The centre of London currently looks as though the apocalypse has struck. Streets, bars and restaurants lie empty and shops are boarded up. It's hard to picture the bustling capital so familiar to many of us a year ago and it's understandable that this dead city centre has prompted many home owners to up sticks and leave. But reinvention is sure to occur. And when it does, you’ll want to be a part of it. Whilst interest in rural properties has surged and rents in London are falling, prices in the capital are yet to reflect the sheer volume of people moving out. Those who can hold on to their London property are doing so in the hope the city will bounce back post Covid. Supply remains tight whilst domestic buyers continue to take an interest. But there are still bargains to be found, with a strong chance that prices will stagnate, if not fall, as the city exodus continues.
The latest research from Savills is interesting. Yes, property prices will rise in the UK this year, they predict. But perhaps not in central London. Your strategic advantage is looking in London whilst the market is slow and a bit depressed. There are few international buyers and there’s some stock hanging around and people who have held on during the pandemic will be keen to sell and move on. If you are in a position to move fast, there could be a discount for certainty. And if you are prepared to renovate, you are at a double advantage.
I have written plenty of articles about places to watch, locations that will see growth when the Elizabeth Line opens, areas where there’s green space, accessibility and all the ingredients post-pandemic buyers say they want. And there are still plenty of reasons to consider those areas. However, if you’re on a real bargain hunt here are my top five recommendations.
Central areas offer superb value
It’s a long time since anyone suggested looking for bargains in Westminster, Pimlico, the West End or even Belgravia or Chelsea. But they do exist and now is the time to go and find them. With a dearth of overseas buyers, these areas are dropping into the realm of affordability. And why not consider shorter leases as long as you can enfranchise? Many buyers are put off these propositions, even though they are a real opportunity to add value. Don’t confine yourselves to these areas though. Other Zone 1 locations such as Bayswater, Paddington, Aldgate or if you can cope going south of the River, Lambeth North and Southwark. They’re all going through a bit of a renaissance and if you can be patient, your investment in a resurgent location could be rewarded. Proximity to the city centre will always create lasting value. Beware, of course, for more significant issues such as rumbling trains, damp, noisy streets or outdoor activities such as bars and restaurants. They’ll be quiet now, but come the summer when they re-open you may regret your decision.
Look for lingerers
We’ve all spent a lot of lockdown time, scrolling through properties for sale. But have you spent much time considering how long a flat or a house has been on the market? Motivated sellers are what you need to look for. Often a property that has been hanging around for a while can be sold at a great price. The vendor just wants to sell and the agent, weary to receive their commission, will often try to push a sale through. Often a poorly presented property online may show well when you actually go and visit. Do make sure you do the usual tests to walk an area and physically see a property. Several times at different times of day is best.
Over specified or speculator properties
At the opposite end of the 'doer upper' spectrum is the house or flat that has been over designed or specified but the value simply cannot be justified. A flat with an amazing designer kitchen, bespoke fittings and fittings, Lutron lighting or amazing sound systems, or even a wine cellar or other features that cost a fortune to put in but rarely attract a higher price than the property next door that’s been fitted out from Ikea. They are few and far between, but a keen buyer will notice, and you should pounce if you see one. Also look out for the last of a litter in a new build development. The developer will be keen to cash in. Often the last to sell is the over-specified ‘show’ home. They can provide real value for money.
Bagging a bargain will be down to timing and opportunity in this market cycle. Distressed sellers are unlikely to appear in large numbers until or unless interest rates rise significantly. But keen sellers can still be rooted out, especially in a climate where many are looking to leave London imminently and have their eye on a dream rural home.