This is the era of the flat plan. More of us now rent than have done for years, more of us buy-to-let, and more buy property as a pension-provider. First-time buyers vie with downsizers and accidental landlords for a sliver of London real estate. Anyone with a bit of money to spare dreams of a garret or a glamorous pad. It has become the thing to do for those who can. Individual buyers will find they are in a much larger pond than they might have imagined. Investment in London property has become huge and global. According to Savills' report Rental Britain, the value of rented property in the UK went up by 42 per cent to £840bn in the five years to 2012. And the forecast is that the capital value of rented property in central London will grow by 25 per cent by 2017, and rents will rise by 24 per cent. So where should you look, what should you buy, what are the considerations? WHERE TO BUY This of course depends on how much money you have and why you are buying. As a rule of thumb, buyers in London Underground Zone 1 will look for capital growth over a long period, while Zone 2 and 3 buyers will hope for lower capital increases but a higher rental income.
The Nationwide estimates you pay an extra £26,000 for being within 500m of a tube station. In cities outside London you might get double-digit rental yields but there may be very little growth and even a drop in value. London is the safest place to be. BUY TO LET Because young couples priced out of buying need one-bedroom flats to rent, smaller flats give higher returns on investment than larger ones. Ludlow Thompson reported this month that West End rents have now broken through the £5,000 barrier showing just how inhospitable central London is now. Rented family houses have done less well (rental incomes are down 6.8 per cent since the peak, according to Savills) because corporate rental budgets have shrunk for businessmen jetting in with their families to spend a few years in London. By comparison rental incomes on one-bedroom flats have risen by 3.2 per cent since the peak, and on two-bedroom flats by 1.1 per cent. But in the last three months of 2012 there was another shift. Rents in the poshest bits of London slowed while domestic areas in south-west London began to rise.
"Look for areas of regeneration like Nine Elms and Battersea," says Gavin Sung, the global investment specialist at Savills. "Think about where the biggest tenant demand is if you want to let. Anywhere with a big pool of students, academics or research houses like Oxford or Cambridge should deliver because the demand is there regardless of the macro economy." BUY TO LIVE IN This is a very different sort of purchase. British buyers flock to areas like Clapham and Islington in south and north London. With prices so high, areas like Peckham Rye and Hackney are now the more affordable alternatives. Marylebone in central London is seen as the more affordable end of prime but with its own distinct vibe. "The best buy is a garden flat with two double bedrooms in a converted Victorian house in Clapham Old Town, for which you could expect to pay £500,000," says Ed Hulme of Winkworth. "You don't have to pay high service charges in a conversion like this. The second bedroom makes it easier to sell when the time comes, and the outside space probably adds 5 to 10 per cent to the value."
BUY OFF-PLAN Expect high-pressure sales techniques. Your friendly sales adviser will suddenly offer to throw in flooring, furniture and a price discount if you sign on the dotted line immediately, but will expect you to have the deposit ready to hand over. All you have seen is a model and a show flat, which probably is not like the one you will actually buy. If you buy early into a development, you tend to do better financially. "Phase One flats will always be cheaper because the developer is trying to build traction. Then the higher you go in a building, the more you pay. It can be £5,000 or £100,000 more per floor," says Gavin. Remember that flats in new developments sell for more than their older counterparts but you are buying something more high tech, with better services, a gym and concierge. It will be more lettable. Paul Hopkins, the managing director of St James London, says those who bought off-plan at Emerald Square, Roehampton, in May 2012, have seen prices increase by 10 to 15 per cent and they won't even be finished until later this year.
BUY FOR OFFSPRING Around 65 per cent of first-time buyers now buy with the help of their parents, including those lucky enough to have properties bought outright for them. Sammy Whisker, 19, got into Canterbury Christ Church University and ended up with a flat of her own. "I wasn't offered any university accommodation so my parents started to investigate the alternatives," she says. "They were staggered by the private rental costs of £500 a month. Rather than pay dead money for a room in a student house, they saw potential to make a investment as well as relieve me of student debt." They opted to buy a two-bedroom Berkeley Homes' flat in Kingsbrook Park at £215,000 including furniture. Sammy can walk along the River Stour to the campus, and when she leaves she will sell or rent it herself. One-bedroom flats start at £159,950 (sales 01227 477 100). WHAT TO CONSIDER 1. A garden helps saleability hugely. 2. Lifts or stairs? Downsizers are reluctant to buy without a lift. We are currently selling spaces in Mayfair for £90,000, in Gerrards Cross at £10,000.
4. Leasehold or freehold? International buyers cannot fathom leasehold. There is a huge market for shared equity, new and second-hand, which is immediately snapped up when it comes up for sale. Source: Ben Babington, the director of residential development, Jackson-Stops & Staff FOR SALES 1. Off-plan One-bedroom flats at Emerald Square, Roehampton, at £310,000, St James (sales 020 3004 4113). 2. At home Two-bedroom flat in Victoria Rise, Clapham, south London at £425,000, Winkworth (020 7498 8600). 3. Outside London The Marque, Cambridge, with gym, concierge, parking. One-bedroom flats at £250,000, Savills (01223 347092). 4. Affordable prime One-bedroom flat in Wells Street, Marylebone, at £499,000, Carter Jonas (020 7486 8866). 5. Prime studio Lower ground floor mini-pad in Knightsbridge with patio, at £700,000, Carter Jonas (020 7584 7020). In pics: top London flats for salenew report reveals cheapest postcodes to buy one-bedroom flats From New Cross to Aldgate and Paddington to Plaistow, new figures highlight the most affordable first-time buyer districts in prime travel Zones.
Wednesday 8 June 2016 16:18 BST Zones 1-3: the areas to start your property search New research from property experts JLL shows it’s possible — just — to buy in Zone 1 for less than £600,000, and in swathes of Zone 3 for under £215,000. “London’s affordability problems are well documented,” says Nick Whitten, residential research associate director at JLL and author of today’s report. “However, the good news is that there are still relatively affordable one-bedroom flats on the market.” Here’s where to start your search… CHEAPEST ZONE 1 POSTCODES: E1, WC1 AND W2 While Aldgate is attracting high-end developers building for deep pockets, neighbouring Whitechapel remains the most affordable area in central London. Some people are quick to dismiss this cosmopolitan area as too gritty, yet others love it for being “real”. However, no one can argue that its location isn’t good — slap-bang on the City fringe, and with Spitalfields and Brick Lane on the doorstep.
Next year it will join the Elizabeth line — formerly Crossrail — with speedy train links to the City and West End. Rory Willmott of estate agent Winkworth believes in the area. “I suspect in the next five to 10 years you will see a dramatic change in Whitechapel with little coffee shops popping up and new homes built. It will never be the next Shoreditch, but it is going to look a lot better.” The compromise: the best-value housing in Whitechapel is ex-local authority, and while these flats tend to be solidly built, with good-size rooms, the estates are ugly and depressing, with little green space in the area. CHEAPEST ZONE 2 POSTCODES: SE14, E3 AND SE8 Sandwiched between hip Deptford and hipper Peckham, New Cross Road is shabby but to the north and south are some nice streets of period houses, many converted into flats. Transport links are also excellent. It is on the East London line, and Overground services to Cannon Street take just 11 minutes. Becky Munday, managing director of Munday’s estate agents, sees the area changing fast — particularly in the Telegraph Hill conservation area where one-bedroom flats sell for up to £400,000.
The best-value flats are to be found in New Cross Road itself. “It is still 20 to 25 per cent cheaper than Peckham,” says Munday. “There is a new Curzon Cinema and all the local pubs and shops are improving fast.” The compromise: New Cross Road roars with traffic and is seriously unpretty, with no café culture. CHEAPEST ZONE 3 POSTCODES: E6, E13 AND E7 This corner of east London’s star is on the rise thanks to the ongoing regeneration of Royal Docks and the planned redevelopment of West Ham FC’s old Boleyn Ground. A network of parks means E6 is surprisingly green, with good transport links and multicultural charm — the Indian restaurants are great. Beckton is on the DLR, with good links to Canary Wharf and the City, while East Ham has the District and Hammersmith & City lines. New flats in the Royal Docks are too costly for first-timers, and the Boleyn Ground homes will carry a premium, but there is value in local Eighties developments. The compromise: the late-20th century architecture isn’t uplifting.