Weekly Property Round Up

Written on 28 August 2015

This week it's Sam Fisher's turn to update us with the property news and highlight the trends in the UK, including a rise in popularity for Bristol and recent market turmoil in Asia threatening a slow down of London's luxury property market.

Bristol is the next best thing since sliced Br-London

Offshore companies have spent nearly £250 million buying properties in Bristol, according to official figures released yesterday.

Some 146 properties were snapped up in the Bristol postcode area from 1999 to 2014, making it the most popular place in the country – outside of London – with foreign companies. It comes as a report from the Land Registry shows more than £150 billion worth of property in England and Wales have been bought over the last 15 years.

House price boom

The country’s economic boom and the housing shortage will push the cost of the average home to £360,000 by the end of 2019, according to research by BNP Paribas Real Estate. Houses in the South West, West Midlands and South East are expected to rise most, with a price increase of between 32% and 40%.

Simon Durkin, the estate agent’s head of research, said: “Many forecasts show benign, low-value growth but history tells us that isn’t how the market behaves and expectations are far from uniform across the country.

Property developer pays to get his own ways

A wealthy property developer, Marc Samuels, has paid Hampstead Garden Suburb (a notoriously strict and powerful planning authority) £180,000 to keep a huge basement swimming pool and gym which he built under his home in a conservation area without permission.

In 2012, Barnet Council and the trust, which rules on every development application in the Suburb conservation area alongside the council, granted Mr Samuels permission to build a one-storey basement under his home.

But during construction he extended the basement beyond the approved size, creating a 21m underground space beneath the home and stretching under the garden to accommodate a “cinema room”, “au pair’s room” and “pool room”. He then also added a second underground level housing a swimming pool and gym. In total, Mr Samuels had created an additional 169sqm beyond what was permitted.

The trust, which has strict rules curbing changes to homes in the Suburb, consulted lawyers about obtaining a High Court injunction ordering Mr Samuels to reverse the unauthorised development, but claim they were advised to seek an out-of-court settlement due to “technical reasons”.

Last month, Barnet Council granted Mr Samuels permission for a retrospective application for the additional basement space in exchange for a settlement of £180,000.  This figure is based on the estimate of the enhanced value of the house, making appropriate allowance for the cost of construction and litigation risk.

The trust made a statement to the newspapers “The resident has also made a contribution towards the trust’s legal fees. While the trust condemns the action of the resident, it acknowledges the spirit of co-operation with which he has dealt with the matter.”

This kind of story on property development will hopefully encourage others to obtain permission before developing, however with most councils being notorious for not allowing developments, who knows what people will do. It's a risky way to develop your home as you could be faced with filling in thousands of pounds worth of development or paying a hefty fine to keep it.

London's luxurious properties to take a hit, or not?

Wealthy investors from Russia, China and other parts of Asia have been scooping up homes in the U.K. capital for years, turning high-end property here into one of the hottest global assets. Now, with many of those emerging economies slowing sharply, some analysts are predicting that parts of the London market could soon feel the pinch.

Recent market turmoil in Asia means the high-end housing market in London “will definitely suffer,” according to Dorian Beresford, group director of strategy and business development at real-estate consultancy Strawberry Star. While there is still interest from abroad, “that part of the market will take a hit,” Mr. Beresford said.

Foreign investors have tended to target the priciest London pads. Buyers from Russia and the Middle East typically gravitated to mansions and penthouses in posh locales. Asian buyers have been big investors in high-rise condominium projects that have proliferated across London and the rest of the country.

In London’s prime central housing market, 3.8% of buyers were from China in the first half of 2015, down from 4.1% in the same period last year, according to real-estate broker Savills. Russians buyers have also pulled back, making up 2.9% of buyers in central London in the first half of 2015, down from 4.1% in the same period last year, according to real-estate broker Knight Frank.

“Even though overseas inward investment makes up a relatively small number of deals, it’s those trades that push or pull the whole market,” said Peter Rees, professor of places and city planning at University College London.

The economy in Russia, faced with low oil prices and Western sanctions, is in recession. The ruble has lost 45% of its value to sterling since last August. "Russians looking to splash their cash on big signature properties are gone" said Roman Grigorjev, property buying agent at LonGrad Ltd. “There are a lot of Russians whose fortunes have changed in the last year.”

In China, recent stock market volatility came after the central bank devalued the currency. The yuan has lost 9.2% of its value to sterling since the peak in April.

So, although the Russian demand has faded, the yuan has dropped in value, which may encourage the Chinese to shift their currency abroad, and invest where the currency is stronger, such as London. So it may potentially result in there being more demand for property from the Chinese in London, pushing the market prices even higher.