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.

 

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.”

 

 

This week, Graham Beale, the chief executive of Nationwide building society, says that the London housing market may face a “natural correction”. With the property market clearly in a state of transition, we look at the effects around the country. 

London

Sellers can no longer name their prices in prime central London (PCL), as the market is starting to cool. The Kinleigh Folkard & Hayward agency reports a 33 per cent reduction in the number of registered buyers across its 52 branches in London, with a 10 per cent increase in homes coming on to the market. Richard Barber, a partner at WA Ellis, calculates, using data from Lonres, that approximately 24 per cent of homes on the PCL market have been reduced in price. Camilla Dell, the managing partner of the Black Brick buying agency, predicts a cooling in the market for properties costing more than £2 million until the general election next year brings clarity about future property taxation costs. Average growth in PCL, according to Knight Frank, is now 7.5 per cent — below the UK average. “This is not a market on fire,” says Tom Bill, the head of London residential research at the agency. Sales are slower in the most traditionally coveted areas — Mayfair, Chelsea and Belgravia — than in the slightly less central areas of Islington, Canary Wharf and Notting Hill. This suggests that buyers have either become priced out or are fed up with the sky-high asking prices. 

Commuter belt

“Since 2009, the markets with the closest links to London have seen the strongest recovery, benefiting from a flow of housing wealth generated in the capital,” reports Sophie Chick, a research analyst at Savills agency. “Average house prices in the prime suburbs (within the M25) and the inner commute (30 minutes to an hour’s commute to London) have reached their 2007 peak levels.” On average, properties with a 30-minute commute to London have gone up by 5.2 per cent, she calculates. Those that take an hour’s commute have performed similarly, at 5.9 per cent.

“We haven’t seen a frenzy this year, but there is a steady supply of Londoners coming here and seeing how much more they can get for their money,” says Stavros Kapsalis, the manager of the Guildford branch of Hamptons International. Nuala Easter, the associate director of the St Albans branch of the agency, reports that demand is fierce for properties within half an hour’s walk of a train station and close to a good school. Recently, a five-bedroom 1930s semi which launched for £830,000 had 46 viewings on the open day, 16 offers and the sale was agreed at £950,000. 

Cities and towns

Urban properties have performed much better than homes in neighbouring villages and rural locations. Research carried out by Savills shows that prime urban properties are now, on average, just 0.6 per cent below their 2007 peak, compared with their neighbours, which are still 11.23 per cent below the peak.

According to figures produced by Hamptons International, not all cities are experiencing strong property markets, however: over the past 12 months, growth in Leeds has been marginal, at 0.5 per cent. Half an hour’s drive away, in Harrogate, prices have increased by 3.7 per cent, nudging 1 per cent beyond prices at the 2007 peak. (Hunters estate agency in Harrogate reports sales volumes are up by 25 to 30 per cent year-on-year.) In Liverpool, it’s 1.1 per cent and in Manchester 2.2 per cent — in all three places, house prices are still 20 per cent below the 2007 level.

Cardiff, meanwhile, has experienced growth of 4.3 per cent and prices are 8 per cent off peak price. Amy Thomas, the head of the residential department at Savills Cardiff, reports a market that is still tough going. “We’re experiencing a buyers’ market, and vendors have to be realistic about their pricing to sell.”

The strongest performing city outside London is Cambridge, which has had 10 per cent growth in the past 12 months. In Brighton (7.2 per cent), Paul Taggart, the associate director of Hamptons International at Brighton and Hove, reports a market less frantic than it was a few months ago — more properties have come on the market, which has started to have an effect on prices. The number of people registering at the Bristol office of Knight Frank is up by 35 per cent compared to last year. James Toogood, a partner of the agency there, reports the country market around Bristol is finding “renewed strength”. 

Rural

“The market is still very price and quality-sensitive, so the good is going, but the bad and ugly are not,” says Robin Gould, a buying agent who covers Wiltshire, Dorset, Somerset, Hampshire and Devon for Prime Purchase. He observes that second-home buyers in these areas are rare. James Wilson, a director of Jackson-Stops & Staff at Shaftesbury, says: “It’s a far cry from the frenetic market that London and some of the southeast is experiencing.”

Knight Frank reports that growth in Dorset is 1.9 per cent, in North Yorkshire it’s 3.2 per cent and Lincolnshire 4.7 per cent. Prime rural properties grew by 4.1 per cent in the past 12 months, compared with the 8.2 per cent achieved by prime urban ones, according to Grainne Gilmore, head of UK residential research at Knight Frank. 

Coastal

These are taking the longest time to recover: prices in Cornwall are subdued, with a growth of 1.7 per cent over the past 12 months, according to Hamptons International. In Blackpool, prices have fallen by 1.2 per cent. Prices in Poole have grown 5.3 per cent; those in Barnstaple have flatlined at 0 per cent. “The second-home market hasn’t recovered as quickly as the mainstream market,” says Chick, who also points out that the prime coastal hotspots were some of the areas hit hardest by the credit crunch — by mid-2013 they were still 26 per cent below their peak.

Families are increasingly choosing to dig basement extensions as the cost of moving rises, but the vast majority are failing to arrange the proper insurance, according to brokers.The basement dig, no longer a central London phenomenon, is spreading to areas such as Wandsworth, Clapham, northwest London and Oxford.The estate agent Knight Frank says that the number of basements being built in Oxford has doubled over the past two years, and Savills expects the trend to expand to other cities, including Cambridge, soon.

Tom Bill of Knight Frank said: “You know the trend has taken hold in an area when a square foot of basementis worth the same as a square foot above ground. That valuation method has spread beyond prime central areas like Kensington and Chelsea and into Wandsworth, Battersea and Clapham over the past 12 to 18 months.”

However, a survey by the broker Insurance Tailors in 2013 showed that only 5% of people who had carried out structural work, including digging basements, had informed their insurance company.This meant that, for most, their home insurance cover would have become void the minute they had started the work, which in turn means neither they nor their neighbours would have been protected against any structural damage it caused.

Basements have become increasingly popular in areas where rising house prices have made the cost of moving expensive. Many families prefer not to lose garden space to extensions, and the technology for basements has evolved — it is now possible to have full-height rooms with natural light.

Ed Meyer of Savills in Cambridge said he expects that, as house prices in the city start to reach £1,000 per square foot, more people will consider digging down to free up extra space. He said the trend will begin to pick Version: 1 up in the best streets in Cambridge soon. It typically costs about £400 per square foot to dig a basement, so it can be a good investment.

There is a saturation point, however, and the trend in central London for giant basements four floors deep appears to have turned. Charles McDowell, a top-end estate agent, said: “The appetite has shifted to more modest conversions that dig down only one floor.”

Sam Sproston of Knight Frank in Wandsworth and Clapham, said he has seen the number of basement digs grow by about 25% in the past year. In south London, this typically involves adding an extra 700 sq ft to a 2,700 sq ft house.

Caspar Harvard-Walls of Black Brick said: “In central London, the square footage value ofbasements is now treated as the same as the rest of the property. Outside of these areas, values are treated differently — historically, agents valued basement space at approximately 50% less than upper floors, but this is starting to change. Basement excavations can affect the values of a street — a successful sale can bring prices up to a new level.”

However, a basement extension can bring down values of neighbouring homes in the short run. Will Hollest of the buying agent Robert Bailey Property said: “Any neighbour considering selling while the basement construction is under way will find that it will affect their property’s value, especially in outer London areas.

“Landlords are particularly badly affected by basement conversions. Most works last between 18 and 24 months and landlords will almost certainly have to drop the rent to secure a tenant. A prime central London house adjacent to a property about to commence excavations is almost unrentable.” He added: “Landlords can insist that noisy works are limited to sensible working hours, when many prospective tenants will presumably be at work. The landlord would then be able to demonstrate to tenants that disruption would be kept to a minimum. Extending the break clause in the tenancy agreement is also away to guard against losing tenants.”

Neighbours also need to beware of cracks and structural damage that can result from digging a basement, particularly in terraced homes. The damage may not be covered in the insurance policy and it would often be up to the homeowner building the basement to cover the costs. In the worst cases, digging can lead to roads collapsing — as seen in Chester Row, Belgravia, when the street collapsed under the weight of a skip in 2010.

Insurance Tailors advises neighbours to check the homeowners digging the basement have obtained adequate cover — from taking out specialist insurance policies to setting up special contingency funds in case of damage.

A party wall award — a legal agreement between neighbours — should be in place before work begins. This aims to mitigate the level of disturbance, sets out when work can be carried out and includes an assurance that any damage to walls will be rectified within a specified period.

Case study: Room for growth

Lana Wrightman is about to excavate the basement of her home in Hackney, east London. The previous owner started the underground extension, digging out to the full width of the house, but moved before the project was finished. Wrightman shares the house with her husband Michael, an underwriter, and their daughters, Edie, 3, and Clara, 2. She wants to dig deeper to raise the basement’s ceiling, making more space for her growing family. The boss of her own marketing agency, Wrightman plans to release equity from the house to finance the work. An architect has been hired and an application for planning permission will be lodged shortly.

Risk assessed

Insurance Tailors recommends specialist policies such as renovations insurance and non-negligent party wall cover, which protects against damage to third-party homes. A typical policy on a Victorian terraced house with £250,000 worth of work costs £800-£1,000.

In some areas, buyers are breaking down the door; in others sellers struggle to drum up any interest. We reveal the length of the queues by Alexandra Goss

The Green Farmhouse is the stereotypical country idyll. The six-bedroom home, close to the Northumberland village of Wark-on-Tyne, has a tennis court and picture-perfect rural views, and is a short drive from Kielder Water and Hadrian’s Wall. Yet the 200-year-old house, which came onto the market in July at £495,000, has welcomed just seven potential buyers through its panelled oak doors.

Meanwhile, more than 300 miles away, on Davis Road, a nondescript street in Acton, west London, an Edwardian first-floor flat with three bedrooms is now under offer after just one week. It was listed at £500,000, and 38 viewers traipsed through its less than 800 sq ft of living space.

House prices in Britain have risen to their highest levels ever, according to figures released by the Office for National Statistics (ONS) last week. In August, the average property was worth £247,000, the highest value since the ONS started recording data in 1968, and 3.8% more than in the same month last year. As has been the case for several years now, London was the best performer — prices in the capital rose by 8.7%, compared with rises of 2.2% in the northeast and 0.6% in Yorkshire and Humberside. Scotland saw a fall of 0.7%.

Property experts have long pointed out the price differential between London and the rest of the country, but little has been made of what is causing these vast iscrepancies — the imbalance between demand from buyers and the number of properties on the market.

“Disparities in price recovery have been widely reported, but regional supply dynamics, while equally important, have not garnered attention,” says Doug Shephard, director at Home.co.uk, a property website. “Restricted supply has been instrumental in both preventing a greater [housing market] crash and facilitating a much more rapid recovery.”

At the moment, about 100,000 people put their properties up for sale each month, less than half the figure seen in 2007, Shephard says. And the number of homes actually selling in England and Wales is running at only 58% of its 10-year pre-credit-crunch average, according to Savills estate agency.

In popular parts of the south, there are too many buyers and not enough sellers, while it is the opposite story elsewhere. The property portal Rightmove says that an average of just 68 properties came up for sale each week in Ilford, Essex, in September, 11% fewer than a year ago and 56% fewer than in 2007. In Leeds, 230

properties were typically listed for sale each week last month, 2% more than a year ago and 18% more than in 2007.

“The media has been full of reports about rising house prices and a forthcoming property boom — this is dangerous ground,” says William Wells, director of Mullucks Wells estate agency in Essex and Hertfordshire. “The recovery is patchy.”

In London, the supply of properties for sale is down by 19% compared with this time last year, according to Home.co.uk, but buyers are out in force. John D Wood estate agency has 27 applicants for every available property in central London locations such as Belgravia and Chelsea; Marsh & Parsons is seeing 34 buyers fighting over every home it lists for sale in Westminster and Pimlico.

“We are regularly seeing properties go for £50,000 or £100,000 above asking price,” says Camilla Dell, managing partner of Black Brick, a buying agency. “It’s not uncommon for homes to be launched on a Saturday, then best bids to be called no later than 11am the following Monday.”

The problem is only set to get worse in the capital, fuelled by a dearth of new properties being built, according to new research by the property adviser CBRE. It looks at planning applications and permissions for residential units in each borough over the next 10 years, and compares this data with the projections for household growth over that time.

“We found that just shy of 305,000 new units are planned, but the number of households is set to grow by 485,000,” says Jennet Siebrits, head of residential research at CBRE. “Straightaway there’s a shortfall of almost 200,000, and that’s not even factoring in variables such as immigration.” The figures show that the problem will be worst in Richmond, with a predicted 22 new households for every property being built. In nearby Teddington, Jackson-Stops & Staff estate agency says that every sale is going to sealed bids.

Outside London and hotspots in the southeast, it is a different story — in the northeast, for example, the supply of property has risen by 16% in the past 12 months, keeping prices subdued. In Newcastle itself, an average of 77 properties came onto the market each week in September, Rightmove says — 4% more than the same time last year and 1% more than in 2007.

Haart estate agency, which has more than 133 branches across Britain, has analysed its data on supply and demand for The Sunday Times. It found that in Northampton there are 13 buyers fighting for every home for sale; yet in Swinton, Rotherham, Grantham and Sheffield, there are only three.

“While some areas are experiencing a shortage of properties, the north of England still has an oversupply, and there remains a lack of urgency on behalf of potential buyers,” says Stephen McOwan, partner at the Corbridge office of Smiths Gore estate agency. “We have only just seen the first signs of price stability after six years in the doldrums. Such recovery tends to occur from the bottom up — there are three times more properties under offer below £500,000 than above £1m.”

What does this mean for buyers and sellers? In essence, properties outside the hotspots take a lot longer to sell. Homes in the south, the east of England and the Midlands sell in an average of 84 days or less, falling to 20 days in popular parts of London, Bristol and Cambridge, according to Home.co.uk. In Mablethorpe, Lincolnshire, however, it typically takes 246 days for a property to go under offer.

Yet there is good news on the horizon. “Buyer demand has increased over the past couple of months, driven somewhat by the Help to Buy scheme,” says Kay McClure, northeast regional sales manager at Bridgfords estate agency. “This is stimulating the local housing market as a whole.”

 

Get the pricing right, have your paperwork in order and proceed with caution if you want to sell in this unusual market by Jayne Dowle

Talk of a house price boom is tricky for sellers. Do you price high to take advantage of the improving forecast? Or go lower to entice a buyer while the going is good? “In this unusual market, pricing becomes a nightmare for selling agents and vendors alike,” says Edward Heaton of the property consultancy Heaton & Partners. “There has been a tendency in certain quarters to price high in order to win instructions. Sadly, this can often kill marketing dead in the water. As a seller, be aware of this and be wary of what appear to be inflated prices. Greedy vendors and bullish agents do the market no favours.”

Proceed with caution seems to be the professional consensus. So what else can experts tell us about getting the best price for your home right now?

1. Do your research before you meet estate agents by checking prices of comparable properties online through portals such as Rightmove and Zoopla. That way, you can hold an informed discussion before you agree what to put your own home on the market for. Don’t be misled, though. “Make sure you look at sold prices as they can be massively different to ‘for sale’ prices,” says Alastair Hart, the divisional director at Hunters estate agency. See landregistry.gov.ukfor official sold prices, but bear in mind the time lag for properties to be registered.

2. Don’t be afraid to put agents on the spot. Invite three to price your property. “Ask them to justify the figure they put forward with evidence of what else has sold recently and what else is currently available,” says Douglas Sleaper, the sales director at the Townends estate agency. “Any good estate agent will be able to show you exactly how they have arrived at their figure.” Don’t be arrogant, though, adds Alexander Leon, sales manager at Henry & James estate agency. “Asking more than the agent recommends is foolhardy and typically results in the house sticking on the market and becoming stale, before the price is eventually dropped, by which time buyers have lost interest.”

3. “When choosing an estate agent, don’t always choose the one who claims they can secure the highest price for you,” says Alexander Gosling, director at housesimple.co.uk, an online estate agency. “It’s a common tactic by agents to out price their rivals just to get clients signed up. Once your property has been on the market for a week or two with no interest, then comes the call from the agent recommending you drop the price.” If you find yourself with no choice but to do just that, Graham Lock, co-founder of the online estate agency House Network, advises a subtle approach: “Gentle price reductions always seem to work better than huge, sudden drops. Sometimes this can spook potential buyers into thinking, ‘What’s wrong with this property if there is such a large reduction?’

4. Getting the best price may be of paramount importance, but it’s not all about the figure. How long a property is on the market and how much attention it receives contributes to how much buyers think it is worth. “Look at the websites of all the agents in the area and watch how long it takes for similar properties in the same price range to go under offer,” says Karelia Scott- Daniels, managing director of Manse & Garret, a property search agency. Edward Heaton adds: “It takes a couple of months if the property is priced optimistically but close to the real value. Properties that go under offer in a few days or a few weeks could probably have been marketed for a little more, particularly if they sell for their asking price or close to. Too long before an offer and the damage has been done. The buying public see the house as compromised. The eventual selling price is often significantly less than if the right price had been asked in the first place.”

5. “Getting the right asking price requires focus, directional hearing and real guts,” says Ed Mead, a director at the Douglas & Gordon estate agency in London. “You’ll achieve the best results by ignoring what you want to hear and focusing on what you need. Incentivise the agent with a middle-of-the-range asking price and a fee designed to get more than the guide price. Estate agents are sales-driven, so offering a fee structure where they receive a hefty additional percentage for everything they get above a guide price has to be win-win for both agent and seller.”

6. As Ed Mead identifies, it is common for prime properties to be marketed with a “guide price” or at “offers around”. Be wary of doing this if your home is more modest, advises Miles Shipside, a director at Rightmove, as you might deter potential buyers from making an offer at all. “Post-credit-crunch, buyers are extra-choosy about value,” he says. “They can be put off by ‘guide price’ and ‘offers around’ as they fear that the sale might end up going to sealed bids, and they will end up paying more than anyone else.”

7. “Under pricing has historically been a good way of generating interest with a view to pushing the price higher through competing bids,” says Edward Heaton. “This often still works, but such are the vagaries of the market this is in no way guaranteed. It becomes a gamble for the seller. If you quote approximately 10 per cent below the average value but only get one interested party, what do you do? Hold out in the hope of someone else with a higher offer? In this market, a bird in the hand is worth two in the bush.”

8. Your estate agent will advise you on the price you should put your property on for, but the price at which you are prepared to sell is a different matter. “Decide in advance what is the lowest price you are prepared to take and keep this to yourself,” says Samantha Ashdown of the selling advice service Home Truths. “Take the emotion out of it. It is important that you are in control of the process if the agent starts suggesting you lower the asking price in order to achieve a sale. Having a bottom line is crucial.”

9. Watch out for the crafty tricks agents pull and ask questions if your instincts tell your something isn’t right. “It’s vital your property is priced competitively otherwise it will become a ‘lever’ flat for the selling agents,” says Caspar Harvard-Walls, partner at the Black Brick property search agency. “A lever flat is where your property is shown to prove to an incoming buyer that another flat is actually really good value. This is to be avoided at all costs.”

And finally, check all your paperwork is in place. If a good offer at or around the asking price comes in, you must be able to move quickly before your potential buyer has chance to change their mind. “It is so important,” says Rupert Sweeting, a partner at the Knight Frank estate agency. “Make sure your lawyer has the contract ready and that all the documentation is in order, such as the local authority searches and details of disputes with neighbours.”

 

Homebuyers fed up with gazumping in an increasingly competitive market may find buying property at auction an attractive alternative. Auction deals are concluded much more quickly, with contracts exchanged immediately; buyers also have peace of mind, knowing that they cannot be outbid after the auction.

Auctions are also becoming more popular. Essential Information Group, which tracks the results of UK property auctions, says that 6,481 lots were sold between July and September, a 3.3 per cent increase on the same period last year. And it is not just decrepit properties that are sold this way — John Lennon’s childhood home in Wavertree, Liverpool, will go on sale on October 29 through Countrywide Property Auctions, with a guide price of more than £150,000.

Here we explain how to get the best deal at auction, and the pitfalls to avoid.

1. Do not rely on the catalogue: visit the property yourself and do your research. Jo Eccles, director of Sourcing Property, a property search and relocation company, says: “One recent auction buyer completed on a property having only seen it from the outside, only to find it piled 5ft deep in tonnes of stinking rubbish. This added significant delays and cost to his intended refurbishment.” Take a look around the neighbourhood. Are the transport links good? Would you live in the area yourself? All of these factors can affect the value of the property.

2. “Get a surveyor to look at the property to help ascertain what the likely cost of improving the property is and to spot any major defects,” says Camilla Dell of property-finding agency Black Brick. A survey of the property will cost about £500 and is a worthwhile investment, even though you could be outbid and lose the money — the cost to you if you end up with a house that is falling apart at the seams would be substantially higher. “Talking to the auctioneer well in advance of the auction is vital. If they are aware of issues relating to the property, they are duty-bound to tell you about them,” says Andrew Brown, managing director of Countrywide Property Auctions.

3. If this is your first time, do a trial run so you can familiarise yourself with the process. You could easily be up against hundreds of bidders and you’ll be more comfortable if you understand how the system works. Chris Baguley, director of Auction Finance, a lender, says: “This will give you a valuable insight into the way the auction works and the tactics other bidders use.”

4. The fall of gavel is when the sale is made and it is legally binding. Contracts are exchanged immediately, so you’ve got to be happy with everything before you start bidding. Have a solicitor inspect any legal packs before the day of the auction. These packs list the terms of the sale and you will be bound by them if your bid wins.

5. As soon as the gavel falls, you have to pay a 10 per cent deposit, and the rest is usually payable within 28 days. “If you’re facing a situation where you need to complete on your purchase before selling your existing home, a bridging loan can help you through,” says Brian Murphy of the Mortgage Advice Bureau. Bear in mind, though, that bridging loans are meant to be short-term solutions and are more expensive than standard mortgages.

Banks could make you mortgage offers subject to retention — for example, they will only give you the mortgage once you’ve installed a kitchen, says David Sandeman of Essential Information Group. It becomes a catch-22 because “you can’t get the money until you’ve got the kitchen, but can’t get the kitchen until you’ve got the money”. The bank could withhold the entire loan until its conditions are met, so it is best to seek a mortgage that doesn’t come with conditions attached, or have another form of finance available if needed.

6. Bring a debit card or chequebook, as well as two forms of identification and proof of residence, to pay the deposit. Cash and credit cards are not accepted, and the penalty for a bounced cheque is substantial — the vendor may sell the property to another buyer as well as sue you for the deposit. Let your bank know that there could be a huge cheque or card transaction being made so they don’t block it.

7. Know the difference between guide price and reserve price. “The guide price is not what property will sell for, it is only a good indication as to where the reserve is going to be and the property could sell. It is not the price at which auctioneer expects property to sell at,” Sandeman says. The reserve price, however, is the lowest price that the vendor will accept. If the reserve price is not met, the property will not be sold.

8. During bidding, the auctioneer is legally permitted to raise false bids while the offers are below the reserve by pretending to accept a bid from a phantom buyer. This is known as “chandelier”, “rafter” or “off-the-wall” bidding and standing in a position that gives a view of the whole room may help you spot this.

9. Decide how much you want to spend and stay calm if the bidding starts to get competitive. Don’t allow yourself to go over budget, do not bid if you have any doubts and always remember that the auctioneer is there to get the highest possible price for the property.

10. Don’t despair if your bid doesn’t win. If the winning bid falls through at a later stage, or if the reserve price was not met, it might be possible to buy the property after the auction. Leave your details with the auction house and you might get your hands on the property after all.

 

Forget Mayfair, Park Lane and Piccadilly. A new wave of investors is redrawing London’s real-life Monopoly map. Christopher Middleton learns how to load the dice in your favour.

The London Monopoly board is as fixed in our minds as Nelson’s Column or Tower Bridge. From the gritty brown Whitechapel and Old Kent Roads to the green glamour of Oxford and Bond Streets, we know exactly where we stand.

Except, of course, that a century after the much-loved board game was introduced, all that is changing. Where it was once simple to work out where to place your bets on an investment, now it is much more complicated. Parts of London that were distinctly downmarket have suddenly become dynamic and desirable. Never have there been so many simultaneously up-and-coming areas. Brixton is buzzing; Hackney is happening. Even Stratford, once a transport-less desert, has been embraced thanks to two Tube lines, a frequent National Rail, Javelin trains to King’s Cross and even the Eurostar to Paris. Mayfair, Park Lane and Piccadilly no longer top property buyers’ wish lists.

Amid all this, how can the average homebuyer find a vantage point from which to survey this fast-changing metropolitan scene? Where on the revolving board should investors place their houses? How to win an imaginary new Monopoly (and avoid going to jail)?

Of course, as in the game, there is no one answer. Property professionals say we shouldn’t torture ourselves trying to identify when the market has reached its peak or is scraping along the bottom. Instead, we should be guided by our own concrete requirements.

“Trying to time the market is impossible,” says Camilla Dell of buying agents Black Brick Property Solutions. “Many people who sit back and wait end up never getting anything, and then watch in regret as the market rises.”

“The problem is, in London the crash never really happened,” adds buying agent Robert Bailey. “In the wake of Lehman Brothers closing down, prices dipped by 15.9 per cent. But they have since appreciated by 62 per cent.

“Those who were predicting a crash saw their gains eroded by rent, agents’ fees and other costs. It cost them more to get back into the market than they saved by leaving it.”

Prices might be subject to the occasional wobble. But it seems the rock-solid foundation on which purchasers base their calculations is London’s continuing appeal – and not just to British buyers either.

The capital has been on the radar of Asian investors for the past two decades. But it has also become an increasingly safe property haven for Middle Eastern buyers, in the light of the turmoil in Iraq, Syria, Tunisia, Lebanon and Egypt.

In total, it is reported that anything between 65 and 85 per cent of all prime central London properties are being snapped up by purchasers from abroad. No surprise, then, that according to a report by Knight Frank estate agents, London is the only city in Europe where prices have gone up in the past year.

The upshot is that demand has never been stronger for the new London hot spots. The banker-rich territory such as Mayfair and Park Lane has performed strongly, but is being outstripped by uppity newcomers.

According to property finders Garrington, house prices in Hackney (11 per cent), Camden (10.6 per cent) and Merton (10 per cent) have all increased more in the past year than traditionally well-heeled areas such as Westminster (6.9 per cent).

A report from Savills predicts that this “priming” will be at its most pronounced in more outlying parts of London. Prices are predicted to rise by 26.2 per cent between now and the end of 2017, as against just 18.1 per cent in more mainstream districts of the capital.

“If you want to spot where the next prime areas are likely to be, look for places that are new, novel or next door to already prosperous areas,” says Yolande Barnes, director of residential research at Savills. “Good examples at present are Shoreditch, Dalston and Brixton.”

The indicator of an area’s rising prosperity used to be the opening of a Waitrose store. But today’s would-be buyers are advised to look for news of incoming investment.

In recent months the highest-profile up-and-coming area has been Battersea. As well as a new Tube station, more than 20 different residential developments are either being built or are about to be built. Not forgetting the new American Embassy and, it is rumoured, the Chinese and Dutch embassies, too.

“If I were 20, Battersea is where I would buy,” says David Adams, managing director of John Taylor estate agents. “Most people don’t want to live in an area until it is deemed up-and-coming, by which time prices have already jumped.”

If you want to get ahead of the crowds, the Church Commissioners are putting a large amount of money into converting and smartening up their Bayswater and Hyde Park properties.

All of which will serve to improve the surroundings – and thereby house prices. None of these places were on the original Monopoly board, but all could help an investor now pick up a high-performing bargain.

Nor does the list end there. The hot tip these days is to keep an ear out for news of a Westfield shopping centre. Both Stratford and Shepherd’s Bush have one, and Croydon is to follow suit. It’s good news for residents of the 756-home Saffron Square tower being built nearby.

Meanwhile, the once down-at-heel south London area of Elephant and Castle is also getting a long-awaited facelift. Money is pouring into not just jobs and businesses, but New Trafalgar Place, a shopping and housing development.

Don’t forget, either, the new lease of life that the arrival of Crossrail will bring to stops along its route. It may be five years until the line is ready, but already it has kick-started residential property developments in places such as Aldgate, Tottenham Court Road and Bloomsbury. Not to mention Custom House in east London. Once a desolate, uninhabited spot, this will soon (with Crossrail’s help) be just a 17-minute train ride from Bond Street. For the price of a small flat in the centre, then, you could get a roomy town house a little further out.

No question about it: the whole London market is transforming before us. Formerly low-price, low-rent parts of town are being linked to the capital’s transport network and the mainstream property market.

Ever since the announcement that the Olympics were to take place in east London, house prices have risen by nearly £1,000 per month in the 14 postcodes closest to the Olympic Stadium.

Not that we should all rush out and start paying over the odds for properties in these hot spots. The key is to buy not just a place that you like, but in an area that has a proven track record, over not just months, but years.

“Opt for the worst house in the best street, rather than the best house in the worst street,” says Ben Podesta, sales manager at Domus Nova estate agents in Notting Hill.

Don’t expect to make a quick killing, either. At the top end of the market, rich buyers can do up a £10-£15 million mansion, and sell it on for £18 million. But the rest of us are advised to work on a five to 10-year plan to make a profit.

Above all, says Alan Loveday, sales director of Countryside Properties, we should buy a property because we like it, not because we think it will make us money. “There aren’t many people who are happy to live somewhere just because, in a few years’ time, it might appreciate in value more quickly,” he says.

But if your heart is set on making money, the capital’s traditional advantages are as attractive as ever. “London is culturally rich, a major financial centre, and it has an international feel that anyone will feel comfortable in,” explains Mark Parkinson of home finders Middleton Advisors.

“This has resulted in a huge influx of buyers from Europe and beyond. For the foreseeable future, the London market is set fair.”

From all the reams of advice and expertise, from international agents and local specialists, the message about London boils down to one thing: buy now. Perhaps the property game is not so difficult after all.

 

On the scent of a secret hideaway home

Secret homes with lush gardens lurk in city centres, says Lauren Thompson.

If you walked down the busting Kings Road in London, you would unlikely to notice the doorway at No. 183. Behind the unassuming façade lie four spectacular townhouses and three apartments, each with its own courtyard garden and underground parking. This new development, Chelsea Galleries, is one of several in the capital that are hidden from street view but open out on to something quite unexpected. Such “hidden homes” are being snapped up by buyers looking for privacy and security amid the hustle and bustle of London.

“Secluded homes in the heart of London are unusual and provide an oasis of calm for residents,” says Ed Lewis, the head of London residential development sales at Savills estate agency, which is marketing Chelsea Galleries, where prices start at £4.9million. “There is something magical about stepping into a home that is utterly concealed and that no one knows is there.”

Many new hidden homes sit in plots between or at the back of existing house, where an architect has spotted the potential to make the most of an unused space. Chelsea Cottage, also near the Kings Road, is a two-storey house but only the front door is visible from the Fernshaw Road. You enter into a long, narrow picture gallery that leads into the house itself, which was built to nestle in a plot surrounded by 14 neighbouring gardens.

John Walters of the Chelsea office of Knight Frank estate agency says “Chelsea Cottage is truly unique. It’s surrounded by other people gardens but you are still a distance from their houses, so it feels very private.” The two-bedroom cottage with garage and two terraces is on the market with Knight Frank for £4.35million.

Over the river in Wands worth lies another house hidden from the road in Lebanon Gardens, currently let to tenants. Built in 2008, residents go through a doorway on the street and walk down a passageway before coming to the two-bedroom mews-style house.

Mathew Dabell, director of lettings at agency Aspire, explains the building provenance: “The end-terrace house originally belonged to a builder in the 1890’s, and there was a plot of land to the rear used as his storage yard, complete with original cobbles. In 2008 the owner of the end-terrace obtained planning permission to build a contemporary house there, and it is now a really surprising and very secluded home.”

With London bursting at the seams, many developers turn to conversions of disused commercial building to create new and private homes. The Mill House near Shepherds Bush Common was lying derelict for many years while the regeneration of the surrounding Brook Green neighbourhood took place. Now its conversion into nine apartments is almost complete, with a discreet entrance at the end of a gated no-through road. Prices start from £499,950 with Marsh & Parsons.

A row of former artist’s studios in Chelsea has also been snapped up recently by developers, creating a new wing of one and two bedroom apartments called Bolton Studios. Onlookers would have no idea the development was there apart from a small entrance on Gilston Road, just off Fulham Road. Prices start at £1.265million with Savills.

Lewis says that the Bolton Studio apartments are being bought by those wanting a pied-a-terre or somewhere for their children, as well as buyers searching for unusual “trophy” homes that offer something different to friends’ bolt holes.

Hidden homes also appeal to those who travel often or leave their homes empty for long periods. Homes impossible to spot from the street are less obvious targets for burglars, even if there are no lights on during the winter months. Former religious buildings can be good hunting ground for private homes in London. One such new development is Carmel Gate, a former monastery in Temple Fortune, Northwest London, which is hidden from the street. The gated development is off Havianna Drive, off Bridge Lane, and is a combination of converted and new-build homes around a courtyard. Prices start at £575,000 for a two bedroom apartment through Glentree New Homes.

If you’re thinking of buying hidden homes, expect to be in the company of celebrities and other movers and shakers looking for a secret hideaway. Camilla Dell, the managing partner at Black Brick buying agency says “We recently acquired an off-market house on Earls Terrace in Kensington for a high profile Asian businessman. The road is popular because it’s concealed from Kensington High Street by a high hedgerow and it is also gated with 24/7 security. Even better, you can drive into and out of the car park underneath the houses to avoid being photographer by paparazzi.

Most of us are untroubled by the attentions of paparazzi or autograph-hunters, but the allure of somewhere utterly hidden from other people may still prove hard to resist.

 

Many of us prefer period properties — but there are signs that the tide may be turning as buyers

… discover the hidden charms of new-builds – by Zoe Dare Hall

Proposals unveiled last week by the government to boost the housing market — including a scheme to help encourage the return of 95% mortgages — are, as ever, directed towards the new-build market, which is, at present, turning out less than half the number of properties required. So, does buying a new-build, rather than a Victorian or Edwardian home, make sense?

At the top of the market, in what estate agents refer to as “prime central London”, the answers appears to be yes. Camilla Dell, managing partner of the buying agency Black Brick, says that new-build properties priced at £5m or more command a 25% premium over their period equivalents, especially those offering large amounts of the lateral space that is so popular with well-heeled foreign buyers.

Across the country as a whole, however, the premium commanded by new-builds is a more modest 2.2%, according to Nationwide — down from 13.4% in 2000 — suggesting that, on average, those who bought a new home a decade ago won’t have done as well as someone who bought a period one. In the capital, the average price is 24% lower than for a comparable older property, Knight Frank estate agency has found.

Utility bills are likely to be lower in new-builds. Another advantage is ease of maintenance “In London and the southeast, where there is a greater heritage of well-built homes, there is an ‘old property premium’, and it has got higher over the past 35 years,” says Liam Bailey, head of residential research at Knight Frank. “Even though high-quality new-builds will sell for a premium, buyers tend to value aspirational period property more in the south. The key for developers is to deliver a product that they can demonstrate has the advantages of an older property — solid construction, character and staying power, so it doesn’t date.”

It’s the same story in the shires, where old properties are always the preference — and cost 15%-25% more than modern ones, according to Charles Birtles, director of the buying agency CB Property Search.
“People looking in the country want the chocolate box with the worn flagstones and aged beams,” he says. “Even pastiche new-builds can’t command the same price as period homes.”

In the north, by contrast, newly built properties tend to command a premium, in part because the housing stock tends to be of lower quality. Bailey says this trend reaches its height in the northwest, where average new-build prices are 15% higher than those for older properties.

And the sector may be about to see a wider spike in popularity, says Kate Faulkner, director of Designs on Property, an independent advice service. “Until 2008, I would never have recommended buying a new-build home, because of the premium they carried — and because so much was being built in city centres that prices weren’t sustainable,” she says. “Since then, the market has changed. We’re building 100,000 homes a year when we need 250,000, and I think new-build property might be a good investment.”

Utility bills are likely to be lower, too. “New-build homes should be a Grade A on the Energy Performance Certificate. Old homes are typically D or E,” Faulkner says. Another advantage is ease of maintenance. “Everything comes with a guarantee, and you shouldn’t have any repairs for five years.” New houses don’t have to be boring and samey, either.

The run-up to the year’s end could be a good time to haggle, with developers keener than usual to shift stock. That said, you should choose carefully. Although new homes don’t depreciate the moment you cross the threshold, in the way that, say, new cars do, older phases of properties on a development will typically be less attractive to buyers than the latest ones. If it’s a large block, always pick a property that has something the others don’t — the corner plot or an end of terrace. “And look at how easy it is to park,” Faulkner says.

Gary Patrick, a regional sales director for Barratt London, says the improved quality of build and facilities is broadening the appeal of new-build homes beyond first-time buyers to older downsizers, upgrading families and thirty- or fortysomething professionals wanting a more vibrant city-centre location.

“We are finding a much greater willingness in London to buy into new-build developments,” he says. “People are more aware of the advantages of homes built to higher energy standards, with modern specifications. Well-insulated homes are less expensive to run, and modern kitchens and bathrooms are pleasant to live with. These factors appeal across demographic boundaries.”

Laura White, 43, a fine-art lecturer, recently sold her period house in Stoke Newington, north London, and bought a three-bedroom flat for £385,000 with her boyfriend, Mark Wright, 49, also an art lecturer, in Barratt London’s Dalston Square, a development in Hackney.

“Dalston is young, fast-paced and bursting with creativity, and the sense of community is incredible,” White says. “We wanted a new-build flat because we saw it as an opportunity for a fresh project that we could decorate ourselves — something we felt restricted by with our previous homes because period houses often have so much character already.”
Who would have thought it: period homes with too much character? Maybe that will be the view of a new generation in love with their new-builds.

Many more foreign buyers are now exploiting a stamp duty loop hole, reports Susan Emmett.

The Exchequer is losing millions in tax revenue as more top London homes are traded behind scenes through offshore companies. Demand for property in the best postcodes, much of it from foreign investors seeking a safe haven for their money, has continued to push up prices in prime London locations, bucking the national downward trend. Yet many of the highest-value transactions are not recorded by the Land Registry or subject to property tax. With stamp duty land tax (SDLT) now at 5% for homes that sell for more than £1mil, the number of multimillion-pound property deals conducted through offshore companies is rising.

Hamptons international estate agents say that 30% of the homes they have sold in Central London in the past 12 months were traded between offshore companies. Most of those deals were worth more than £4mil, although a number went for far more than that. James Wardle, Director of the Knightsbridge office, says that the stamp duty increases in April is an incentive, but that more offshore companies have been set up as Central London market becomes more global. He adds that even if homes are bought on the open market, some overseas purchasers are incorporating their new property into an offshore company, which means that any future sales are unlikely to be recorded by Land Registry. The absence of these deals from official data suggests that prices in Central London are rising more than records show.

The latest land registry figures indicate that the capital is the only part of the country in which prices have risen over the year, with average values increasing by 2% in the 12months to August. But prices in the 2 boroughs of Kensington and Chelsea and City of Westminster, where the most expensive properties are located, went up by about 10% and 8% respectively. Strong demand for deluxe new developments such as Candy & Candy’s One Hyde Park, where prices stretch up to £130mil, has inflated the figures.

Richard Barber, a partner at W.A Ellis estate agents in Central London, says that the recent sales at One Hyde Park, the “Bulgari” penthouse in Knightsbridge and Roman Abramovich’s purchase of a £90mil mansion in Kensington Palace Gardens emphasise how many wealthy foreign buyers see prime Central London property as “indestructible”, “a safe haven” and a “must have”. These buyers are drawn to London for its relative safety, its schools and universities and its position as a leading financial centre. The weak pound and favourable tax regime are also attractions.

London is also something of a bargain. A recent report by Knight Frank, the estate agent, shows that compared with Hong Kong and St Petersburg, where prices have risen by 16.1% and 12.2% over the past year, price growth in London, at 8.3% is relatively modest.
Although there is no guarantee that the London market will not be adversely affected by the global financial crisis, agents agree that bricks and mortar in the capital’s prime postcodes will continue to attract wealthy overseas buyers. Some groups appear to be more active than others. Chinese investors, for example, are targeting new-build flats in areas such as Docklands and King’s Cross.

Camilla Dell, Managing Partner at Black Brick, the buying agents, anticipates an increase in the interest from the Middle East “There is more confidence coming out of the UAE as the economy stabilizes and a renewed desire to hold a diversified international property portfolio” she says.
But beyond the buzzy London postcodes, prices are falling in the capital’s outer boroughs. Croyden, in South London, has been particularly hard hit, with prices falling 1.8% over the past year. The land Registry also recorded falls in Lewisham, Hounslow, Bexley and Barking and Dagenham.

Declining values have been blamed on shrinking demand as potential buyers find it difficult to raise a mortgage. However, unlike many of the purchasers in Central London, these struggling byers also need to pay Stamp Duty if their property is worth more than £125,000.