off-plan development,” says Dell. “The developer was open to changing the layout to meet our client’s vastu requirements.” Buying off-plan with staged payments is also easier for buyers affected by the limits of exchange control.