6 June 2019
Renovating your dream property in prime central london
People are motivated to renovate property for a number of reasons. For some, it allows the freedom to create their ideal home; a space that is perfectly suited to their lifestyle and the needs of their family. For others, a renovation can be seen to be an investment – properties in need of renovation often command a lower price tag than similar, refurbished properties in that same area. This means not only that you can potentially get more for your initial outlay, but the prospect of adding value through subsequent refurbishment improves your potential to achieve long term capital growth whilst minimising risk. In this article, we look specifically at why more people are choosing to take on a renovation project in Prime Central London (Belgravia, Knightsbridge, Mayfair etc) and offer some advice on things to consider before taking on your dream project.
London has an enduring appeal
Yes, it is true that the market has slowed due to political uncertainty surrounding Brexit, a decline further compounded by changes to stamp duty for foreign buyers. There has been a general feeling from both buyers and sellers of waiting it out until we have a clearer idea of the UK’s future relationship with the EU. Yet there are flip sides. Motivated sellers have adjusted their pricing expectations down from their 2014 peak and sterling’s ongoing weak performance gives overseas buyers a pronounced currency advantage. There are deals to be had! Furthermore, the price falls that we’ve been seeing across London’s most expensive postcodes are continuing to ease, and with Savills predicting in their latest state of the prime central London market analysis that they expect to see a bounce in values as clarity around Brexit unfolds, it really does seem a good time to make the most of any good value opportunities out there, of which properties with renovation potential are often among the best.
The key of course is to finding the right property, with the right potential and at the right price. For this reason we would always recommend bringing in experts as early on in the process as possible. Having input from experienced professionals will help you get a better idea of what is possible as well as highlight practical considerations that may have an impact on the realisation of your vision. We’ve included some details how we can help in this regard at the end of the article.
THINGS TO CONSIDER
Freehold v Leasehold
Much of the land in prime central London is owned by three main landlords: The Grosvenor Estate, The Crown Estate & Cadogan Estate. This means that many properties coming up for sale are sold as leasehold rather than freehold, which has a direct impact on the purchasers rights to that property and subsequently what if any modifications can be made. To summarise the difference between these two tenures: if you buy a freehold property, you own both the property and the land on which it stands. As such you are free to make any changes and alterations you wish, providing they meet with all relevant planning and listed building regulations. Purchasing a leasehold property on the other hand, gives you the right to occupy the property for the amount of time specified on the lease, but gives you no rights in relation to the land. Typically in this scenario, the freeholder (often referred to as the landlord) will be responsible for the maintenance of the buildings exterior, structure and common areas, though they often impose a service charge for this so be sure to check specifics in the terms of your agreement. Once a lease expires, all rights to the property revert back to the freeholder, which essentially makes this kind of tenure a depreciating asset. This is why you often see drastically reduced prices for property with a short lease remaining, though when given the option to negotiate an extension direct with the freeholder, this can be an effective way of offsetting a good percentage of the property cost for a period of time. Note that once a lease has less than 80 years remaining, it often becomes more expensive to renew. It is also more difficult to obtain a loan against such a property and so buyers looking to take advantage of these opportunities need to be cash-rich.
What buyers want
Postcode and location are still of vital importance to a certain demographic of purchaser. Increasingly however, the boundaries of what is considered to be prime central London are being pushed outwards and buyers are more prepared to evaluate properties on their own merits. For newer developments this translates into experience with many purchasers opting for exquisitely designed developments and access to five-star, luxury hotel style amenities. See the likes of Twenty Grosvenor Square from Four Seasons or the upcoming Mandarin Oriental Residences on Hanover Square for evidence of this demand. However, it is also a consideration for those looking to buy amongst London’s extensive period property stock, where is is vital to consider ‘curb appeal’. Attractive houses in picturesque squares will always be in demand, which makes them less susceptible to market fluctuations, thereby enhancing their renovation potential.
When assessing the renovation potential of such a period property, it is important to look beyond the architectural features (though they are a fantastic bonus and we’d recommend always taking advice on how to incorporate them into your refurbishment plans!) and consider the wider building. Always commission a building survey to gain a more accurate overview of the buildings condition. This will help to build an accurate picture of work that needs to be done, which is the foundation upon which you will build your renovation budget. It is a good idea at this stage to invite other relevant specialists such as planning consultants, architects etc for their input. In fact, we often advise our clients at this pre-purchase stage, exploring the design potential, identifying opportunities (and potential risks!) and even outlining indicative budgets and timelines for their refurbishment plans. Creating as accurate a budget as possible before your purchase is vital in making sure that your investment pays off as overspending on renovations can quickly eat away any savings you made on the initial purchase price.
If you are planning any physical modifications to the property, you will likely need to apply for planning permissions or licences to alter to the local council. Having an understanding of what permissions similar properties have been granted in the area will help guide you in knowing what is likely to be accepted in your case. Again, working with someone who has a good awareness of policies in this regard and experience of successfully obtaining permissions can help prevent wasting time and money with unsuccessful applications. In addition, if your new purchase is one of over 600 listed properties in London, then further approvals would be needed for changes to ensure that the buildings historical character is not diminished. It’s advisable to work with a specialist consultant on such projects as they can help navigate the various rules around such properties. It’s true that a little more time, patience and often expense is required in the renovation of such homes however the reward is a truly unique, beautiful property that is in itself a part of London’s history.
HOW WE CAN HELP
Being a multi-disciplinary practice with extensive experience of working across prime central London, we are in a unique position to be able to work with our clients across the entire renovation process. This often begins at the pre-purchase stage where we can offer advice on everything from the design potential of a property to indicative budgets and timelines. Engaging our services at this early stage often allows us to identify and pre-empt potential risks, which could otherwise be costly problems if encountered later in the process. The purpose of this kind of consultation is to furnish you with knowledge you need to make an informed decision about the property purchase.
We have a fantastic team of specialist craftspeople, trades & suppliers, which means that if you decide to proceed with your renovation project and employ our services, we have the resource and flexibility to tailor our offering to the specific requirements of your project. Some clients value our involvement in a consultative capacity whereas others are looking for a more design-led role in the specification and installation of all the furniture, fixtures & equipment; the things that will help fulfil their vision of a perfect home. We also offer a more comprehensive project management service for those clients that value having a single, trusted point of contact to coordinate and deliver the project. Either way, we will employ our skilled team and extensive experience to help make your renovation journey as simple, painless and above all enjoyable as possible.