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Mind the gap

The price gap between property in London and the rest of the country has reached its widest point in history — an average home in the capital now costs more than two and a half times the price of a home elsewhere.

The record divide, revealed in data from the Land Registry, shows that a typical London property now costs £463,872 compared with £180,252 across England and Wales.

The phenomenon is explored in a new Channel 4 documentary, Million Pound Properties, which is being shown on Wednesday 15 April at 8pm.

It investigates what a seven-figure budget will buy across different parts of the UK. For example, for £1 million you can snap up a Scottish stately home, or an Islington council house. In Essex, what you pay for a mansion will buy a Thames houseboat in the capital.

Currently on the market with Miller Town & Country is a Grade II-listed, nine-bedroom manor house near Okehampton, Devon, featuring views across Dartmoor and four acres of grounds. It’s yours for £1 million. In London, Chase Apartments is offering a one-bedroom flat in King’s Cross for the same price.

“The simple fact is that London has become an ‘international city state’ and what is going on here bears no resemblance to what is happening in the rest of the country,” says Howard Elston, associate director at Aylesford International.

“If the influx of overseas money into London continues as it has done over the past decade, then the discrepancy will only get bigger and domestic buyers will have to move further out to find something they can afford.”

Home owners leaving London can, technically, profit from the equity their properties have built up. But buying agent Saul Empson of Haringtons UK says that, in reality, London’s stellar price rises mean home owners are reluctant to move.

This, he says, is partly because it costs so much to move and, if you do, you will have no chance of getting back to London if you change your mind.

As a result, owners are holding on to property, reducing the choice for buyers and ramping up prices.

“One of the most common complaints about the London market is the lack of good-quality homes,” says buying agent Caspar Harvard-Walls, a partner at Black Brick.

“Everybody wants to buy here because profits have been so high since 2008, compared to the rest of the UK. If you are one of the lucky people who own in London and have benefited from significant capital growth, why would you sell?

“Increasingly, we see families, who need or want to move out of the capital for more space and better schools, renting out their London home and renting in the country, while using the profit on their rent in London to pay the commuting costs.”

While the property price gap between London and elsewhere is likely to remain large for the foreseeable future, there is evidence that as price rises in the capital become steady, the gulf with the prime home counties will start to narrow.

Take a walk on the south side

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

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

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

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

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

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

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

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

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

How to build a future in buy-to-let

How can you make your pension pot money work its hardest? Investing in a rental property is a popular option. According to the insurer Direct Line for Business, about a third (32 per cent) of people aged 45 to 64 who have a pension would consider investing some or all of it in a buy-to-let (BTL) property.

Their thinking is that a bricks-and-mortar investment is a third way between the rock-bottom interest rates on the high street and the volatile stock market, and estate agents report a stream of would-be “silver landlords” coming through their doors. But BTL isn’t an easy option. Before you start house-hunting you need to grasp the tax implications and risks involved.

Is BTL a good idea compared with other forms of investment?
A recent study by the finance services group True Potential concluded that, over the past 30 years, shares outperformed property. Cash investments produced the poorest returns. However, fear of stock market volatility has deterred some investors who feel that investing in something they can see is a safer bet, even though capital growth is not guaranteed. “All investments include some risk,” says Alan Ward, chairman of the Residential Landlords Association.

“If you are looking for capital growth, you have to remember that a lot of property has not regained the value it had prior to 2008.”

Am I landlord material?
House-hunting for a BTL property has to be a clinical process — you need a property that will appeal to the market, not one you adore. “There can be a lot of emotion involved,” says David Vawdrey, branch manager of Leaders letting agency, in Chichester, West Sussex. “You have to be slightly divorced from the property; it needs to be something that will let well, not something you want to live in.”

You also need time to spend on the property, even if you have a managing agent. You will need to field regular calls about maintenance issues — and it is your legal responsibility to ensure the property is in a decent, safe condition. However, Vawdrey’s biggest issue is landlords who hope to BTL on a shoestring and have no contingency funds in place. “An agent’s biggest nightmare is when the boiler breaks down and you have tenants screaming and the landlord saying they can’t afford to fix it,” he says.

What sort of property should I buy?
Flats are the traditional choice of BTL landlords. “They are much easier and cost less to maintain,” says Will Clark, director at sellmyhome.co.uk.

“Two-bedroom flats tend to be the most popular with landlords as they appeal to a variety of potential tenants — from couples, singles, young families and downsizers.” A flat close to a train or Tube station, university, or city centre will tend to be the easiest to let. However, buying a house to let might be a smarter option, as more young families are priced off the property ladder and face renting for life, in particular in London and the southeast. Families tend to stay put longer than young renters, meaning less risk of void periods.

Should I look for an income or growth?
According to the Direct Line for Business survey, more retirees want a property that will deliver a regular income (43 per cent), compared with those seeking capital growth (17 per cent). Finding a property that will deliver both will be challenging.

“Areas either give good capital growth or good income. Combining the two is very hard unless you buy a wreck for cash and add value, then remortgage,” says Kate Faulkner, managing director of the property advice site propertychecklists.co.uk.

The golden rule is that if you buy an inexpensive property in a depressed market your yield (see below) will be higher than if you buy in an expensive area where the higher rents will be wiped out by higher entry costs. Tim Hyatt, at Knight Frank, says that investors should look for a minimum 5 per cent yield to break even, once maintenance, service charges, fees and tax are taken into account.

Does it need to be near where I live?
A recent study by Sequre Property Investment reports that 61 per cent of investors buying property in the north of England are based in London or the southeast. These buyers are homing in on good-value locations such as Manchester, Liverpool, Preston and Salford, where entry prices are low, and Sequre suggests they can enjoy yields of up to 7 or 8 per cent — almost twice what they would earn on a property in London. If you do rent far from home, a good local lettings agent will be a must and that will eat into your profits — of which more later.

What is “yield” and how do I calculate it?
Yield is the income you can expect to earn from a BTL compared with the value of the property. So, if you spent £225,000 on a property, rent it out for £950 per month (or £11,400 per year), your yield would be 5.06 per cent (11,400 divided by 225,000 times 100).

However, calculating a precise yield is not quite as simple because there are some wild-card costs to consider. Terry Lovett, managing director of Lovett estate agents in Cambridgeshire, points out that yield does not allow for periods when the property is empty (a “void period” in the trade) and the cost of management and maintenance, although these latter costs are tax deductible. Another issue with yield is that it is hard to predict in advance. Faulkner warns that unregulated estate agents can say whatever they like on returns (unlike financial advisers) so do your research on local rents before you buy.

What is the BTL mortgage market like?
Good, says Brian Murphy, head of lending at the Mortgage Advice Bureau. “We have not had so many products in the market since before the financial crisis,” he says. The minimum deposit you can offer for a BTL mortgage will be about 15 per cent but, of course, the more money you put down the better your interest rate will be. If you have, say, a 40 per cent deposit you could expect to find a tracker mortgage with an interest rate of about 2 per cent. If you opt to fix that mortgage for two years then that will rise to about 2.3 to 2.4 per cent.

However, Murphy suggests that, before plunging in, you consult a specialist pensions adviser. “One size does not fit all,” he says.

How do I go about finding a good lettings agent?
Word of mouth is the best way. The Association of Residential Letting Agents (arla.co.uk) and the Royal Institution of Chartered Surveyors (rics.org) have databases of members. Find out who your point of contact will be, exactly what they will be doing for you, and how much it will cost — including whether they will charge fees each time a tenancy agreement is renewed, a common ruse.

Speak to several firms before making a decision. Check that they are registered with the property ombudsman, which can arbitrate if you do run into difficulties (tpos.co.uk). You could even go under cover. “Mystery shop them,” advises Karelia Scott-Daniels, of Manse & Garret Property Search. “Sign up as a tenant and see how they treat you. If they just refer you to their website they are not being very proactive. They should be persuading you to go and see things.”

How much will they charge?
The cost of marketing your property initially varies wildly, says Ward, but it is about half a month’s rent. He says it is crucial to grill your agent on matters such as the cost of renewing a tenancy so you don’t get a nasty surprise further down the line. Expect to pay about 10 per cent of your rent for day-to-day management. However, this will be higher in London — Faulkner suggests it could be about 15 per cent.

Remember, however, that the cost of management is tax deductible. If you want to cut costs, do it yourself — advertising a property on a website such as Gumtree is probably the most cost-effective method, although you will have to interview tenants yourself and call in their references.

Unless you have experience of BTL, or are unafraid of the learning curve involved and willing to put in several hours each week, Faulkner thinks it is best to leave the job of managing a BTL to an agent. “The management of a property is complex. I use an agent as it’s virtually impossible to keep up with the law,” she says.

Buying agent Camilla Dell, partner of Black Brick, agrees. “It’s never a good idea to manage a property yourself,” she says. “What happens if you are away on holiday and your tenant calls you in the middle of the night complaining of a leaking tap? A good agent acts as a barrier between you and your tenant, so if things get tricky, the emotion is removed and problems can be dealt with in a calm, professional manner.”

What red tape will I face if I do manage it myself?
Before you rent the property you will need to have an Energy Performance Certificate. Gas appliances must be safety-checked annually and it is advisable that the electrics are also checked (this is not mandatory unless you are renting a large shared house). The property should be in a safe and decent state. You also have to sign up to a deposit protection scheme to safeguard the money your tenant pays up front. Checks on the immigration status of tenants are being trialled in the Midlands and could be rolled out nationwide.

How to negotiate a house sale

A recent survey of homes sold in Greater London showed that 20 per cent achieve the asking price, with 29 per cent selling for more and 51 per cent for less. One lucky buyer negotiated paying just 43 per cent of the asking price while a seller gained 48 per cent over the asking price, according to the analysis of almost 33,000 sales by the estate agency comparison website getagent.co.uk. Here, we outline the tactics you can employ to secure the best deal for you. Poker faces at the ready:

If you are buying

• Know your market: “The most important thing is to research prices and look at plenty of properties to get a feel for the market,” says Stuart Patterson, the director of the Knightsbridge boutique estate agency Patterson Bowe.

Trevor Abrahmsohn, the director of Glentree Estates, agrees: “Take soundings from various local agents who understand the values in the road that you are looking at and preferably make your offer with the sellers themselves at a meeting that you should ask your agents to set up. There is nothing better than direct dialogue between you and them.”

• Know your price: “Bear in mind that in a buyers’ market there are usually too many properties to sell and too few buyers; that gives you enormous purchasing power. Always offer at least 20 per cent below the asking price. Often an opportunistic agent will tell you that there are other bids in order to accelerate your interest. Ignore this completely, it is probably hogwash,” Abrahmsohn says.

“However in a sellers’ market the vendor has all the power and very often you will have to bid up to the asking price. Then it is absolutely crucial that you agree a lock-out period during which you carry out due diligence of the survey and solicitors. Gazumping is rife in this type of market,” he says.

“You have to be a good poker player during these meetings and try to curb your enthusiasm. The last thing that you want is to give the game away since this will cost you dear.”

Patterson says: “Don’t insult the seller with a derisory offer. Be reasonable and back up your offer — whether you are a cash buyer, your finance is in place, you are chain-free, etc Make yourself attractive to the seller, you need to appear genuine, prepared to commit. Come across as confident.”

Rayhan Rafiq Omar, cofounder of getagent.co.uk, says: “Remember estate agents represent sellers and are there to get the best price for the seller. If an agent comes back saying the owner wants a higher offer, stay firm. You’ll want to eventually meet the seller halfway, but don’t let the agent know you can be pushed around in the negotiation. The people who act desperate are the ones that get gazumped or pushed into a higher price just before exchange.”

• Know your seller: Camilla Dell, a managing partner at buying agency Black Brick Property Solutions, says: “Find out about the motivation to sell. Is it a developer who just wants to get it sold and move on, is it a divorcing couple or a probate sale? You need to determine whether the seller is motivated because there are people who will put their property on sale to test out the market and are not sure they really want to sell. You don’t want to end up negotiating with someone who isn’t a committed seller.”

• Know your competitors Dell adds: “If you are the only game in town and the asking price is reasonable, I probably wouldn’t go in at the asking price but 5-10 per cent below, depending on the market. If I suspected there were more people interested, I might go in more aggressively, especially if it is a competitive market with rising prices. Then I might go in at the asking price, or even above. Then it is less about saving money and more about securing the property and getting it off the market.”

If you are selling

• Know your buyers: Patterson says: “Play it cool. If they come to you with a serious offer, you can assume they have done their due diligence. Find out everything about the buyer. Build up a rapport, even before negotiating. Keep everything open and chatty.

“You will see the most interest in the first fortnight to three weeks, when the property is fresh to the market. If you don’t take an offer then, you might be waiting three to six months. So many deals fall through because sellers just get greedy,” he says.

• Know your worth: “You’ve done the hard work of marketing your property, having people traipse through on viewings and now you have an offer. The first thing to do is say ‘no’. It doesn’t matter how good the first offer is, the first offer is never the best one,” Omar says.

“If this is the only offer you have received, ask for an increased offer. And wait. You have the property they want to call home. Even if they refuse to increase their offer, be patient. They will come back with a better offer. When the buyer comes back with a higher offer that you are happy with, again don’t be hasty to accept. Behave as if you aren’t desperate,” he adds.

“If the buyer is in a rush, use this to get the very best offer for your home. This is where a good agent really steps up. They will have a handle on how many people are in the market for your property, and how long you should wait to get the best price. Whatever you think about estate agents, they see and experience more of your local property market than you do.”

Omar adds: “If you received multiple offers: you have achieved the holy grail and will likely achieve above asking price. Many agents use a process called ‘sealed bids’ to make buyers compete. It is a horrible process and you certainly don’t get the best result. While sealed bids are easy for an agent to administer, their true skill is with someone in your home, putting on the pressure to seal the best deal. There’s no reason why they couldn’t run an informal auction in your home.

“A good agent will negotiate the best offer with each of the buyers and present them to you, along with how confident they are each buyer will complete.”

Buying agents can help get the best price

A professional property buyer can save you money, but if you can’t afford one, here are some of the tricks they use

How does a discount of 10 per cent on your property purchase sound? The wealthiest property buyers have always known the best way to knock down prices — pay a professional buying agent, someone to represent them directly, rather than the seller who has the estate agent on his or her side. If you are lower down the property chain, however, and want to unearth the best properties before anyone else — preferably at a reduced rate — here are the things you need to know to go about it in the current market, with or without an expert at your side.

Buying agents may cost somewhere between 1.5 and 3 per cent of the purchase price, but they often save their clients much more because of their ability to secure sneak previews of properties not yet on the market and to sniff out a discount where a lone buyer might unwittingly have paid the guide price. They spend years cultivating relationships with local estate agents to ensure that they get the latest information about, and access to, the newest properties and that they are full of insider tips. For example, developers are often more willing to accept a lower offer than sellers who live in a property, because they want the return on their investment as soon as possible.

Previously, buying agents tended to be busiest at the higher end of the market, in prime central London, for example. Recently, however, they have also found themselves busier than ever lower down the chain. Some of the things they do — such as creating long-standing relationships — are difficult to emulate. However, other tips from these industry insiders can be incredibly useful.

It’s the best buyers’ market the UK has seen in a long time, according to housing experts, but only if you’re looking for properties worth more than £2 million, where discounts of between 10 and 15 per cent are becoming increasingly common. Many sellers at this level are keen to sell to avoid being hit by the mansion tax proposed by Labour, which could kick in after the general election in May on properties worth £2 million or more. They are also aware that there may be less interest from buyers worried about the same thing, making a discount more likely for those buyers in a good position.

Those looking for properties below the £2 million mark must be even more astute, because the market is flooded with people who might previously have bought a more expensive property. “It’s definitely a tale of two halves at the moment,” says Camilla Dell, managing partner and co-founder of Black Brick Property Solutions.“The market below £2 million is incredibly active, with lots of buyers chasing relatively few opportunities, and some going to sealed bids.”

That doesn’t mean, however, that there aren’t opportunities out there. “We’ve seen a lot of examples where sellers put over-priced properties on the market for between £1.5 million and £2 million just before Christmas,” says Jo Eccles at Sourcing Property. “Now, because those properties have sat on Rightmove for several months, buyers think there must be something wrong with them and overlook them. But some of these are actually cracking properties that can, in some cases, be purchased for 10 per cent less than the guide price.” For a property worth £1.5 million, 10 per cent of the asking price would mean knocking £150,000 off — a substantial amount by any standards.

A buying agent immediately adds credibility to a bid, says Nathalie Hirst, a London-based agent. “Sellers are interested in more than just the amount that’s bid. The agents I work with know that I’ve always done my due diligence on a buyer and that I can be upfront about their finances, their legal situation and move quickly as a result. Say there is a property on at £5 million. I might quite easily put in a bid at £4.8 million because they know I won’t back out.”

Finding a keen seller should be your top priority, says Guy Meacock of Prime Purchase. “Even when it seems like a buyers’ market, don’t be fooled: you won’t automatically get 20 per cent wiped off the asking price.” A buying agent will be able to do this much more easily because of longstanding relationships with local businesses, but there are still things you can do yourself.

1) Ask agents about the seller’s situation — are they a developer or do they live there? Do they look as though they are living alone because of a divorce or that they are keen to move because they’ve just had another baby and run out of space? Find out how long the property has been owned on sites such as Zoopla.

2) Try to see properties before anyone else. Either find a good buying agent or build up a relationship with local estate agents.

3) Get a good lawyer, who is familiar with the location, doesn’t rely on fax machines and get one who answers the phone quickly. “We tell our clients that having a good lawyer can make or break a deal, depending on how fast and professionally they act,” says Dell.

4) Don’t put all your cards on the table. If you love a property, try not to gush about it right away in front of the estate agent or owner. It’s harder to negotiate if they know it’s the one for you.

5) Have your current property on the market, ideally with a buyer in place. If you can exchange before making your offer, even better.

Catch the house price wave south of the Thames in ‘new London’

Thirty years ago, there was no contest. Ask people which side of the Thames it was better to live on, and the answer would be north every time.

You only needed to look at the Underground map. Barely 30 Tube stations south of the river, compared with 200-plus on the north bank.

Why? Firstly, blame the geology. It was easier to tunnel through the solid clay of north London, than through some of the wetter, more gravel-like soil on the south of the river.

And then there was money. The firms that were building London Underground lines in the 1920s and 1930s were all private companies. The way they maximised their profits was by opening up stations in parts of London that were hitherto uncatered for.

“They preferred to build new lines into areas not previously well served by transport links, rather than areas already served by local mainline railways or tramway networks, as was the case in south London,” says Candice Jones, marketing manager at the London Transport Museum.

This was all very well until 1952, when trams were discontinued. Then, 10 years later, the last trolleybuses were shunted onto the hard shoulder of history.

All of a sudden, travelling into the centre of town became a lot harder for anyone in south London.

North of the river, your average Central Line passenger could get on at West Ruislip and read the paper all the way to Oxford Circus, as could the District Line ticketholder from Upminster to Mansion House.

By contrast, commuters from Surbiton, Croydon and Sidcup had first to take a British Rail train into a central London terminus, and then fight their way onto a Tube to get to work.

And that, so Londoners thought, was the way it was destined to be, which is why the past 20 years have come as something of a shock. For the riverbank south of the Thames has been transformed, from gap-toothed wharfside wasteland into a line of gleaming apartments stretching all the way from Wandsworth to Woolwich.

Forget Fagin and the Artful Dodger; Thames-side residents these days are no longer ragamuffins and pickpockets, but high earners who can pay anything from £500,000 up to £50 million for a river-view home.

This hasn’t happened by accident. Roots of the south-of-the-river renaissance lie in the building of Canary Wharf and the opening of the Jubilee Line, then the Docklands Light Railway.

More recently, too, there has been the creation of the London Overground. This means that in the space of a few minutes, you can make what would previously have been a nightmare journey from Peckham Rye, in the south, to Highbury and Islington, in the north.

The biggest south-of-the-Thames hotspot at the moment is the Nine Elms area, which covers the mile-and-a-half-long stretch of river between Vauxhall and Battersea.

There are about 30 building projects taking place here, covering 480 acres, all due to be linked by parkland. The most newsworthy building is, of course, the new American Embassy, which is moving here from Mayfair. And it will have plenty of other buildings to keep it company.

These include the old Battersea Power station site (3,800 homes), Nine Elms Point (573 flats), One Nine Elms (436 flats), Embassy Gardens (1,900 homes), Nine Elms Parkside Royal (436 homes), plus Vauxhall Cross Towers (291 homes).

And rather than having to cram their way onto already packed trains into Waterloo, residents will be able to hop straight on to the Tube, since two new Northern Line stations are being built at Battersea and Nine Elms (opening in 2020). The cost of these stations (£1 billion) will be met not by the taxpayer, but by the developers building the apartments (the Battersea Power Station Development Company alone is contributing £200 million).

Further good news, given the Northern Line’s propensity for technical problems, is the fact that more money is being put into improved signalling. This should result in a 20 per cent increase (11,000 people) in the number of Northern Line passengers who can pass through central London during peak rush hour.

Yes, this part of town may have lagged behind in the past, but now the brakes are well and truly off. On top of which, New Covent Garden Market is to be redesigned, and in the process is predicted to become south-west London’s answer to fashionable Borough Market.

“This part of town is set to move forward a century in a matter of a few years,” says Mayor Boris Johnson. “It will support 24,000 new jobs, 18,000 new homes, and will cut journey times for passengers.”

And given that London’s population is expected to reach 10 million by 2030, plans are even now being laid for a £3 billion extension to the Bakerloo Line, taking passengers beyond Elephant and Castle, to New Cross, Lewisham, Bromley and Hayes.

As well as constituting a rebirth for the broader south London area, the new plans also mark the upward-mobilisation of the river. Instead of being seen as synonymous with mud and rats, the Thames is now being promoted as an attraction, providing uninterrupted, panoramic views.

“The top 10 cities in the world for global property, in terms of where to live and invest, are all located either on the banks of a major river, on the harbour front or by the ocean,” says Sophie Chick, from the research team at Savills.

“London is one of those premier world cities. The others are Hong Kong, Moscow, Mumbai, New York, Paris, Shanghai, Singapore, Sydney and Tokyo.”

An even bigger bonus is that the Thames follows a pleasingly circuitous route, enabling some residents to see both up and downstream.

“In the west of London, the river bends quite obliquely, and you get terrific views both of the Shard and the London Eye, and back down the river westwards,” says Mark Dorman, head of residential development at estate agents Strutt and Parker.

The best part is that if you live right on the river there’s nothing blocking your view. Mind you, it’s by no means just in the west of town that the river’s renaissance is happening.

As well as the Globe Theatre and the Tate Modern, east London has also seen a huge amount of new development, backed up by improved transport links (first the Jubilee Line, then the Docklands Light Railway). Initially, this development was from Tower Bridge to Canary Wharf and the O2 Dome, but it now stretches much further.

Indeed, when Crossrail opens in 2018, you will be able to get from Canary Wharf to Liverpool Street in six minutes, Bond Street in 13 minutes, and Paddington in just 16 minutes. Effectively, then, east London is no longer a public transport outpost. As a result, the developers have moved in and bought up once-disregarded tracts of land.

“Along the riverfront from the eastern end of Greenwich, and around the Greenwich peninsula, there are still a lot of mouldering wharves and industrial sites,” says Rod Cullen, associate director of sales at Chestertons estate agents. “The developers can’t put up new blocks fast enough.”

Fact: House prices along the South Bank, inbetween new development schemes, rose 8.7pc in 2014, with Chelsea seeing price falls of 1.6pc and Fulham 0.7pc.

Plans are afoot, too, for housing developments to be built as far eastwards as Gillingham, in Kent. Here, a 20-acre site is being turned into Victory Pier, complete with shops, restaurants, art centre and apartments starting at £152,000.

The other big bonus is that a river view is a whole lot more affordable in the east.

“For years, the chance to own a balcony overlooking the Thames was the preserve of the wealthy in west and central London,” says Antony Crovella, marketing director at United House Developments, the firm that has converted a former marine boiler factory into the 257-unit Paynes and Borthwick development in Greenwich (asking prices £480,000-£950,000).

“Now, though, sites in the south-east of London are providing a more affordable way to achieve this.”

These days, it’s not just a question of building flats and then moving on. Developers have learnt from some of the earlier south-of-the-river developments, which have a rather lonely, Marie-Celeste-cum-wind-tunnel feel to them.

“Developers have realised that, in order to make their scheme a success, they have to build not just flats, but a whole new community,” says Camilla Dell of buying agency Black Brick. “It needs to be made up of offices, parks, new transport links, restaurants and shops.”

This is something Jacob Sullivan, head of sales for Berkeley Homes South East, is keenly aware of. His firm is currently turning South Quay Plaza, next to Canary Wharf, into a more human-friendly, 900-home environment.

“The whole point is to buy a site that we can transform into a proper place,” he says. “Not just with lounges and terraces for the residents of the development, but, for example, with swimming pools and gyms and underground parking.”

And don’t overlook shops, restaurants, cafés and views. That’s the aim of George Kyriacou. Brought up in nearby Lambeth, Kyriacou is now managing director of CIT, the firm that is turning the former IPC Magazines building, at Southwark, from offices into a 41-floor, 170-plus-apartment residential scheme.

“The great thing about the south bank of the Thames, is that there are now wonderful views across to the buildings on the north side,” says Kyriacou.

By the same token, too, there is more for north Londoners to look at across the river, given the number of south London developments now reaching skywards.

Certainly, it’s south of the river where the boom is happening, with some 8,500 apartments being constructed. This compares with some 500 apartments that are being developed on the north side, between Battersea and Blackfriars.

The two biggest north-bank schemes are the Riverwalk development just east of Vauxhall Bridge (116 apartments, from £1.75 million, being built by Ronson Capital Partners), and the 50-storey Principal Tower scheme, designed by Foster and Partners, on a site close to Liverpool Street Station.

No question about it, then, Thames-side living is now in fashion, and prices are rising almost as quickly as the new, riverside blocks.

“Even houseboats with moorings at Wandsworth Park sell for £500,000 up to £2 million,” says Chris Firth, director of sales for Chestertons estate agents.And that’s for homes that don’t have any firm foundations, but float on top of water.

“It didn’t used to be the case, but because of all the changes, now it’s true,” says Kyriacou. “These days, the south bank of the Thames is no longer second best. It’s a prime residential area.”

Some like it hot

Where do you stand on hot tubs? Do you try desperately to banish all thoughts of Hugh Hefner as you suppress an embarrassed British snigger at the sight of one? Are you Scandinavian at heart and think how bracing it would be to streak across the terrace on a snowy winter’s morning and jump into the bubbles? Or is there a touch of the SoCal about you and the mere glimpse of a hot tub sees you planning your “bellini and bikini” parties. If so, you’ll be wanting the Luxema 800, the deluxe $26,000 split-level variety that includes a built-in bar, TV and sound system.

Whatever your view on hot tubs, one thing seems certain – the London skyline will soon be peppered with the jet-set waving to one another from their steamy, bubbling rooftop pools as top-end developers include them as must-have accessory for residents of the capital’s multi-million pound penthouses.

Paddington Basin may not match Miami for dreamy waterfront views, but buyers of the duplex penthouses at 3 Merchant Square – priced from £3.4m (020 7993 7393) – can gaze across W2’s canals from the hot tub on their huge decked terrace. The view is more bucolic – you could even watch the Oxford v Cambridge boat race glide by – from the four penthouses at Queen’s Wharf next to Hammersmith Bridge. “The hot tub is a great piece of added luxury. They bring that element of prestige,” says Alex Greaves, CBRE’s associate director of residential development, who is marketing the penthouses from £4.75m (0207 205 2973).

Other high-end London developments with rooftop tubs are 127 Shoreditch, whose £4.75m penthouse (020 7101 2020, hattonrealestate.co.uk) has one on its wraparound terrace. Definitely one for those who want to be seen.

Buyers of the £8.5m Triplex Penthouse or the £8m Ophelia Penthouse at One Tower Bridge (020 7871 0011) can luxuriate in theirs while soaking up the postcard views. “We wanted to create a usable yet luxurious outdoor space which feels like a private members club and hot tubs make the ultimate viewing platform all year round,” comments Jacob Sullivan, Berkeley Homes (South East London) head of sales. “They are certainly the most relaxing way to enjoy panoramic views of the London skyline.”

We British are clearly learning to love a hot tub. Holiday Lettings report that they are one of the most asked-for features in luxury UK holiday homes, with searches for hot tubs in country houses or “swanky flats” rising by 250 per cent in December 2014 compared with a year before.

“They are definitely a tick box for the international super rich and some houses have two – one inside next to the swimming pool as a built-in spa, and one outside as a “feature” area,” comments Alex Newall from property advisors Hanover Private Office. There’s something quite sexy and decadent (not to mention exhibitionist, given the probable proximity of your neighbours) about having a hot tub in the city – wallowing in your warm water high above the masses trampling the pavements below.

In semi-rural surroundings such as on Surrey’s Wentworth Estate, where Vilebrequin-toting owners are very partial to these millionaires’ pleasure troughs, it’s all about soaking up the peaceful views across golfing greens and countryside. “We recently acquired a £10m property there for a high profile client which has a sliding glass roof and stairs leading up to a private terrace with a hot tub, wet bar and modern shower,” says Newall. “There’s no escaping it – we’re embracing the American lifestyle.”

Other agents remain unconvinced that we can ever do hot tub culture with aplomb. “They are expensive to maintain, unattractive and frankly still have a bit of a seedy image,” says Robert Bailey, a central London buying agent. “Developers put them in thinking it will entice buyers, but within a few years they are covered in dust and debris, never having been used.”

Jo Eccles, head of Sourcing Property is similarly scathing. “They’re a gimmick that doesn’t get used”, she says, while Camilla Dell, MD of Black Brick buying agency, thinks “they are out of fashion. People prefer to bathe in the privacy of an indoor spa – though they do work well in the country”.

Perhaps they might be converts if they saw the “hot tug” – the world’s first wood-fired hot tub that is half Jacuzzi, half motorised dinghy. Ideal for those whose property comes with a mooring. You can’t help thinking that pootling around on the water in a receptacle that is full of water can only lead to a sinking sensation. But the Dutch love them and it can only be a matter of time before they start to appear in St Katherine’s Dock or Chelsea Harbour.

Ultimate party pads

When couples of a certain age watch their children leave home, they typically downsize, declutter or maybe just repaint. Not so for South African couple Chris and Melinda Bird. When their daughter flew the nest last year, they called in the builders to turn their £2m family home in Fulham’s Radipole Road into an all-singing, all-dancing party pad.

Out went a spare bedroom to make way for a balcony overlooking a vastly-extended party kitchen. In came ensuite bathrooms so guests could comfortably stay over, a high tech wireless music system with hidden ceiling speakers in every room, and the basement floor was lowered to build a fully-waterproofed wine cellar with tasting area and feature “spitting” sink. They also added some top notch soundproofing.

“They absolutely didn’t want a family home any more – they wanted an adult folly where great entertainment space was key,” says Billy Heyman, MD of BTL Property, who carried out the £800,000 refurbishment.

Leisure spaces in luxury London homes are becoming less about “me time” and more about me, you and 100 of our closest friends in sumptuously designed surroundings that render going out pointless. Swimming pools turn into dance floors, walls retract to reveal hidden bars and in one St John’s Wood house, a gym floor opens up to expose a 1,000-bottle wine cellar with adjoining wine room and “contemplation area”.

The best party houses combine space, privacy and views. “They should provide exceptional free-flowing spaces with a wow factor – ideally integrating seamlessly with the external landscaping so you can expand the guest list significantly,” says Mark Pollack, director of Aston Chase. Add a bit of drama in the form of a Lalique chandelier or a recognisable art collection and you’ll be fighting to keep them away.

Penthouses lend themselves perfectly to the job – and with the average London penthouse costing £13.3m, according to new figures from Lonres, developers are throwing in the firepits, hot tubs and other Miami-style accoutrements to make buyers feel they really have something worth showing off to their friends.

One penthouse with views to spark any party conversion sits on the 37th floor of Strata in Elephant & Castle, on sale for £1.75m, its 43-foot wide living room with sloping windows providing a prime frame over every central London landmark.

The Penthouse 127 in Shoreditch, on sale for £4.75m, is a similar conversation piece, with 360 degree views from its 1,372 sq ft wraparound terrace that includes an outdoor lounge, kitchen, dining area and even an al fresco TV.

Also in Shoreditch but more discreet in its party particulars is the penthouse at Avant-Garde – a two-bed duplex, £3.5m which features a gold wall in the reception room that opens up to reveal a moodily-lit bar.

You don’t need a new-build to be the ultimate socialite, however. You could follow in the footsteps of practised partiers The Astors in a converted listed farm building built by Lord Astor on land that was once part of the Cliveden Estate. The property £3.95m, pays a nod to the partying days of the young Astors, with its theatrically huge space and features such as a galleried music room, a concealed spiral wine cellar and a cinema. What’s more, its master bedroom looks across to Spring Cottage, where Christine Keeler stayed when she indulged in a different kind of partying with John Profumo.

“The Astor is a show-stopper, a property with a rich and scandalous history that has been turned into the ultimate party pad. It’s designed with a sense of fun in mind,” says Nick Hole-Jones, Hamptons’ country house director.

Another show-stopper in its time is Bethany Hall, a four-bedroom house in Ladbroke Grove which – to give an idea of its lofty proportions – once hosted a party where trapeze artists were hired to swing from the beams in its vast hall. Now the 1920s former dance hall is on sale for £5.5m and includes a “total immersion baptistery” currently used as a wine cellar.

If dinner parties are more your style, then you’ll be wanting a show kitchen, the latest feature in some central London mansions where guests sit around a counter in the kitchen to watch the chef perform. Camilla Dell from Black Brick buying agency describes one exquisite 12,000 sq ft townhouse in Belgravia’s Eaton Place, soon to come on the market. It includes a professional kitchen with “chef’s table” on the excavated basement level. “It’s ideal for families with their own private chef,” says Dell.

If this all sounds like taking partying to another level, there’s a Hampstead developer who is quite literally doing that. He has built a private high-speed lift to whizz guests to a 2,000 sq ft dedicated party space two floors below ground. As Aston Chase’s Mark Pollack comments: “It means that other residents of the building will be blissfully ignorant of the fun going on below their very feet.”

It just shows how London’s luxury developers are taking partying to dizzying heights – and depths.

The winners and losers of stamp duty reform

The asking price for Colin Roberts’ house in Leicestershire has dropped by £70,050- bringing a stamp duty saving of £7,000.

The shake up of stamp duty was announced on Wednesday at 1.15pm. By 1.30pm Colin Roberts, whose five bedroom detached Leicestershire home was on the market for £995,000, had emailed his agent and instructed him to reduce the asking price to £924,950. He may well have been the first seller in the country to make that move, saving his buyer £7,000 in stamp duty.

“I had changed the price before George Osborne even sat down,” says Roberts. “It just made sense. If I’d kept the asking price where it was, my home would have been in the higher rate bracket. Fortune favours the brave.”

The selling agent Alasdair Dunne, a partner of the Fisher German estate agency, believes Roberts will be the first of many of his clients to drop the asking price. Though most will find it far more difficult to accept the inevitable. “There are lots of interesting phone calls that i need to make with vendors… the market above £1million has been awful this year, and this news is going to make it worse,” says Dunne.

Solicitors also felt the impact of the chancellor’s news as they came under intense pressure from clients buying homes valued over £937,500 who had not yet exchanged. (Only homeowners who had exchanged were offered the option of choosing whether they wanted to go with the old or new regime.)

Robin Chatwin, director of Wandsworth office of Savills, said on Wednesday that a number of his clients were “madly trying to move through to exchange” before midnight, by which point the changes would be introduced, in the end, 26 Savills clients in South London managed to exchange in time. Another Savills agent reported a husband phoning his wife, who was having lunch with friends, insisting that she go home immediately to apply pressure on their lawyer instead.

“The last time something similar happened, when the tax was raised to 7 per cent above £2million, we had a client whose lawyer was in hospital. My client rang and said “I don’t care what is wrong with you, make sure my property exchanges today.” And it did. “There will be people having similar conversations this afternoon” says Chatwin.

In the medium term, he believes the sector likely to be most affected will be the £1.5million to £2million property- considered a comfort zone; it was here that buyers felt safe from the mansion tax and 7 per cent stamp duty. “It is a big ask to expect buyers to find an extra £53,750, as they will have to if they are buying a £2million,” says Chatwin.

The worst outcome for homeowners around this threshold, as Trevor Abrahnsohn, a director of Glentree Estates agency, points out, is if Labour wins the general election. They would then have to foot the bill for the new Tory stamp duty regime as well as Labour’s proposed annual mansion tax., which Ed Balls, the shadow chancellor, confirmed this week would go ahead.

Osborne’s changes ought to “put an end to any argument that these properties are under-taxed” and undermine any case for a mansion tax, says Lucian Cook, the head of UK residential research for Savills. He estimates that £2.2billion of stamp duty receipts will now come from property worth more than £2million. One third of stamp duty revenues from residential property will be generates by fewer than 5,000 sales., less than 0.5 per cent of all transactions. He also suggests that the change will stimulate transactions at the lower end of the market.

At the top end, agents are making dire predictions. Camilla Dell, the managing partner of the Black Brick buying agency, predicts and “acute” impact for the £10million-plus market. She says a buyer of a £20million home will have to find an extra £1million as a result of the reforms. Lower and mid-market volume housebuilders, meanwhile, are certainly not complaining; Barratt Developments and Taylor Wimpey saw their share price close trading 1.7 per cent higher than on the previous day.

London houses still seen as a safe haven for investors

Unfavourable exchange rates and prospective tax changes have not deterred international buyers from buying expensive properties in central London, say property finders, as many prepare for one of their busiest Christmases ever, despite low levels of housing stock.

Penny Mosgrove, chief executive of Quintessentially Estates, has about 50 viewings booked for December, compared with only ten over the same period last year — with her final one booked for December 22.

“We’re usually looking forward to some festive lunches with agents about this time of year,” she says, “but overseas buyers are being much more industrious than they usually are — it really is unheard of to have something booked quite so close to Christmas Day.” Most of Mosgrove’s clients — from countries all over the world, including America, China and India, often keen on huge lateral apartments in Georgian town houses in classic London locations such as Eaton Square — have visited London before looking for property. Only one has mentioned concerns about the mansion tax on properties over £2 million mooted by Labour and the Liberal Democrats, she adds.

“At the beginning of the year some of our clients felt prices were sky high and some suggested they should wait. After the Foxtons share price fell, I think many felt conditions might be more buyer friendly and were keen to move quickly. Now, I think they are very keen to get something sorted by the new year, as are many sellers.”

Shares in Foxtons, which floated on the Stock Exchange last September, tumbled 20 per cent in October after the London-focused estate agent chain warned that profits would fall this year because of a sharp slowdown in the capital’s property market. In its statement, Foxtons said: “Although the longer-term outlook for London property markets remains positive, the market is expected to continue to be constrained for some time due to political and economic uncertainty within the UK and Europe, tighter mortgage lending markets, and mismatches between the price expectations of buyers and sellers.”

Although London house prices have driven much of the headline growth in recent years, the market in the capital has seen a distinct cooling since the summer. The past year has had the highest number of sales since 2007, however average stock levels held at estate agents fell to an average of 60 properties, a record low in November, according to Rightmove. New properties coming on to the market in November slumped by 15 per cent on last month and are 1 per cent down on a year ago, meaning that househunters eager to purchase before the new year may struggle.

International buyers still consider London’s property market to be a safe haven, insist agents such as Mosgrove. However, many are now more determined than ever to secure a bargain, even in the upper price brackets.

Overseas buyers are finding they have to dig deeper to acquire properties within the capital because of exchange rates, according to a report by Garrington property finders seen exclusively by The Times. Russians have seen the highest rise, with the equivalent cost of a home in prime central London bought in roubles rising 37 per cent in the past 12 months. By contrast, sterling buyers in prime central London are now paying by comparison, on average, just 13 per cent more. Buyers from mainland Europe are finding prices (in euros) are now 21 per cent higher and purchasers with US dollars (and those with dollar-pegged currencies from Hong Kong and Singapore) are now paying 17 per cent more.

Why? “Rising house prices, a strong economy and a strengthening pound against many foreign currencies. At the same time, in the case of Russia, the rouble has fallen dramatically as a result of UN sanctions and [there is] economic volatility due to the Ukraine crisis,” says Nicholas Finn, executive director of Garrington, who adds that many vendors are now open to offers and that, with transactions in prime central London down nearly a fifth, there are more opportunities for savvy British buyers. “With the cooling of the market, and levelling of prices, there is an appealing environment created for those decisive buyers looking to make a sound property investment.”

Negotiations that result in discounts of up to 10 per cent on properties popular with overseas buyers are now much more common than they were a year ago, adds Finn, who recently helped a client to buy a £1 million flat in Great Minster House in Victoria for £900,000 off-plan. Garrington client numbers have doubled year-on-year, and this includes a substantial increase in British buyers too.

Although there is a common perception that buyers from the Middle East and Russia dominate the market in prime central London — particularly in areas such as Belgravia, Knightsbridge and Mayfair — research from the independent property buying agency Black Brick suggests that it is in fact African buyers who dominate the market. The agency analysed its own sales data from 2007 onwards and counted 35 different nationalities, with Africans forming the highest percentage of buyers at 43.7 per cent, followed by Middle Eastern buyers at 17.1 per cent, with Asian and UK buyers tying for third place at 10 per cent each. Egyptians had the largest average budget, at £5.175 million. Budgets for investors, who make up 40 per cent of all buyers, have fallen from an average of just over £2 million in 2007, to over £1.4 million in 2014.

Black Brick has dealt with buyers from Nigeria, Kenya, Zambia, South Africa and Uganda, notes Camilla Dell, managing partner at Black Brick. “Many wealthy Nigerians were educated in the UK and send their children to school here. Typically, they like gated, secure developments, as this is what they are used to back home.”

Many Africans prefer new-builds such as Imperial Wharf, says Dell, adding that some people refer to this development as “mini Lagos”. Belgravia and the SW3 part of Chelsea are also popular. “Thirty-nine per cent of our Nigerian clients have bought in either SW3, SW10 or SW1, closely followed by 35 per cent buying in northwest London postcodes such as NW8, NW6 and N2.”

20 ways to become a property millionaire

Not since the days of Roy Jenkins and the permissive society has a government minister struck such a cavalier note. That was until last March, when pensions minister Steve Webb announced: “If people want to buy a Lamborghini… that is their choice.”

Mr Webb was speaking in the context of the Government’s ongoing pensions reforms, which were being driven forward at breakneck speed by the Chancellor of the Exchequer. From next year, people will be able not only to release up to 25 per cent of their pension pots tax-free, but to access those pots almost as easily as they can access their bank accounts.

It is goodbye to that safe-but-dull annuity, and hello Lamborghini, fine wine and holidays in the Caribbean. Until the cash runs out, of course.

Could it also be hello second, third and fourth homes? Anyone can see that, with interest rates at their current level, money in the bank is going to grow so slowly that it might as well be kept under a blanket. Property prices, by contrast, have soared, far outstripping inflation.

All that might change, of course. But anyone who has been tempted to release capital from their pension pots, and wants to put the money to good use, not just blow it on extravagances, would be mad not to include property in their long-term financial calculations.

We have all endured those tedious dinner parties where Plonker A boasts about how he did up a flat in Walthamstow and made £300,000 profit in six weeks, and Plonker B says that’s nothing, he made a cool million on his buy-to-let in Barcelona. Well, if you cannot beat the plonkers, why not join them?

This 20-step guide to becoming a property millionaire is hardly foolproof or risk-free, but it incorporates practical tips from the experts.

1. Target flats rather than houses

Most observers agree that investors who put money into flats tend to generate a good return. “Generally speaking, flats make better buy-to-let investments than houses, and if your budget will stretch to a two-bedroom, two-bathroom flat, we would always advise that,” says Camilla Dell of Black Brick.

The second bathroom might sound unnecessary, but the more flexible your buy-to-let property is, the better.

2. Be patient

It’s important to assess all the pros and cons of an investment before jumping in. “Remember that property is a long-term game, and if you want to make money from it, never put yourself in a position where you are forced to sell,” explains Rupert Collingwood of the London Management Company.

How many buy-to-let investors commit precipitately to a purchase after listening to the sales pitch from a developer? They should talk to local lettings agents before taking the plunge.

3. Don’t put all your eggs in one basket

As with stocks and shares, a diverse property portfolio is much more likely to weather financial turbulence than one relying on a single, bold gamble. The potential return on that beach development in Albania may look mouth-watering, but if the Balkans lets you down, it is nice to have a student buy-to-let in Bristol to fall back on.

4. Always look for ways to add value

“One of the best ways to make money out of a property is to add value to it,” says Dan Channer of Finders Keepers in Oxfordshire. “Even seemingly unglamorous purchases can prove lucrative. For instance, consider a maisonette above a shop with potential for a loft conversion.”

5. Become tax-efficient

You will never become a property millionaire if you pay the taxman more than you absolutely have to. “There are many ways to keep your tax bill down, and you should take full advantage of them if you want to achieve maximum capital growth,” says David Hannah of Cornerstone Tax.

“If you are married, ensure any rental income from your property portfolio is divided between you and your spouse in the most tax-efficient way. You should also maximise savings from tax-deductible items, such as furnishings.”

6. Exploit local knowledge

It sounds obvious, but when buying a property, it’s not going to be easy to spot a bargain thousands of miles away. The sort of property that is so reasonably priced it can hardly fail to appreciate in value is going to be much easier to spot in your own backyard. In addition, you will have all the vital information about schools, transport and so on at your fingertips. You will also find keeping tabs on tenants so much easier than from another town.

7. Start at home

Are you nearing retirement age and living in a tired and dilapidated family house that is far too big for you? Then consider breaking it up into two or three flats. You can keep the ground-floor flat for yourself and use the others as the first building blocks in your property portfolio, advises Luke Walsby of Hamptons International. It makes obvious financial sense to release some equity from your biggest asset, and you will be on the spot to oversee the newly created flats.

8. Find professional partners you can trust

Unless you are a financial wizard with a law degree and advanced DIY skills, you are going to need professional help in building your property portfolio. “Pick the right partners, people you can trust, with expertise in their chosen field,” says Phillip Button, managing director at property investment specialists Brookes & Co. Finding dependable builders, lawyers and accountants is not just key to maximising your profits, but will offer you peace of mind during a complex process.

9. Is there cash in your attic?

If you are thinking of selling your main home to raise capital and kick-start your portfolio, consider making value-adding improvements first. A loft conversion or extension – assuming you have not employed a cowboy builder – can add 20 per cent to the value of a property, according to a recent Zoopla survey.

10. Take advantage of low mortgage rates

“Turning an initial investment of £200,000 into a £1 million portfolio is certainly achievable if you do your homework,” says Graham Davidson of Sequre Property Investment. “One possible strategy might be to buy eight properties costing £100,000 each, using a 75 per cent buy-to-let mortgage, and putting down a £25,000 deposit on each. “Invest intelligently in vibrant, up-and-coming cities such as Manchester and Liverpool, and you would soon be in a position to purchase four or five more similar properties.”

11. Don’t turn your nose up at unfashionable suburbs

“For anyone nearing retirement, I would strongly suggest buy-to-lets in suburban London,” explains Marc von Grundheer of Benham & Reeves Residential Lettings.

“I have just bought a one-bedroom flat in Tooting for £320,000, opposite St George’s hospital, and am expecting to get a rental yield of 5 per cent. You would be hard pressed to achieve that in central London at the moment.”

12. Think Waitrose

Even if you prefer shopping in Tesco or Sainsbury’s, you should keep an eagle eye on what Waitrose is doing. If there is a new Waitrose scheduled to open in Hampton-in-the-Puddle, then a better class of resident in the area – and a subsequent hike in house prices – can be confidently predicted.

13. Look for young professionals as tenants

“If you are pursuing a high-income investment strategy as a means of building a £1 million portfolio, the best tactic is to invest in premium-quality, low-cost shared accommodation for working professionals,” says Steve Bolton of Platinum Property Partners.

With the right tenants, converting a single-occupancy property into one in multiple occupation will lead to significant capital gains, covering the refurbishment costs with plenty to spare.

14. Don’t trust estate agents’ estimates of rental yields

Novice buy-to-letters are at the mercy of estate agents promising unrealistic rental yields. So don’t trust the agents, do your research and get genuinely independent advice, says Camilla Dell of Black Brick. Average rental yields in central London are a modest 2.83 per cent, and if you only have around £200,000 to invest in a buy-to-let apartment, you may do better in “outer prime” areas, such as Fulham and the City.

15. Vive la France!

The French property market is in the doldrums and, with the pound so strong and the euro so weak, there will never be a better time to buy that dilapidated farmhouse in the Dordogne for a song. Do it up, turn it into a stylish holiday home, with all mod cons and swimming pool, and wait for the optimum time to sell. You could double your money in five years – and have some slap-up French meals along the way.

16. Check out property investment funds

“There’s nothing better than lying by a swimming pool and watching the pool go up in value,” says David Rogers of Rocksure Investments.

Rocksure specialises in schemes where, for an outlay of just over £200,000, you can purchase a share of a luxury villa in the sun – or, for that matter, a Chelsea apartment, a blue-chip investment if ever there was one – and have personal use of it for a certain number of days a year. Capital growth tends to be modest but reliable.

17. Could Jersey be a cash cow?

In a recent report highlighting islands where property prices have remained resilient during the global economic crisis – and which offer outstanding long-term investment potential – the Channel Islands came close to the top, along with the likes of the Bahamas and the British Virgin Islands.

“The next 10 years will see a growing appetite for island real estate development,” predicts Yolanda Barnes, the director of Savills World Research.

18. Become a trainspotter

When you analyse why house prices have grown faster in some areas than others, you will often find that the single most important factor is improved rail links, slashing commute times.

But it is no good waiting until that new station has been built before sinking money in an area. You need to stay ahead of the game, study long-term transport plans and pinpoint areas that will get the benefit of improving rail links in five years’ time.

19. Follow trends in planning approvals

Keep an eye out for approved local planning applications, urges Natalie Hall of Fyfe Mcdade. They can be found on local authorities’ websites and often give an early indication of areas with good long-term investment potential.

Where planning permission has been granted for major housing schemes, there is often a noticeable ripple effect years before the developments have actually been built.

20. Remember the growth potential in gardens

Even if you are investing in a city apartment, remember how much people value fresh air.

“Our research suggests that London properties with some kind of outdoor space, such as a small patio, are worth 20 per cent more than properties without such a space,” says Nick Barnes, head of research at Chestertons.

As for your own outdoor space, worry not. If all your buy-to-lets perform according to plan, you’ll be able to afford as much of that as you want.

Where to make Capital Gains

In the game of snakes and ladders that is the London property market, there is nothing quite as satisfying as being the first person to identify a hot spot. “People buying in central London have become far less postcode-snobbish than they used to be. And they are prepared to look at areas they might once have overlooked, so long as the price is right,” explains Tom Bill, the head of London residential research at Knight Frank. Substantial and continuing changes in the city’s transport infrastructure have also played a pivotal role.

So where should the canny buyer invest? Some areas, such as around the soon-to-be-renovated Battersea Power Station, have obvious investment potential. But the developers know that, so property prices already reflect the expected gains. Other up-and-coming corners of the capital have improved under the radar, so to speak, and may be better long-term bets

Here are 20 capital hot spots where snapping up property in 2014 could just be the best decision you have ever made.

1. Bayswater/ Queensway

Bayswater is “the last piece of the jigsaw around Hyde Park,” says Tom Bill. Prices on the north side of the park have never matched those in Kensington, Mayfair or Knightsbridge, but wealthy overseas investors are starting to buy properties around Queensway. Look out for tired terraces and once-cheap hotels which, with a bit of TLC, could be converted into ultra-cool residences in a prime location.

2. Dalston/ Kingsland

To the old mantra “Location, location, location”, there needs to be added a new one: “Trains, trains, trains”. House prices in Dalston/ Kingsland are up 31 per cent in the past 12 months, according to Hamptons. It’s the area’s proximity to the North London Line – part of ongoing improvements to London Overground – which is believed to be responsible. Equally sharp price rises have been observed near other London Overground stations, such as Brockley and Brondesbury Park.

3. Whitechapel

Could Whitechapel be about to finally shake off the reputational damage caused by Jack the Ripper? Yes, says Lochie Rankin of Lichfields, who calls Whitechapel “the most interesting developing market in east London”. Although prices in the area are tipped to rise by around 25 per cent before Crossrail is completed in 2018, developers have only recently seen Whitechapel’s huge potential. Expect a rash of New York loft-style properties in the next few years.

4. Peckham

The Trotters would probably be appalled, but there is hardly a plonker to be seen in Peckham now – the area is being gentrified so quickly. “When prices shot up in more salubrious parts of London, Peckham was left behind, despite its proximity to the City and fantastic Victorian architecture,” says Gareth James Mozley of GJM. It is making up for lost time now, with prices more than doubling in five years.

5. Holborn/ Aldwych

Holborn used to be viewed more as a corridor between the West End and the City than as a desirable address. Not any more. Cool city apartments or town houses on immaculate residential streets such as Doughty Street cost significantly less than they would in more fashionable parts of central London. You can be confident of showing a healthy profit in the long term.

6. Clerkenwell

“Clerkenwell has seen positive changes in recent years, and I believe the scale of this regeneration will accelerate over the next five to 10 years,” says Camilla Dell of Black Brick. Current property prices in this likeable enclave, popular with creative types, range from £1,000 to £1,400 per sq ft, but experts see no reason why they should not rise to Soho levels of £2,000 per sq ft. Farringdon will be a major beneficiary of the Crossrail project, while the major new development on the Old Street roundabout, known as the White Collar Factory, should be complete in 2016.

7. Nine Elms, Battersea

London property experts are unanimous that, with the regeneration of Battersea Power Station, the US Embassy moving south of the river and the planned Northern Line extension, this area has a bright future. So much smart money has already been pumped into the area that it may be too late to get on the bandwagon, but it is certainly a bandwagon worth careful consideration.

8. Streatham

“This area is a brilliant option for those who can’t afford the more established surrounding areas, such as Balham,” says Robin Chatwin of Savills. “We have seen prices grow by nearly 20 per cent over the past 12 months, but the area still looks amazing value.” The new Streatham Park is helping put the area on the map, while there are excellent transport links to Victoria, as well as some well-regarded schools.

9. Stoke Newington

“Stoke Newington is what Shoreditch was five or six years ago, with a lot of young professionals moving into the area and creating a real buzz,” says Robert Fraser, director of Fraser & Co. Like neighbouring Newington Green, this multicultural pocket of the borough of Hackney is being rapidly gentrified without becoming in any way genteel. It looks an excellent long-term bet.

10. Southwark

t is hard to envisage a day when Thames-side properties fail to attract a premium, and it is mainly developments south of the river which are setting the pace. The latest one, due for completion in 2016, is the Music Box. These 40 modern apartments are perched on top of the London Centre of Contemporary Music in Southwark, which is fast becoming the epicentre of South Bank cool.

11. Bow

No East End Cockney used to be worth his salt unless he had been born within the sound of Bow bells. Not many of Bow’s current residents would pass the Cockney test, but the area’s rich history, and lively ambience, continue to make it attractive. “Bow is proving particularly popular with City types who cannot afford to live in Canary Wharf, but view it as an excellent alternative,” says Robert Fraser, director of Fraser & Co.

12. West Drayton

Another area likely to benefit when Crossrail is completed in 2018, when Bond Street will be just 23 minutes away. “Over the past couple of years, we have seen a huge increase in the number of investors keen to purchase property in the area. They are confident that their investment will achieve a substantial rise in capital value once the Crossrail station opens,” explains Nicholas Jordan, director of the Cameron group. Drayton Garden Village will provide nearly 800 new homes, while Drayton Wharf, on the Grand Union Canal, will offer stylish apartments at affordable prices, starting at £200,000.

13. Brixton/ Kennington

“Thanks to re-rating, the search for property hot spots in London is starting to move outwards, and Brixton and Kennington are among the areas benefiting,” says Ed Mead of Douglas & Gordon. “Brixton is defying convention and is now the area where young people want to live for all right reasons, while the Oval is firmly in the sights of the Bank of Mum and Dad.”

14. Earls Court

Known as Kangaroo Valley in the Seventies, Earl’s Court has never quite overcome a down-at-heel image. But all that could be about to change, says Richard Barber of W A Ellis: “The redevelopment of the Earl’s Court Exhibition Centre and Seagrave Road will have a massive effect. The development will comprise four urban villages and a new primary school, and we will undoubtedly see house price increases off the back of it.”

15. Wapping

“The past 12 months have been fantastic for Wapping, with price growth of 24 per cent compared with seven per cent for Chelsea and Knightsbridge,” says Lauren Ireland of Savills. Wapping is simultaneously steeped in history and thoroughly modern, packed with the kind of riverside warehouse conversions that seem sure to gain in popularity.

16. Victoria

“Victoria has long been seen as a poor relation of neighbouring Belgravia. It’s often called up-and-coming, but has never really arrived,” says Rachel Thompson of the Buying Solution. But better times could be just around the corner, with the £2bn regeneration of Victoria Coach Station and Victoria Street. Ultra-modern glass buildings are slowly replacing the austere architecture of “old” Victoria – often a telltale sign of an area where confidence is booming.

17. Tottenham Court Road

“Historically, this end of Oxford Street has been considered unattractive. But I have no doubt that this perception will change considerably, particularly if the Centre Point building gets redeveloped into high-end residential units,” says Camilla Dell of Black Brick. The Tube station is being completely redeveloped and, with the travel time to Canary Wharf set to be halved, the area can only go from strength to strength.

18. Honor Oak

No sector of the capital has benefited more from improvements in the capital’s infrastructure than the south-east. Honor Oak, in the borough of Lewisham, perfectly illustrates the knock-on effect of good rail links. The area has never had the cachet of Dulwich, but it is catching up fast. With direct trains to London Bridge likely from 2018, courtesy of the Thameslink Project, those competitively priced three-bedroom Victorian terraces at around the £500,000 mark are starting to look like real bargains.

19. Mayfair

Anyone who has ever played Monopoly will have clocked Mayfair as London’s most pukka address, so it may seem odd to call such a bastion of conservatism up-and-coming. But perhaps that way of thinking is out of date, says Tom Bill of Knight Frank. “Mayfair used to be dominated by offices, but we have recently seen a big growth in the residential market, which is likely to bear fruit long term.”

20. Elephant & Castle

Elephant and Castle used to be the kind of scruffy London enclave you drove through without stopping: it was far from easy on the eye and the road layout was a mess. But better times have come to the area, with a significant programme of regeneration (the picture shows Elephant and Castle’s dilapidated Heygate Estate as it is planned to be – an eco-friendly, mixed-use retail space)) . It is also in travel zone one, which is a plus, and property prices remain remarkably reasonable for somewhere so central. It’s not far from the Old Kent Road, which along with Whitechapel, is the last area on the Monopoly board where you can still hope to find a bargain.

Sniffing out the perfect property

The big name architect and interior designer are on board, the original artwork and bespoke chandeliers are in production and the private residents’ lounge is taking shape…what else does a luxury developer need to think of these days? Ah yes, the smell! What is this development going to smell like?

While luxury new-builds sell themselves as being a feast for the eyes (those views! That £150,000 kitchen!), ears (think soporific background music to lull you into thinking you’re already at home) and touch (throws to envelop yourself in, rugs to melt into), appealing to the sense of smell has usually been limited to the reliable old waft of freshly baked bread and just-brewed coffee.

But developers are starting to get more sophisticated in their indulgence of the olfactory. They are realising that creating a “proprietary fragrance” is all part of the process of enticing buyers. The team behind One Thousand Museum, Zaha Hadid’s futuristic bottle-opener of a building on Miami’s Biscayne Boulevard, has commissioned the bespoke New York-based perfume factory 12.29 in their first residential project. Their task? To come up with a scent that matches Hadid’s architectural vision.

The resulting beach-breeze aroma that will be diffused around the huge reception area is “the aesthetic message of One Thousand Museum”, according to its marketers. The gym has its own smell too – no, not sweat, but a motivating citrus with dark wood, while the rooftop aquatic centre will emit a smell called “warm skin” – a coconut and orange flower combination that’s “reflective of an ocean breeze”.

The main purpose behind it all is branding. As 12.29’s founder, Samantha Goldworm – who has invented scents for Lady Gaga, trendy hotels such as the Quin in Manhattan and Miami’s glamorous Art Basel event – puts it: “we took the developers through the process that translates their brand identity into a scent”.

But there’s also a more romantic motivation, that smell is “the most powerful link to emotion and memory”, says Goldworm. As Samantha’s twin sister and 12.29 co-founder Dawn explains: “when you scent a space, you’re changing the way people feel about it”.

In New York, INSTRATA Lifestyle Residences – a portfolio of luxury residential buildings throughout the city – also have a custom scent. It’s called Golden Bamboo byScentAir and its top notes of satsuma and lime blended with a base of apple and bamboo emit a scent reminiscent of a massage or meditation session, according to Rob Neiffer, Director of Invesco Real Estate. “The use of a distinctive scent is a relatively new concept for residential real estate but growing in popularity. If the right scent is selected, it can help to reinforce a luxury feeling and experience when entering the building,” Neiffer adds.

For luxury British developers Millgate, white tea and fig is the signature scent that infuses its projects, including six-bed mansions in Holland Place, Sunninghill that cost from £4.25m. The idea, says sales director Jonathan Cranley, is “to create a soothing, luxurious environment. We believe that scent is a powerful way to connect on emotional and memorable levels with our customers, forging a greater association when a buyer first walks in”.

The leading candlemaker Rachel Vosper has been drafted into One Tower Bridge, Berkeley Homes’s new development of luxury apartments beside the iconic London landmark, to give each of the three show flats a distinctive smell.

For the “Tom Ford Suite” show apartment, designed by Honky, Vosper chose an oriental spice blend to complement the river and park-side location, while the Casa Forma-designed apartment lent itself to a fresh, minty smell. “Bringing an apartment to life doesn’t just involve scents but an acute attention to detail to make it feel simultaneously lived in and like a blank canvas,” says development manager Doug Acton.

Given the effort and expense that goes into creating bespoke scents for properties, it all seems a bit of a shame that the most effective smells are those we scarcely notice. But it’s far preferable to send a subconscious message of luxury than to thrust an aroma, quite literally, right up our noses.

In one £55m London apartment that Camilla Dell from Black Brick buying agency came across, the smells were carefully choreographed to suggest sheer decadence. “The men’s walk-in wardrobe and bathroom had a very masculine smell and empty shopping bags from Hermès and Loro Piana scattered around, whereas the woman’s walk-in dressing room and bathroom had a floral, feminine scent and was dressed with Chanel and jewellery. It all combined to create the feel of a family living there with the best of the best,” says Dell.

We choose perfumes to suit our personalities. Why not use scents as a subtle way to announce the personality of properties too? That must be what they call paying through the nose.

House prices fall in parts of London for first time in two years, report says

House prices are falling in parts of London for the first time in two years as the capital’s “sealed bid frenzy” comes to an abrupt halt, a report says today.

Tougher mortgage rules, fears of an interest rate rise and a jump in the value of the pound – making London more expensive for foreign buyers – have all combined to take the steam out of the market.Across London as a whole, prices did not rise at all in July and fell “in localised markets where demand has cooled the most”, according to property data firm Hometrack.

The biggest falls have been for larger properties in W and SW postcodes in central London, according to Hometrack’s director of research, Richard Donnell. He said buyers were being far more cautious after a long run of post-recession price rises that reached a peak earlier this year. He said: “The housing market runs in cycles and it has been such a strong upward trend everyone is now thinking, ‘it can’t keep heading for the stratosphere. Do I want to get into a sealed bid situation and pay 15 per cent more than I was planning to?’”

The slowdown in central London has been exacerbated by a “glut” of properties on the market priced at more than £2 million. Hometrack said prices are rising in just 12 per cent of London postcodes, compared with 86 per cent as recently as February.

The average time a property has been on the market has lengthened from 3.4 to 4.3 weeks since May, while average sale price as a percentage of asking price has fallen from 99.2 per cent to 97.5 per cent. The slowdown in central London has been exacerbated by a glut of properties on the market at more than £2 million.

Property buying agency Black Brick said there are currently 1,968 properties with “For Sale” boards priced at £2million and above, more with the 1,657 properties sold in that bracket in the whole of 2013.

Managing partner Camilla Dell said: “It has started to become more of a buyers’ market for the first time in a long time, particularly in the super prime upper end of the market – £10 million and above. “Indeed, we’re currently in the midst of a search for a client looking for a house in Mayfair or Belgravia from £20 million up to £100 million and there are well over 20 houses for sale in this price range. If there are sanctions against Russia which mean that certain Russians might be exiled from the UK, this could create even more supply on the super prime end.

“Many high end developers are now struggling to find buyers for their trophy mansions, and are having to become more realistic with their asking prices. As such, I believe we could see significant price drops at the super prime end of the market. Indeed, one house in Mayfair has already had a significant price reduction from £120 million down to £95 million.”

Sealed bids: deal or no deal in a secret seller’s market

Gazumping, open-house viewings, buying off-plan: one by one, the signs of a boom have returned. Now making its comeback is the sealed-bid auction. Bidders put their offer in an envelope, without knowing what the competition is, and hope that they can beat their rivals. Compared with conventional auctions, where everything is above board, the sealed-bid system thrives on secrecy. Nobody knows what anyone else is up to. People miscalculate and there is a lot of fingernail-biting.

In a rising market, with fierce competition for the best properties, sealed bids are a quick way to proceed and offer advantages for sellers and buyers. It is hardly surprising that an increasing number of properties, particularly in central London, are being sold using this method.

“Sealed bids are now more prevalent than at any time since the peak of the market in 2007,” says Caspar Harvard-Walls of London buying agency Black Brick. “Some agents use the tactic of pricing a property at a low level to attract competitive buyers. It can often work well for vendors. But the disadvantage is that if the buyer feels they have overpaid there is a greater likelihood of the sale falling through later.”

In a sealed-bid auction, the vendor will usually set a guide price for the property and written offers will be invited by a specific date. On the appointed day, the envelopes are opened and, according to critics of the system, here is where things can get confusing.

A common misconception is that if a vendor accepts an offer it guarantees that the sale will go through. Not so. The buyer might get cold feet. Or the vendor m ay suddenly decide to accept a different offer. Only with the signing of contracts, as with any other property transaction, is the deal set in stone.

Contrary to what you might expect, the vendor is under no obligation to accept the highest bid. He or she may go for a lower one that carries greater credibility or that comes from a cash buyer.

London PR consultant Joanna Lennon recently found herself the executor of her late sister’s will. She wanted to sell the property, in Balham, London, and went to sealed tender when it became clear that there was plenty of interest.

“Some of the offers were £40,000 over the guide price and accompanied by letters that were so barmy the authors had to be bonkers. So, we didn’t go for the highest bid, but for the most proceedable. The man had simply written a factual letter, giving his solicitor’s details and those of his mortgage offer.”

Properties can sell for more than the guide price.

“We had a property in Pont Street, south west London, on the market for £1.25 million. It went to sealed bids and fetched £1.375 million,” says James Bailey of Henry & James.

At Heathgate agents in Hampstead, around 40 per cent of sales are now conducted by this method. This is a consequence of the London property market, says Ed Mead of Douglas Gordon: “Agents are used to conducting negotiations with two prospective buyers. But when they have to deal with five or six, it is sensible to invite bids.”

And where London leads, the rest of the country follows. Lindsay Cuthill of Savills invited sealed offers for a property in Oxfordshire and achieved 15 per cent above the guide price.

Not everyone is a fan of the process. “It can add a lot of stress to buying ,” says Jo Eccles of Sourcing Property. “The losing parties often regret not offering more, or question whether the bidding was handled correctly, while the winning parties are left wondering whether they have overpaid.”

In a seller’s market, where the best properties are now attracting swarms of potential buyers, sealed tender looks set to remain .

It may be a stressful process to have to undergo, but you can work it to your advantage whether buying or selling.

Buying or selling a house through sealed bids?

If you are selling…

• Only invite sealed bids if you are confident of attracting several buyers.

• Don’t set a ridiculously high or low guide price, buyers will suspect that you are playing games. A sensible price will maximise interest in the property.

• Stipulate the documentation that needs to accompany written offers. For instance, how buyers will fund the purchase.

• Don’t just accept the highest offer, assess whether the bidder is credible and will proceed with the sale.

If you are buying…

• Consider using a specialised buying agent.

• Offer what you are prepared to pay. Don’t take a chance with a very low bid, but equally, don’t tender over the odds just to make sure of winning.

• Include information about how you will finance the purchase.

• Instruct a solicitor before putting in a sealed bid to avoid coming across as a time waster. Explain to him that you may need to move fast to secure a deal.

• Have a survey done in advance as vendors like offers that are not “subject to survey”.

• Put your offer in, and check that it has been received, just before the deadline, not weeks in advance.

• Avoid submitting a round sum figure to reduce the likelihood of a dead-heat with a rival.