By Carol Lewis

The wealthy are splashing out on penthouses. We look at the reasons behind this buying spree

The five-bedroom penthouse in Cheval Place, Knightsbridge, central London, is on sale for £24.5 million through joint agencies H Barnes & Co and Knight Frank.

Reports of the death of the super-prime property market have been greatly exaggerated, as Mark Twain might have said had he worked for an estate agency in London. Hundreds of millions of pounds of property transactions have been completed in the past six months, with buyers — particularly those with US dollars to spend — aiming high and paying top prices for penthouses.

Among these is the penthouse at the Peninsula London hotel, overlooking Hyde Park in central London, which is believed to have been bought for £100 million by Ken Griffin, an American investor, as part of a wider portfolio, which includes a mansion on Carlton Gardens, St James’s, for £95 million.

Caspar Harvard-Walls, a partner at Black Brick, a buying agency, says: “It is the classic thing of people trying to call the bottom of the market. For those with American dollars there’s been an extra incentive. The weak pound means that buyers now receive the equivalent of a 40 per cent discount on prices, compared to the first quarter of 2015. “There is a feeling that there might have been an overcorrection in the market and maybe it has gone too far in favour of the buyer. There is also the reasoning that if people like Ken Griffin are investing, maybe they ought to, too.”

Griffin’s acquisition is not the priciest of its kind in this period, though, having been pipped by the sale of the 8,100 sq ft penthouse — with a 5,000 sq ft roof terrace — at Lodha’s No 1 Grosvenor Square development to an unnamed Chinese buyer for a reported £105 million. These prices beat the previous year’s £90 million sale of the penthouse at The Knightsbridge to the British media entrepreneur Ashley Tabor.

Buyers at this price point are fussy. James Hyman, the head of residential at Cluttons, an estate agency, says: “These are not just top-floor flats, they have to be the whole top floor, have unrestricted 360-degree views, double-height ceilings, a hotel-style concierge and total ‘wow’ factor.”

The penthouse that has fetched the highest price this year is thought to be that at Clarges Mayfair, just off Piccadilly and overlooking Green Park, in central London, which sold for £55 million (after a £60 million deal for the same property fell through), with a smaller penthouse in the same development selling for £38 million.

There has recently been a cluster of other deals between the £15 million and £20 million mark, including the penthouse at the Nova development, near Victoria, for just under £17 million.

This spurt of activity can partly be attributed to several new-build super-prime penthouses having come on to the market at the same time. There are more in the pipeline, too, with hopes of record prices at John Caudwell’s Audley Square development in Mayfair, where the eight-bedroom penthouses are said to have their own swimming pools and gyms.

Penny Mosgrove, the chief executive of Quintessentially Estates, the buying agent involved in the sale of the Clarges Mayfair penthouse, says: “Here is a purchase that represents confidence in the prime central London market and assurance in the UK’s economy, despite Brexit and other global pressures.”

While the lower end of the London market remains cautious over Brexit concerns and increased stamp-duty rates, buyers at the upper end are jumping at the opportunity to invest.

Ed Lewis, the head of residential sales at Savills, says: “There is confidence in the London story and, if we have an orderly Brexit, many believe there will be a surge in the market and prices will rise.”

Mosgrove says: “We have more than £200 million of property requests for prime central London.”

And Camilla Dell, a managing partner at Black Brick, says: “We had a record number of inquiries for property up to £20 million in January, more than the whole of the last quarter last year. There is a lot of pent-up demand.”

Stuart Bailey, a partner in Knight Frank’s Belgravia office, says: “There are two schools of thought: either that people want to spend on the best in class and think, ‘My equity is safe here’, it is a real flight to quality, or people are looking for a second-hand property that they can get at trade prices. There is a belief that best-in-class penthouses will hold their value because there is a finite supply, and with predictions that the market will rise by 12 to 13 per cent over the next five years I expect buyers will hold for the medium term.”

David Lee, the head of sales at Pastor Real Estate, has also had an increase in buyers looking for properties between £10 million and £20 million.

“There is a real inflection point in calling the bottom of the market in terms of the dollar-sterling currency,” he says. “Brexit is not important for many at this level. They have cash and still feel that central London is a good place to have it.”

Hyman, who recently sold the freehold of the Bankside Collection, a 16-storey development that includes a triplex penthouse, for more than £19 million, says: “The international market hasn’t fallen out of love with London. It has very much been sitting on the fence and waiting for the market to bottom out, waiting for the London property market to stabilise, but more importantly the currency play.”

For many of the buyers and sellers of these super-prime properties, discretion is paramount, with penthouses such as the one at No 1 Grosvenor Square neither advertised nor marketed. Wealthy buyers such as Griffin send agents to scout out suitable properties, with offers made through brokers.

Mark Parkinson, a founding partner of the buying agent Middleton Advisors, says: “A lot of the buyers at this end of the market have US dollars to spend, and to a lesser extent euros. For some it is about currency, for some Americans there is the prospect of [President] Trump gaining a second term too.

“For others it is political instability at home. They are not too worried by Brexit. For many at this level it is not going to be their main home; domestic politics isn’t seen as too much of a worry. Taxation might be more of a worry, with the prospect of a Corbyn/McDonnell government, but many think that would be short-lived.”

One result of the property slowdown is lower prices close to good primaries

By Jessie Hewitson

This three-bedroom house in Kensington, west London, is on sale for £2.75 million through Lurot Brand. It is close to Fox Primary School, which is ranked ninth in the country by The Sunday Times Parent Power guide.

Securing a place at some of the country’s top schools may now be easier than you think. Fewer property sales in the catchment areas of some of the best state schools is creating opportunities in these locations for savvy buyers.

Knight Frank analysed the local property markets of top schools as ranked in Parent Power, a schools guide published by The Sunday Times, and found that sales within one and a half miles of the top ten state schools dropped 18 per cent in four years, from 15,656 in 2013 to 12,822 in 2017. This is at odds with the average 15 per cent growth in property sales UK-wide in the same period.

These findings indicate that schools aren’t receiving the usual number of applications for Reception places (a child’s first year of primary school), which had to be lodged by Tuesday for the start of the school year in September.

This four-bedroom house in Great Bonas, Shropshire, is on sale for £925,000. The nearby primary school at Tipperton is ranked as outstanding by Ofsted.

Estate agents report that catchment areas are widening as a result, and one desirable school in north London, rated outstanding by Ofsted, is for the first time having to market itself to parents. The school blames its dwindling applications on the local property market: there are no new families moving to the area.

“The slowing property market will mean that people who want to sell a property within a traditional catchment area may struggle, so the catchment area may grow to take in streets that historically would never have had the chance of getting a place at the school,” says Caspar Harvard-Walls, a partner at Black Brick, a buying agency. “This is good news for those parents and buyers, especially because properties outside the traditional catchment area are usually cheaper than those inside.”

The lull in sales close to good schools has been compounded by a general drop in property transactions since 2017 and property unaffordability after years of strong price growth.

According to Patrick Gower, an associate in the research department at Knight Frank, the drop in sales is related to the drop in house price growth, tighter mortgage regulations and potential sellers not building up enough equity to move up the ladder. Brexit uncertainty is also causing vendors to wait and see before moving, with this week’s vote doing little to change this.

“This poses problems for schools with tight catchment areas, and some will need to look farther afield for their intake,” Gower says. “The issue is likely to be compounded for primary schools with an outstanding secondary school near by, [because] it effectively reduces the need to move.”

A four-bedroom apartment in Earls Court, west London, is on sale for £1.75 million through Tedworth Property.

Marc Schneiderman, the director of Arlington Residential, an estate agency in northwest London, says that the volume of sales in St John’s Wood and Hampstead, where there are many outstanding private and state schools, has gone down by about a third compared with two years ago. “With fewer families moving into these areas, the number of new pupils at local schools has been reduced,” he says. The homes within close walking distance of well-regarded schools that have historically sold quickly are also taking “some time” to sell.

James Hyman, the head of residential at Cluttons estate agency, says that, while property prices in good catchment areas of central London have not dropped by as much as the 15 per cent national average over the past three years, they have gone down
(5 per cent). However, research by Knight Frank shows that homes near the best schools command, on average, an 11 per cent premium compared with ones at the bottom of the league tables.

The stagnation in people buying and selling means that local authorities are having to flex the rules on owning a home and renting in the same borough. One parent, who is renting a home close to a desirable secondary school in Haringey, north London, but also owns a home outside the catchment area, was recently inspected by Haringey council. When asked why she was renting while also owning a home, she said that she couldn’t sell her main residence in the present market. The local authority accepted her explanation. It is likely this reason will increasingly be given to councils as parents give up on moving closer to schools and choose to rent instead.

Jemma Scott, a partner at the Buying Solution, a property agency, says she has seen a “marked reduction in the availability of prime rental family houses in the home counties. She says in Ascot and Sunningdale in Berkshire and Virginia Water in Surrey some families are opting to rent during Brexit negotiations and have given up trying to move close to a new school.

The foodie revolution continues in London

In the second of a two part series we look at neighbourhoods where growth is being driven by great food.

By Jayne Dowle

The Mansion development by Clivedale is just to the north of Oxford Street, close to Marylebone, in central London. Apartment prices start at £4.95 million.

Last week we brought you the regional locations where the food revolution is fuelling buyers’ appetites. In the country, nothing adds value to a property like an award-winning village pub or a bustling farmers’ market within walking distance. This week we focus our attention on London.

Part of the old BHS on Oxford Street will reopen in the summer, not as a department store, or a cheap sportswear outlet, but as an indoor market, brimming with producers, retailers, restaurants, street-food vendors, four bars, event spaces and a demo kitchen. It belongs to the chain Market Halls, which is opening branches across the capital and regionally, including one in York in late spring.

Its expansion underlines the growing relationship between decent food outlets and a postcode’s popularity. Take, for example, Borough Market in southeast London. Southwark has grown dramatically in popularity since this foodie paradise appeared 15 years ago.

Soho and Marylebone, prime locations within walking distance of Oxford Street, enjoy a fine reputation for neighbourhood markets, delis, restaurants and cafés.

However, is it the eateries that attract the residents, or vice versa? It’s a debate that the residents of Islington have been chewing over for decades, with the restaurants of Upper Street contributing to a Georgian terraced house in NW1 being able to command an average of £1.38 million.

Whatever the answer, it’s a trend that other areas of London are rapidly emulating. “An army marches on its stomach and the march of some of London’s coolest neighbourhoods is being driven by great food,” says Nick Dawson, an associate at Garrington property finders. “Shoreditch in east London is a shining example. The formerly down-at-heel neighbourhood is a hotbed of tech start-ups, with a bohemian vibe and new restaurants and bars opening. For a three-bedroom property in Shoreditch you can expect to pay £1 million on average, but this is still nearly a third cheaper than the likes of Soho and Covent Garden.” Speaking of value for money, Bethnal Green (where the average price of a flat is £512,102) and Hackney Wick (£522,298) are good examples of areas getting an upgrade to their traditional offering of greasy spoons as buyers move eastwards in search of affordability. “These may offer a slightly more eclectic feel, but they do have an abundance of artisan breweries and cheesemakers,” Dawson says.

Northfield Butchery in Borough Market in Southwark, southeast London.

Tom Kain, a buying consultant for Black Brick, a property agency, adds Brixton and Bermondsey to the list. “These are good examples of areas that have rapidly become more gentrified,” he says. “And a large part of the gentrification is fuelled by the food markets. Many young professionals and families relish the pop-up foodie outlets found in Brixton Village and Maltby Street Market in Bermondsey. It certainly is a draw card.”

A main factor is the surge in healthy and organic eating. Katy Brookes, a sales manager at Foxtons in Muswell Hill, says that a popular spot for north London’s health-conscious is Planet Organic, open until 9.30pm to welcome weary commuters desperate for a Fatigue Fighter (apple, beetroot, orange, celery and ginger) fix.

Her colleague, David Busson, says that the farmers’ market in nearby Stoke Newington helps to create a sense of community and marks the area out from its neighbours. Stoke Newington, with an average price of £653,804, is more expensive than Stamford Hill (£570,416), Upper Clapton (£506,292) and Clapton Common (£510,760). “All the produce comes from within 100 miles of Hackney,” Busson says.

And if you’re wondering where the next hot meal might be coming from, Dawson advises looking northwest. “Queen’s Park is one to watch, with gentrification spreading into the less-affluent areas of Kilburn and Willesden and creating strong demand for fine dining,” he says. “With investment in Queen’s Park on the rise — and family upsizers continuing to move in from Notting Hill and St John’s Wood — this is a foodie haven that might be worth getting in on now.”

By Jane Dowle

The windows need replacing and there’s a big crack in the drawing room ceiling, but this won’t deter the growing number of buyers seeking distinguished but dilapidated properties to make their own.

In central London and other popular spots, where a buyer’s search radius can be as specific as one or two streets, distressed homes are extremely sought-after, says Noel De Keyzer, the head of Savills in Knightsbridge. “In particular favour are those which require full refurbishment because they allow super-prime buyers to tailor it to their own design and taste,” he adds.

These faded glories are an ideal opportunity for buyers to make money. “We recently sourced a property in Marylebone [northwest London] for a client that was for sale at £1,200 a square foot,” says Camilla Dell, the managing partner at Black Brick, a buying agency. “The buyer needed to spend £300 a square foot renovating it. However, when complete it will be worth upwards of £1,800 a square foot, making it a great deal.”

Camilla says that as sellers seek to release capital, there is an increase in suitable properties coming on to the market. “Many of these properties are in need of renovation,” she says. “They are often family properties owned for several generations and have gone up in value considerably since they were originally bought. Therefore, sellers are willing to take a deal.”

Outside of the capital, Marcus Gondolo-Gordon, a search expert at Incognito Property, a property consultancy, says that an increasing number of people are selling in London and looking for large properties to renovate, rather than build from scratch. “Adding their own design to a place comes without the pain of seeking planning and finding a suitable plot, plus the stress of bringing in services and drainage to a site,” he says. “Crucially, finding a well-priced ‘doer-upper’ has the additional benefit of saving a large sum on stamp duty land tax. Buyers can add value by renovating, extending, modernising and improving, using the funds they have saved by not paying as much in purchase tax.”

What can home improvers on more modest budgets learn from these grand renovators?

Get on the radar
The most promising renovation properties are snapped up immediately. Many don’t even make it to the open market, so are not advertised. “Make sure that you are front of the queue,” says Gondolo-Gordon. “Strike up a good relationship with agents and keep in touch to make sure that you are top of their list when new and interesting options come up.” You should ideally be pre-qualified, with your finances in place, so you’re ready to swoop. Cash buyers in rented or “under offer” situations are seen as “hot” and are more likely to get first refusal.

Establish priorities 
“Picking a property, with ‘good bones’ and lots of daylight is far more important than looking for specific features,” says Charles Bettes, the managing director of Gpad London, an architecture and interior design company. “A well-proportioned space can be made to feel homely and is enjoyable to spend time in, but an odd-shaped room with low ceilings can be hard to make beautiful. Somewhere without enough daylight will never be comfortable.” Before you make an offer, visit at different times of the day to see how the light falls.

Financial facts
Don’t let your imagination run away with your budget, warns Harry Gladwin, a partner at the Buying Solution, a buying agency. “When you’re preparing to make an offer, you need a full picture of faults and challenges. Key areas of focus will be the ecology of the property, such as whether bats inhabit the main house or outbuildings, and the use of hazardous materials such as asbestos; we were recently able to negotiate £150,000 off a £7 million country manor house because of asbestos.”

Planning permission 
Beware of restrictive covenants, ancient light, access or easements rights, and listing and conservation area restrictions, any of which may scupper or escalate the costs of an ambitious renovation plan, according to the London-based architect Neil Tomlinson, who specialises in high-end refurbishments. “With any older building, you should also check at the outset for any structural defects, often betrayed by settlement cracks,” he says. “A slow descent down a dilapidated mineshaft might mean the best bits of the property have to be demolished.”

Let it breathe
The smell of fresh paint in a renovation sale puts David Shaw, an architecture specialist at Savills, on high alert. “It’s worth checking further for signs of damp and water ingress that have been hastily covered up,” he warns. “The mechanics, electricals and ventilation are key aspects in any renovation and one of the most expensive to rectify. Inspect the boiler room and electricity circuitry and make sure all are compliant. And if you suspect the garden has been back-filled over the years, check that no air vents have been blocked — this is a main cause of damp.”

Now it begins
You’ve completed the sale and the project is yours. But where to start? Rather than running amok with the sledgehammer smashing down walls, plan your restoration in elements. “Mentally break the house down into manageable sections that will not overwhelm you,” says James Nason, who recently renovated his home, the 16th-century, 60-room Pitchford Hall near Shrewsbury in Shropshire, turning the west wing into holiday lets (cottages.com). “Invariably, there will be problems, but taking it room by room reduces stress and eases cash flow.”

Make an entrance
If you still don’t know where to start, focus on the front door, says Caroline Takla, the director of One Point Six, a London developer. “Sweeping drives, historic entrance gateways and lovely heavy front doors, with vintage door-knockers, give the feeling of grandeur,” she says. “Borrow this by paying close attention to the entrance hallway and space around the landings. These are the areas that ultimately give an air of space and elegance. Wide staircases in particular can add instant splendour.”

Look up
If your property is across multiple levels, see if it presents an opportunity to open up floors, volumes and voids to create imposing double-height rooms and mezzanines. This approach is guaranteed to add the wow factor, says Jonathan Ashmore, the founder of Anarchitect, an architectural practice. “You can create a more open, connected series of living spaces that reflect modern living needs and allow you to retain the heritage, such as original fireplaces.”

Inside out
An ambitious but achievable trick is to bring together indoor and outdoor spaces. “You might consider an inner courtyard or light well at the centre of the property,” Ashmore says. “The beauty of this is the deep natural light penetration, but also that the space has the potential to really feel like an extension of the interior space, either as a winter garden or open to the sky in the summertime.”

Access accessories
The interior designer Karen Howes, founder of the luxury interior design company Taylor Howes, favours the “designer shoes and handbags” approach. “This is when you couple particular pieces with an M&S T-shirt, meaning that you spend your budget wisely, accessorising in the right places,” she explains. For instance, quality flooring throughout creates an impression of being seamless. A large, signature piece of art can cut back on acres of expensive wallpaper, or obviate the need for a crushingly expensive “statement” light fitting in a room.

Be bold
While state-of-the-art gyms and infinity swimming pools may remain the preserve of those with limitless budgets, be bold, Ashmore says. “Even in a more modest project, rather than adding excessive bedrooms, think about incorporating areas that you will enjoy and use, such as a yoga studio, an artist’s retreat or en suite bathrooms in the children’s bedrooms, which are incredibly practical, too.”

In central London and other popular spots, where a buyer’s search radius can be as specific as one or two streets, distressed homes are extremely sought-after, says Noel De Keyzer, the head of Savills in Knightsbridge. “In particular favour are those which require full refurbishment because they allow super-prime buyers to tailor it to their own design and taste,” he adds.

These faded glories are an ideal opportunity for buyers to make money. “We recently sourced a property in Marylebone [northwest London] for a client that was for sale at £1,200 a square foot,” says Camilla Dell, the managing partner at Black Brick, a buying agency. “The buyer needed to spend £300 a square foot renovating it. However, when complete it will be worth upwards of £1,800 a square foot, making it a great deal.”

Camilla says that as sellers seek to release capital, there is an increase in suitable properties coming on to the market. “Many of these properties are in need of renovation,” she says. “They are often family properties owned for several generations and have gone up in value considerably since they were originally bought. Therefore, sellers are willing to take a deal.”

Outside of the capital, Marcus Gondolo-Gordon, a search expert at Incognito Property, a property consultancy, says that an increasing number of people are selling in London and looking for large properties to renovate, rather than build from scratch. “Adding their own design to a place comes without the pain of seeking planning and finding a suitable plot, plus the stress of bringing in services and drainage to a site,” he says. “Crucially, finding a well-priced ‘doer-upper’ has the additional benefit of saving a large sum on stamp duty land tax. Buyers can add value by renovating, extending, modernising and improving, using the funds they have saved by not paying as much in purchase tax.”

What can home improvers on more modest budgets learn from these grand renovators?

Get on the radar
The most promising renovation properties are snapped up immediately. Many don’t even make it to the open market, so are not advertised. “Make sure that you are front of the queue,” says Gondolo-Gordon. “Strike up a good relationship with agents and keep in touch to make sure that you are top of their list when new and interesting options come up.” You should ideally be pre-qualified, with your finances in place, so you’re ready to swoop. Cash buyers in rented or “under offer” situations are seen as “hot” and are more likely to get first refusal.

Establish priorities 
“Picking a property, with ‘good bones’ and lots of daylight is far more important than looking for specific features,” says Charles Bettes, the managing director of Gpad London, an architecture and interior design company. “A well-proportioned space can be made to feel homely and is enjoyable to spend time in, but an odd-shaped room with low ceilings can be hard to make beautiful. Somewhere without enough daylight will never be comfortable.” Before you make an offer, visit at different times of the day to see how the light falls.

Financial facts
Don’t let your imagination run away with your budget, warns Harry Gladwin, a partner at the Buying Solution, a buying agency. “When you’re preparing to make an offer, you need a full picture of faults and challenges. Key areas of focus will be the ecology of the property, such as whether bats inhabit the main house or outbuildings, and the use of hazardous materials such as asbestos; we were recently able to negotiate £150,000 off a £7 million country manor house because of asbestos.”

Planning permission 
Beware of restrictive covenants, ancient light, access or easements rights, and listing and conservation area restrictions, any of which may scupper or escalate the costs of an ambitious renovation plan, according to the London-based architect Neil Tomlinson, who specialises in high-end refurbishments. “With any older building, you should also check at the outset for any structural defects, often betrayed by settlement cracks,” he says. “A slow descent down a dilapidated mineshaft might mean the best bits of the property have to be demolished.”

Let it breathe
The smell of fresh paint in a renovation sale puts David Shaw, an architecture specialist at Savills, on high alert. “It’s worth checking further for signs of damp and water ingress that have been hastily covered up,” he warns. “The mechanics, electricals and ventilation are key aspects in any renovation and one of the most expensive to rectify. Inspect the boiler room and electricity circuitry and make sure all are compliant. And if you suspect the garden has been back-filled over the years, check that no air vents have been blocked — this is a main cause of damp.”

Now it begins
You’ve completed the sale and the project is yours. But where to start? Rather than running amok with the sledgehammer smashing down walls, plan your restoration in elements. “Mentally break the house down into manageable sections that will not overwhelm you,” says James Nason, who recently renovated his home, the 16th-century, 60-room Pitchford Hall near Shrewsbury in Shropshire, turning the west wing into holiday lets (cottages.com). “Invariably, there will be problems, but taking it room by room reduces stress and eases cash flow.”

Make an entrance
If you still don’t know where to start, focus on the front door, says Caroline Takla, the director of One Point Six, a London developer. “Sweeping drives, historic entrance gateways and lovely heavy front doors, with vintage door-knockers, give the feeling of grandeur,” she says. “Borrow this by paying close attention to the entrance hallway and space around the landings. These are the areas that ultimately give an air of space and elegance. Wide staircases in particular can add instant splendour.”

Look up
If your property is across multiple levels, see if it presents an opportunity to open up floors, volumes and voids to create imposing double-height rooms and mezzanines. This approach is guaranteed to add the wow factor, says Jonathan Ashmore, the founder of Anarchitect, an architectural practice. “You can create a more open, connected series of living spaces that reflect modern living needs and allow you to retain the heritage, such as original fireplaces.”

Inside out
An ambitious but achievable trick is to bring together indoor and outdoor spaces. “You might consider an inner courtyard or light well at the centre of the property,” Ashmore says. “The beauty of this is the deep natural light penetration, but also that the space has the potential to really feel like an extension of the interior space, either as a winter garden or open to the sky in the summertime.”

Access accessories
The interior designer Karen Howes, founder of the luxury interior design company Taylor Howes, favours the “designer shoes and handbags” approach. “This is when you couple particular pieces with an M&S T-shirt, meaning that you spend your budget wisely, accessorising in the right places,” she explains. For instance, quality flooring throughout creates an impression of being seamless. A large, signature piece of art can cut back on acres of expensive wallpaper, or obviate the need for a crushingly expensive “statement” light fitting in a room.

Be bold
While state-of-the-art gyms and infinity swimming pools may remain the preserve of those with limitless budgets, be bold, Ashmore says. “Even in a more modest project, rather than adding excessive bedrooms, think about incorporating areas that you will enjoy and use, such as a yoga studio, an artist’s retreat or en suite bathrooms in the children’s bedrooms, which are incredibly practical, too.”

By Graham Norwood

Whether you are buying or selling, dealing with estate agents can be a trying experience — and, for sellers, an expensive one. Yet many agents are scrambling for business as the number of transactions falls: sales were 3.5% down last year, according to the latest figures from the Land Registry, and are predicted to drop again in 2018. So is now the time to negotiate down the fee?

Before you bullishly enter the fray, there are a few inconvenient truths worth noting. First, the lowest fee isn’t necessarily the top priority for sellers: fewer than 10% of homes are marketed via low-cost online agencies. Second, high-street agents have an incentive to charge a competitive commission rate — they earn their money by winning instructions and selling homes, so setting prices too high is counterproductive. Finally (and you may want to sit down for this), British estate agents offer good value, with an average commission rate of 1%-1.5%, compared with 4% in Canada, 3%-6% in Spain and 5% in the US.

Yet even a low percentage can lead to an eye-watering bill, simply because property prices in Britain are so high. The average home costs £220,962, according to the Halifax, despite a 3.1% drop in April. So, at 1%, the agent’s commission is more than £2,200, and at 1.5% it’s £3,314 — both excluding VAT, of course. If you’re selling a £1m home, which isn’t uncommon, it swells to as much as £15,000. A few high-end agents may ask fees of up to 2.5%, but these are rare.

How do I start negotiating? 
Get at least three agents to provide valuations and their marketing strategies for your home. Check the small print in their contracts: if the charges are blank, they’re up for negotiation. Ask them to state the commission, but don’t commit before you’ve compared figures and strategies from other agents.

“While we occasionally see 0.75% commission, it’s actually more like 1.2% at the moment,” says Paula Higgins, co-founder of the consumer group Homeowners’ Alliance. Be sensible when trying to strike a bargain — remember, an agent needs motivation to sell, so an unrealistically low commission may mean your property won’t be their top priority.

What is included in the fee? 
If you want real value for money, not just the lowest fee, check all aspects of an agent’s service, as well as their track record selling your type of property in your area. Most include preparing details and photos, placing them on portals such as Rightmove and Zoopla, and providing “For sale” boards within their standard fee.

What else should I watch for? 
Find out if you will be charged extra for a premium listing on Rightmove (one that pushes your property towards the top of buyers’ searches). And ask whether your fee includes the cost of an open-house event and advertising in the local press — or, if you are flogging an estate, Country Life magazine.

Will I be free to switch agent if I’m unhappy? 
Most sole agents have “lock-in” periods lasting 4-12 weeks — consumer groups say it’s unwise to accept longer terms, as it means you cannot easily switch agent if you’re unhappy.

Would it help to use an agent’s recommended services? 
Agents typically get referral fees after telling clients about their partner mortgage or conveyancing firms, but compare rates and reviews before making a decision, and remember that you’re under no obligation to sign up. Declining to use these companies must not — by law — be an excuse for the agent to disadvantage your property sale or the purchase of your next home.

What if I instruct more than one agent? 
“Rather than pay a multiple fee of 3% shared between them, no matter who finds the buyer, we adopt a winner-takes-all approach,” says Camilla Dell, managing partner of Black Brick buying agency and an arch negotiator with selling agents. She suggests saying up front that you’ll pay 2% or 2.5% to the agent who comes up trumps with a purchaser — and nothing to the ones who fail.

I’d like to incentivise my agent — am I allowed to? 
You certainly are. So, if the agent would usually charge, say, 1.25% commission to sell your home with an asking price of £500,000, why not strike a deal saying you’ll pay 1% if they get a sale for less than £475,000, but 1.5% if they find a purchaser who’ll offer £525,000 or more? You can have these terms written into your contract.

How about using an online agency? 
The savings can be large, but so can the losses. Most online firms charge about £1,000 if you pay upfront; in many cases, however, that’s lost if the agency fails to shift your home. Analysis by the investment consultancy Jefferies suggests some online agencies sell only 50% of the properties they list, and the unsuccessful vendors usually have to employ a traditional estate agent who charges commission — so they end up paying twice to achieve a sale.

Mum and Dad rent a different class of digs

By Carol Lewis

This three-bedroom apartment at Centre Point Residences in New Oxford Street, London, is £1,700 a week with CBRE.

The average cost of student digs across the country is about £88 a week, although in some areas of London parents are paying almost 100 times that to secure the best luxury accommodation for their offspring.

James Thornett, the head of lettings at CBRE Residential, says that parents are paying up to £7,000 a week for “super-top end” three to five-bedroom apartments with a concierge, gym, spa and games room. This year 42 per cent of the estate agency’s lettings in Covent Garden have been to students — compared with 21 per cent last year.

“Many are postgraduate students studying business or management at the London School of Economics or University College London. Two thirds of them are from overseas and will have funds from mum and dad. They are security conscious and tend to want to live in a secure part of town with a 24-hour concierge. They are looking at super-prime properties — a far cry from the stereotypical student digs,” he says.

Thornett says that 10 to 15 per cent of the wealthy students he rents to will not have visited the property before they arrive for university, either trusting in virtual reality or video tours. “Often they will pay the whole year’s rent in advance to secure the tenancy and it is usual to start paying rent in June even though they won’t arrive until September for the new term — such is the competition for the best places,” he says.

Often students will want new-build properties or newly renovated places and some will request a “nanny annexe” in which a bodyguard can live. This is despite the increase in private student halls, many of which offer students a higher quality of digs than seen before. According to the website Accommodation for Students, 287 private halls opened in Britain this year, with students in London paying £264 a week on average, or £129 a week for private rental accommodation. Zone 1 is the most expensive area with an average cost of a studio in private halls of £429 a week. The average weekly rent for all properties within Greater London was £395 in September according to Countrywide, the estate agency.

Last month one student accommodation provider, Hello Student, announced that it was teaming up with the Conran Shop to offer luxury furnished “executive studios” to students in Cardiff costing from £233 a week.

Yet despite the high rents some parents are paying there is a lack of property available to students. “Some landlords are cautious about renting to students but we have to think beyond [the 1980s sitcom] The Young Ones image of students partying every night and ruining the place. They tend to leave the place immaculate and rarely, if ever, do we have to deduct anything from the deposit,” Thornett says.

A two-bedroom flat at Merano Residences, on Albert Embankment in London, is to let for £1,125 a week with CBREA two-bedroom flat at Merano Residences, on Albert Embankment in London, is to let for £1,125 a week with CBRE.

Other areas of London popular with wealthy students include South Kensington, near Imperial College London and the Royal College of Music, and St John’s Wood and close to Regent’s Park for the London Business School.

Camilla Dell, a managing partner of Black Brick, a buying agency, says that she has seen an increase in international rental tenants including students. Many have decided against buying because of the increase in stamp duty, the abolition of capital gains tax and inheritance tax breaks for foreign buyers, and the uncertainty caused by Brexit, which means families are less sure that their children will live and work in London after graduating than they were before the referendum.

She says that most of her clients are looking to spend between £700 and £1,000 a week, with safety the key concern — so a 24-hour concierge or porter is a must-have. They also tend to want a one-year tenancy with the option of renewing for the final two years of their course.

Martin Bikhit, the managing director of Kay & Co estate agency, says: “We have seen a spike this year in wealthy students renting, but also in parents buying for their children. Often they are planning years in advance, buying property three to four years before the children need it and renting it out in the meantime. They will buy two to three-bedroom apartments so that siblings can share. Marylebone is particularly popular for its proximity to the London Business School and London College of Fashion. They tend to spend from £800 a week upwards on rent.”

Thornett says that, of his clients, 80 per cent of parents will pay for children to rent while the rest will buy for them. “More than a couple of times we have had parents plan for children who are eight or ten years old. They are buying property for the child to live in in ten years’ time. They treat it as an investment. There is also a small percentage who will start out renting and will then buy.”

Strategies to survive a price slowdown

Spooked by forecasts of a market fall? Keep calm and take the chance to find your dream home

Francesca Steele

The debate continues about the future of the housing market, with one economist forecasting disaster, while others believe that the average property price will rise this year. These predictions come as house price indices provide evidence of a slowdown. Figures released by the Office for National Statistics and the Land Registry show that average house prices rose by 4.1 per cent in the year to March, the slowest pace of growth since October 2013.

In London, particularly in the prime sector, there has been a marked shift in price gains. The most recent index from Nationwide shows annual growth falling to 1.2 per cent in the capital, the second slowest pace of the 13 UK regions and the weakest rate of growth since 2012.

Robert Gardner, Nationwide’s chief economist, says a squeeze on household incomes and the country’s uncertain economic and political outlook is to blame. Lucian Cook, the head of Savills residential research, says: “We are expecting a weaker market driven by needs-based buyers, who are less likely to compromise. The best insurance against a weaker market is to avoid properties that are blighted, for example, by road or aircraft noise, or where a garden is too small for the size of the house. I’d also recommend buying in the best location you can afford.”

Here, we list what you can do to future-proof your home in case of a slowdown.

Flight to quality Agents are seeing a flight to quality in town and the country. The properties that sell quickly do not have “abnormal quirks”, says Nick Whitten, the director of residential research at JLL, the property company. “Safer house purchases come down to the perception of an area and future stability. Factors to consider include schools, public transport, employment, vibrant local shops and services, proximity to green spaces, safety and overall attractiveness of an area.”

He says the best properties and locations are those with the broadest appeal. For example, if you move to an area because the local school is rated outstanding, what happens to your house price if the school loses that rating? “If your street is ten minutes from excellent transport links as well as a desirable school, a rating change would be less problematic,” Whitten says.

Location, location, location Whitten highlights York and Abingdon as locations where prices are likely to remain stable. Limited older and desirable housing stock, good transport links and popular shopping and cultural activities maintain the popularity of these places. Market towns and houses within easy reach of them are typically stable, even in a downturn, he says.

Ben Pridden, the residential director at Savills, agrees that York is a good location, predicting a five-year growth of 25.9 per cent despite a loss in the past three months of 0.7 per cent. “York ticks all the boxes; aesthetics, connections to London and Leeds, the northern finance centre, great schools, a university, and we even have a racecourse. It’s proved a resilient market, with a deep strand of equity, and more than half our clients are cash buyers. Being a medieval city, restricted by its old walls, York has few Georgian and Victorian streets, so homes there are always sought-after.”

Winchester and Edinburgh are other locations where demand is likely to remain high because of what is on offer, despite prices not rising as much as in the most popular markets, such as London and Oxford.

Buy in a city JLL has noticed a “trend towards urbanisation” being driven by regeneration in city centres such as Manchester, and suburbs such as Solihull in Birmingham. “Historically our biggest cities weren’t very residential,” says Whitten. “The population of Manchester city centre was about 10,000 people in 2000, and 17 years later it’s about 55,000, because so much has been built around the canals and the university. People want to be closer to jobs and culture. Whether you’re an owner-occupier or an investor, city centres feel a safe bet.”

Similarly, Solihull, listed in 2013 as the top place to live in Britain in a quality-of-life index conducted by Uswitch.com, has benefited from the regeneration of Birmingham city centre and Midlands transport improvements. Solihull railway station gets commuters to Birmingham Moor Street station in under ten minutes. JLL predicts a five-year house price growth of 28 per cent in Manchester city centre and 22 per cent in Solihull over the next five years, compared with a UK average of 13 per cent.

Depending on your budget, it may be worth considering somewhere yet to rise. Places where the transport links are nearly in place, such as Crossrail locations in and near London, are a good option. JLL predicts price increases for Woolwich in southeast London, while Jo Eccles, the managing director of SP Property Group, recommends Ealing, Acton and Northfields in west London for family homes.

“You can still buy a superb family house for less than £1 million and there are excellent state schools in the area. Once Crossrail opens, property will be in high demand here,” Eccles says.

Camilla Dell, the managing partner at the independent property buying agency Black Brick, warns about what should remain off-limits, even in up-and-coming areas. “Try to avoid flats higher than the first or second floor without a lift, ground and lower-ground floor flats, which suffer from damp or low levels of light, and properties far from public transport and shops.”

The devil is in the detail Alex Newall, the managing director of Barnes Private Office, says there is a flight towards quality, which is evident in every cycle. “Deals are still happening — we’ve just made a £30 million residential sale in central London — but buyers are less prepared to compromise. Our clients say the house must be spot-on to part with their hard-earned cash.”

The title must be “squeaky clean”, Newall says, meaning that you must know exactly what you own and what that ownership entails. “The classic error is finding the pathway you think you own is public land, or the old rectory, where you’re responsible for paying for the church roof next door. We have a case where the people who bought two flats hoping to put them together found they don’t own the slim void between the two properties.” Read everything carefully and stay on top of your conveyancers.

Plan for the future If you’re not moving, you can increase the appeal of your property should you choose to sell in future. “Build in hope value,” says Newall. Get planning permission for an extension and fix old electrics. Surprisingly, this may be the most important selling point in luxury properties, where buyers often want to install the latest systems and can only do so if the wiring is up to scratch.

June 09, 2017

Why the Russians want Mayfair
By Carol Lewis

The Russians are back buying luxury properties in central London and beyond. Favourable exchange rates and a rise in the price of oil mean that international buyers, particularly those from the Middle East and Russia, are spending millions on large homes in high-end neighbourhoods.

Camilla Dell, the managing partner at Black Brick Property Solutions, says her buying agency has had a 22 per cent increase in the number of Russians buying in central London this year compared with last. This includes a family who bought a large detached house in the heart of Kensington for £37 million and another who bought an apartment in a Mayfair development for £21 million. “The Russians have been our biggest spenders, paying an average of £18.5 million for their properties. They have been buying homes in prime central London, with a preference for Mayfair and Kensington. Their reasons for buying are relocating to London for family, better quality of life, safety and education. Brexit has not been a factor, although currency has,” Dell says.

The main nationalities buying in prime central London last year, according to the Mayfair-based agency, were British, Indian and Middle Eastern. This year the balance has shifted to Russian, French and Middle Eastern. Dell’s biggest sale this year was a £55 million house in Belgravia to a Saudi Arabian family. Savills also reports that super-prime sales, properties worth more than £10 million, are robust.

The estate agency reports there were 120 sales last year of properties in London worth more than £10 million.
While transactions were down a little on the previous year, slightly more was spent. In total about £2.5 billion of property worth more than £10 million sold last year, of which £1.5 billion was invested in properties worth more than £20 million, according to a report, Spotlight: Prime London & Country 2017, by Savills.

The agency also reports an increase in high-end sales in the home counties. There were four sales of more than £10 million in St George’s Hill in Surrey. High-spending buyers came from Europe, the Middle East, the Far East and Russia.

According to data from Hamptons International, the strengthening of the rouble against the pound means that property is 45 per cent cheaper than it was in January 2016 for Russian buyers. It also shows that international buyers accounted for one third of sales in London in the first three months of this year, up from 22 per cent in the last three months of last year, with the proportion of overseas buyers in the most expensive London neighbourhoods totalling 49 per cent. However, this is well below the peak of 60 per cent, achieved right after the European referendum when the pound was weak.

The proportion of EU buyers in prime central London has fallen from 33 per cent last spring to 8 per cent at the start of this year. It is the first time that European buyers are not the largest group of overseas buyers — overtaken by those from the Middle East, who accounted for 10 per cent of all purchases in prime central London. However, sales to European buyers in affluent London suburbs are rising; from 6 per cent at the end of last year to 10 per cent of all sales this year.

Johnny Morris, the research and analytics director for Countrywide, says: “Europeans are attracted to wealthy suburbs such as Wandsworth, Richmond and Wimbledon — driven by the exchange rate and market sentiment.”
The spike in international homeowners selling property in London, which occurred just after the Brexit vote — in London 46 per cent of sales were by foreign owners; in prime central areas the figure was 68 per cent — appears to have eased; now foreign owners selling accounts for 20 per cent of sales across the city, and 40 per cent in the centre. However, Morris says that a weak euro and Brexit uncertainty has contributed to an increase in sales by EU owners in prime central London.

By Annabelle Williams

Estate agents are investing in headsets, but not everyone is convinced.

Estate agencies are spending tens of thousands of pounds developing virtual-reality tours of high-end properties, so buyers can privately gaze at the interior of immaculate homes, including those yet to be built, in their own time.

JLL, the property consultant, is working with a virtual-reality company to offer virtual tours of properties for sale, or to let. It says the tours, available this spring, will be “fully immersive and as close to reality as possible”.

“The benefits include saving time,” Tim des Forges, a director at JLL, says. “Rather than the buyer being taken to see 20 flats, they can view them virtually and perhaps opt to see only their top three in person. Some may buy or rent only after seeing the virtual tour.”

The estate agency Carter Jonas is going one better. Using new technology, it has launched what it believes is the first virtual-reality tour to include an estate agent — viewers can follow an agent through a house, yet virtually look around and turn away from them. Carter Jonas says you would not let a buyer wander round your home without guidance, so why would you do so virtually?

The prototype is being used for a development in Leinster Square, in Notting Hill, west London, and is expected to be offered at two other central London developments, and one outside the capital. “The difference [with our technology] is that I’m in the video speaking,” says Amelia Blake, a London residential sales specialist at Carter Jonas.

Virtual-reality technology has been around for decades, but has not yet been good enough, nor cost-effective, for general use. Yet it has made big leaps in portraying spatial depth, which buyers can’t gauge from a floor plan or pictures.

Tours typically will be offered through an app downloaded on to a smartphone and viewed through a headset.

In Asia, however, tours are often viewed on tablets.

“Some clients do not want to put goggles on their head,” says Alex Newall, the managing director and founder of Hanover Private Office, a property consultancy.

The technology is often aimed at overseas investors. “In the prime central London market, international buyers are crucial to the business so we do what we can to accommodate their needs,” Blake says. Virtual reality has been vital for developers selling off-plan apartments, says Newall, and at a time when high-end property sales have slowed, estate agents might consider investment in virtual reality money well spent.

However, not all experts are convinced that virtual-reality viewings, however high-tech, are going to catch on for properties already built. “They are fun gimmicks, but anyone who is going to buy a house will visit it,” says Newall. “It doesn’t sell the house.”

He says that investment in drone photography has been more revolutionary for marketing properties.

Camilla Dell, the founder of Black Brick Property Solutions, an independent buying consultancy, says: “I have seen very little evidence of high-net-worth clients using this sort of technology. When people are spending millions, 99.9 per cent of the time they will get on a plane and see it, and we would be worried if they did not.” At best it may help clients to draw up a shortlist, but ultimately the virtual-reality experience cannot replicate being in a property and seeing the neighbourhood, and older buyers see it as a faff rather than helpful, Dell says.

Nonetheless, sellers yet to be convinced of the usefulness of virtual reality should perhaps keep the faith; it will provide them with useful analytics, including “how long buyers spend in each room, what they look at and what’s important to them,” says des Forges. “Sellers can take this information to maximise the potential of their property, and agents will be able to use it for future instructions, for example, by telling you that 60 per cent of virtual reality viewing was spent looking in the kitchen — so it’s good to place an emphasis on it.”

By Camilla Dell

As property advisers, we are often asked what is the best kind of investment in London – a new build property or an older style or period property?

New build developments certainly have a natural appeal in that everything is brand new, which means buyers can put their own stamp on the property and maintenance should be low. People also like the concept of buying off plan, on the basis that prices will rise as the development nears completion. What’s more, off-plan developments often offer more flexible payment options.

When buying off plan, there are a number of things to be wary of. The biggest risk is that you can’t actually inspect the property. You need to be able to read the floor plan and visualise how the flat will look and what the outlook will be like, which can be challenging for the untrained eye. Swanky marketing suites can also often be very misleading.

You also need to take into account things like service charges, as many developers now calculate service charge on price per square foot basis, which can be confusing, and can significantly add to your annual expenditure, an important factor to consider particularly if you plan on renting the property out.

It is also important to consider the potential for capital growth. Many new builds can be priced as much as 30 per cent higher than surrounding re-sale properties, and as a buyer, you need to ask yourself whether that premium is justified. Looking back over the boom and bust periods of London’s property market, it is the older, period style properties which have tended to appreciate most over time.

New builds usually appreciate far slower, especially as they are often located in ‘up and coming’ areas, where supply outstrips demand. When the market drops, these developments tend to take a much bigger hit due to a combination of location and the fact that there is a higher density of similar properties in the area, with prices falling up to 20 per cent in some cases.

We recommend taking into consideration the location, as well as the “rarity” factor of the building. For example, we have purchased several apartments in the former BBC Television Centre development in White City for clients. This is a particularly interesting new development thanks in part to its history, its proximity to transport links, as well as Westfield shopping centre.

Clients of ours who bought into the scheme in early 2015 have already seen a 10 per cent uplift in the value, and we are encouraged by the fact that there is very little evidence of buyers trying to sell on their contracts before completion.

Another consideration when buying new is that there are deals to be had. Developers with completing stock are more able to play with their margins and are able to give ‘deals’ to their buyers. Buyers should be wary of developer incentives, such as offering to pay stamp duty, though – the cost is often made up in the asking price of these so-called “incentives”.

When weighing up the options, the key to buying new build property is to do your homework; seek impartial advice on the developer, the area – check the local council’s housing policy for further developments – and the property itself.