Monday, 31 December 2012

A Do-Er Upper's 2013 Forecast

Over the last few weeks I've been inundated with London estate agent forecasts for the next year.

Most of them show a remarkable similarity to horoscopes in that they could be interpreted in an almost endless variety of ways and made to fit any eventual outcome.

Many, for example, predict a 'flat' market.

Now, I take it that this doesn't actually mean a good market for 'flats'. But it could.

Seriously though, the messages coming out of the so-called gurus are muddled, conflicting, ambiguous, or incomprehensible.

In other words, they don't have a bloody clue.

No surprises there then.

Anyway, as I'm about to bet our entire capital on the capital's property market, I've had to take a view myself and determine my own predictions for '13 (unlucky for some!).

1: There will still be a property market. Unlike Foie Gras and Caviar, a roof over our heads is pretty much an essential. And they are building less new roofs than ever. Ergo.... work it out for yourselves.

2: People will still want a better, bigger or smarter house. I once knew a St Tropez based yacht salesman who told me he had never, ever met an owner who didn't covet a bigger, better, faster boat. Nobody ever really traded down! The same, I believe, is true of property. Even downsizers want to move to a smarter address with wet rooms, cinema rooms, calf leather floors and walk-in bidets.

3: London will still be popular. This city is not prone to violent revolution, fundamentalist religious uprisings or even French-like confiscatory tax regimes. When the sun shines, it's actually pretty. And the choice of great restaurants makes Paris look like a motorway service area. So where else would anyone go? Nasty New York - I don't think so.

4: SW London will not get any bigger. My grandfather repeatedly told me "land is the one thing they don't make any more". Actually he repeatedly told me hundreds of things (that's old age for you), but this one stuck with me. So, Chelsea, Knightsbridge, Kensington, Notting Hill ain't going to be getting any bigger any time soon. Yet the number of people who want to live (or own property) there is still growing. Even my flaky knowledge of economic theory can work that one out.

5: Bricks & Mortar will do better than Stocks & Shares.  I've had at least two paper fortunes, and I can tell you now I'd rather have a Bricks & Mortar one! Ok, yes, if you'd bought a few Apple shares 15 years ago, you'd be a billionaire by now. But with the global economy currently about as potent as a Citroen 2CV, the stock market is little better than the National Lottery. So my money's on property. Literally.

6: Borrowing money will get easier. The world does not learn lessons. Following some terrible event, it will pretend for a few years that it has....and then a new generation take charge and permit exactly what others swore never to allow again. That's why we still send men (and women these days) to be killed in wars. That's why the US doesn't ban guns. And that's why the financial world (and government) will eventually forget the causes and curses of the Credit Crisis and throw cash at people once again. It may not happen in 2013, but it will happen. And my guess is that it will very gradually start to happen in the coming year.

7: Builders won't get any better, Solicitors won't get any faster. Some things are destined never to change. When I see how long house refurbishments take in my area, I am staggered that anything ever gets built at all. The influx of cheap, skilled, hardworking Polish artisans seemingly created only a temporary improvement.
Although I have a great solicitor who is both fast and efficient, he usually has to work with incompetent fools on the other side of a deal. It recently, for example, took us FIVE weeks to get a West Country solicitor to respond after various letters, numerous emails and countless phone calls.

8: I will get grumpier. A year spent cajoling and cursing builders, designers, architects, estate agents etc is not, I think, likely to reduce my grumpiness quotient. I will therefore be asking the doctor for a higher dose of blood pressure tablets for my sake, and maybe a stock of Valium for my suppliers sake. If anyone tries to sell you the idea that people mellow with age, he must be an estate agent. It's simply not true.

Happy New Year.

Monday, 24 December 2012

A Do-Er Upper's Christmas Wish List

I am, so my family regularly tell me, something of a Scrooge.

It's not, I hope, because I'm actually mean.

It's simply that I find the whole Christmas thing rather false and forced, a bit tacky and far, far too bloody long.

Elements are seriously nice. But the whole seems pointlessly stressful and hugely wasteful.

Every cupboard in our house is currently packed with gifts, small and large, that once greedily unwrapped will be often instantly forgotten.

I genuinely cannot remember one present I received last year. Can you?

So, as a Do-Er Upper, what would I really like to find under the tree this year?

This clever device (hidden about one's person) would detect any hint of exaggeration or untruth on the part of Estate Agent, Solicitor, Builder, Interior Designer or Architect. Whenever it detected hyperbole, outright lies or misinformation the machine would emit a loud and rather chilling laugh. Given the amount of bullshit about these days, a spare set of batteries should be kept handy!

I can't stand people who do not respond to phone calls or emails quickly. It takes nothing to tap out an email saying they're busy and will get back to me ASAP. But it's surprising the number of people who take days to respond to anything. So, this piece of kit would enable me to remotely send a small electric 'reminder shock' to those people who don't respond quickly. What fun!

I am not registered for VAT. But 'verbal' quotes I get from builders, buying agents, solicitors, surveyors and designers exclude the VAT. This is incredibly irritating. Every price I get is 20% below the actual cost! It is a practice I believe should be illegal. So this clever device would instantly add 20% to any price quoted verbally and shout out in public " SO YOU MEAN £24,000....NOT £20,000" or whatever the actual numbers were. This would, hopefully, embarrass suppliers into changing their ways.

and finally:

Over in Beijing they're planning to build the world's tallest structure in less time than London builders expect to take modernising my one room flat! So, please Santa, send me a team of your best Chinese workmen. Yes, I know the finish might not be up to Candy & Candy standards. No problem. The flat only needs to look good for a few months....after that I really don't care if the mezzanine starts to wobble a bit! I'll be long gone. Hopefully.

Happy Christmas.

Wednesday, 12 December 2012

The Sealed Bid comes unstuck!

It's late September.

The only thing we've seen worth buying is a potentially wonderful, derelict Chelsea flat owned, I subsequently discover, by an F-ing famous TV chef.

It has an enormous garden (by London standards) and is opposite the even larger Physic Gardens.

My wife wants to move in tomorrow, so it passes the biggest test of all. (She hasn't quite come round to the idea that we might not move in!)

The trouble is the plummy accented agents are in a bit of a muddle about the price. It seems to go up £100k in the space of 24 hours without so much as an explanation or apology.

(To some Chelsea agents price is clearly an incidental part of the process. As perhaps it is to some of their clients.)

Sadly, after much agonising we have to pass on the anticipated bidding war. We don't have quite enough cash to both buy it and completely gut and renovate.

So, when my stepson arrives on a whirlwind trip from Hong Kong and over dinner says he'd like to come in as a 50/50 partner and effectively double our available cash, its cause for celebration and renewed effort in our search.

The flat, however, has already gone. nuisance, as the owner might say.

William coming onboard isn't just a financial bonus. His interest in property makes my own look decidedly amateur.

He recently switched careers from shipping to property, and as well as working in HK for one of the world's most prestigious top end agents has put together a buy-to-let portfolio on the island.

Will's iPad is permanently locked on to property websites, and within a few hours of landing in the UK he's been to see most of the agents in our part of town.

I'm exhausted just watching him, but his enthusiasm and professionalism are highly infectious.

Desperate to impress him with my choice of buying agent, I badger Tracy to find us something to view. Anything!

"Well, there is a little studio flat. There may be money in it", she says, by now somewhat desperate herself to earn a fee.

Normally I'd baulk at such a small project, but this one's a 5 minute walk away and has one of the most prestigious addresses in SW London.

On one side of the street, a truly magnificent crescent of white stucco fronted £12m mansions look down imperiously over immaculately maintained communal gardens. On the other, our side, imposing red brick residences hide high ceilinged, big proportioned mansion apartments.

It's London as fairy tale. The sort of area you walk through and wonder if anything so niggling as a faulty washing machine or dodgy light bulb ever troubles the ordered, rich lives lived there.

While I'm still waxing lyrical in my head, the agent lets us into the ground floor flat. It's awful.

Of course it's in serious need of renovation, that's a given. But, in addition, the owner has managed to make the entrance into a dark, claustrophobic and, frankly, forbidding space.

Since the flat has wonderful large bay windows overlooking the gardens opposite, this isn't an easy feat. Hats off to the owner, they really know how to ruin a flat.

The apartment is supposedly almost 500 square feet, but around a third of this consists of a bedroom mezzanine designed for those who stopped growing at the age of 8.

Going to bed would be more of a challenge than a pleasure, we decide. (My back is already beginning to ache just thinking about it.)

Still, for all this, the world and his wife are queueing up to view, the agent manages to say with a straight face.

The agent is very young. "Very green", Tracy whispers conspiratorially, "we can work with this guy."

In his enthusiasm, our conservatively suited top end 'just out of public school' dogsbody does indeed give away in some detail the current state-of-play.

We adjourn to the local cafe (the mind numbingly overpriced yummy mummy hang out Aubaigne) to do our sums and agree a strategy.

In the absence of any alternatives, we decide to go for it. A small project will, we agree, be a good first test of our partnership, our suppliers and our ability to create value.

Tracy provides comparables that show a potentially significant uplift in price per square foot, if we get it right. IF.

First we have to buy it. And that's not as easy as we had hoped.

Our first offer is batted back with news that the client is asking for 'best and final offers' above the asking price by the end of the week. In other words, it's sealed bids at dawn.

For the uninitiated, a sealed bid is just what it sounds like. All potential buyers submit written offers together with supporting financial info by a set time. The agent then opens them all at the same time, and the winner takes all, as in an auction.

Well, that's how its supposed to work. In theory.

As Will boarded his plane back east, we bandied various offers around. Tracy recommended a figure £20k above asking price. I went a fraction higher, and Will even higher. Eventually we settled on a figure generously, or so we thought, in excess of the original price and the 'sealed, best and final' offer went in.

Later that same day, the agent rang Tracy to say we'd lost out.

Oh well, back to the search, I thought. There'll be other things out there. It's a shame, but hardly catastrophic.

But, just as I'd got used to the idea of losing, the sealed bid came unstuck.

The agent calls to say that maybe, just maybe, if we raise our offer a little we might be in with a chance. The owner hadn't yet been contacted with the results of the sealed bid. He or she was away.

Now this isn't supposed to be what happens. Especially when one of London's top agents is involved!

But I wasn't about to get all ethical about it. Not when there was still a chance we'd win.

We did our sums again, pushed the boundaries a bit and went to £50k over asking. (A not inconsiderable percentage of the original asking price.)

Within hours, our offer was accepted.

Although I'm pleased with the result, the process does raise doubts about the validity and finality of 'sealed bids'.

I suppose agents will say that no two cases are the same, and that all kinds of other factors come into play alongside the actual price offered. Mmmmmm!

Still, I'm glad to be the beneficiary of this 'unstuck' sealed bid. As a loser, I'm not sure I'd have been quite so charitable about the process!

* Next time - what the hell do we do with this tiny, very expensive studio flat? And some photos, I promise.

Saturday, 1 December 2012

The good, the bad and the seriously overpriced.

This so-called diary is like a politician's. In other words, it should not be entirely trusted to tell the truth, the whole truth and nothing but the truth.

This is especially so since I am still writing retrospectively, trying to remember actual properties, actual events and conversations.

Soon, we'll be up to date and entries will, hopefully, contain rather less hyperbole, more specifics.

We're in September by this stage; the buying season is back in full swing and we are back from holiday relaxed, tanned, settled in the new house and keen to get our cash working for us.

It seems to me that 'making cash work harder' is a fundamental driver behind the strength of Prime London property.

For the rich, with large cash balances, you see, there's a limited range of options.

Interest rates mean that keeping money in a bank is pointless. Dodgy economic forecasts make stock markets less reliable than a casino. And who'd invest in a new business with Europe collapsing, the US split irreversibly in two and even Asia's charge slowing.

There's only really art and property left for the rich. And if you buy art, you need walls to put it on, bigger walls, more walls.

Walls that will also be worth 12% more by the end of 2012, apparently.

Of course, we're not competing for properties with the bonused-up Goldman partner, the cashed-in tech guru or the frightened-out Oligarch.

We're well down the food chain, but not so far down we're unaffected. The trickle down effect in Prime London is profound.

A Donne deal?

It means that even the meanest little flat in a semi-good location is (or was in September) a hot property, able to whip up a frenzy of interest and command an unrealistic price.

If it's anything better, like a potentially cute unmodernised little terraced house round the corner from Brompton Cross, then the market goes insane.

We saw just such a house come on the market in September and 24 hours after it was first listed went to take a look.

Donne Place is a little, tucked away Chelsea street containing tiny cottages rather than classic stucco townhouses. It's a bit shabby to be honest. And the houses are seriously Lilliputian.

This might put some people off Donne Place.

The one that comes to market is 1000 square feet and seemingly hasn't been touched in 60 years. It doesn't have a garden, but I guess an optimist would say it has a 'patio'. The windows look like those of a post war local authority house and to call it '4 bedrooms' may be technically correct, but is in no way a truthful description. You might be able to add 100 square feet. Might.

It's listed at £1.65m. That looks a bit toppy, as Tracy would say, but if they'd take £1.55m there would be some, limited potential for a small developer.

Not a chance. The agent explains that interest is such that 'sealed bids' are required by 10 am the following day, and the house is expected to go for 'above asking'. In addition, the agent insists that any offer is submitted by our solicitor with full disclosure of our 'financial means'.

We reckoned, on the back of a Starbucks napkin, that it would cost £300k + to renovate, making a total cost of over £2m when you factor in tax and fees.

You might get that back for a finished 'product'. But with the new 7% stamp duty on £2m+ properties it would be a hard sell just to break even.

I have no idea what price they finally achieved. We had already walked away. Fast.

Full on Fulham.

Having just moved out of Fulham, I wasn't that keen to go back as a developer.

But the trickle down effect I mention above means that this borough has now become the place for young professionals as they start breeding. (The destination of choice used to be Wandsworth's Nappy Valley, but it really isn't close enough to the action for today's young.)

There have always been hot spots in Fulham such the Peterborough estate, parts of Hurlingham and bits of Moore Park, but now even Sands End and the streets around Munster Road are filling up with 4x4s, black labs, double buggies and Hunter welly wearers.

It's not so long ago that you'd want an armed guard to venture far into Sand's End, but today it's a plantation shutter makers dream. All fake Farrow & Ball finishes and, increasingly, French accents.

(Just off the wrong end of Wandsworth Bridge Road, there's now even an Ecole des Petites.)

Basically Fulham is the closest to Chelsea these folks can 'afford' if they want room to have even a modest family.

Doesn't look much, but this is the
highly valued Peterborough Estate

Perfect, then, you would think, for the greedy attentions of a little developer like us.


I'm sure there are opportunities, and we did take a look at several. But the streets in these newly up and come areas really aren't very inspiring. There's a uniformity, a boxiness, a production line repetitiveness to the place that I simply don't like.

In a more 'hard-nosed' vein, I also think the market's overheated. With the City cutting jobs and professional firms tightening their belts, even Fulham prices are beginning to look beyond the ordinary mortal.

And where there are 'bargains' to be developed, there's also a young couple prepared to outbid our profitability cut off point.

Vauxhall. Like the car, you wouldn't be seen dead in it.

My very first company car was a Vauxhall. Although it was completely free in those days, I was still embarrassed to drive it even at the tender age of 21.

More recently a friend has been involved in the planned relocation of the US embassy to Vauxhall, an event which has been heralded by agents as creating a potentially massive boom in local and neighbouring Battersea property prices.

I'm sure they're right. It's logical. It makes complete sense. But then so does driving a reliable, cheap to buy and run car from the General Motors offshoot.

I just can't do it.

It might be a great home for dogs,
humans I'm not so sure about.

Even Battersea, which as many of you will know is not the name of a car, doesn't work for me. I got as far as the front door of a couple of properties and had to turn back. It just wasn't for me.

Within empty beer can throwing distance of the properties we looked at there really is a housing estate where a bodyguard is advisable.

Taxi drivers won't venture into it, even the police only enter mob handed.

So I won't be venturing anywhere near it either.

Lots Road. Or the Golden Triangle, to you.

This area ought to be the Holy Grail for people like me. Certainly the agents keep saying so.

It's an almost triangular area of Chelsea bounded by the luxurious and ever expanding Chelsea Harbour complex at one corner, the King's Road and Ashburnham Road which leads down to the Embankment. It feels cut off from 'mainland' Chelsea and in terms of property prices it is. Or was.

Once again, the inexorable march of plantation shutters can be seen gradually colonising even this once down at heel area.

A trendy photographer's agent I know has moved into Burnaby Street, Upcerne is almost entirely gentrified, there's a grand new art school and a rather mysterious new secondary school housed in lavish new quarters.

We went to see a strange property that had become stuck on the market, and was now open to 'offers'.

There are bargains in Lots Road.
The house wasn't one of them.

The owner, a structural engineer by trade I think, had started a full refurbishment of the house while still living in it. He didn't like the ground floor much, so stripped this back to floorboards and unplastered walls and then left it. Retreating to the upstairs, he built what he needed above this main ground floor. And then appears to have run out of either money or interest.

It was a great 'developer' opportunity. The numbers stacked up. The area is up and coming. Houses around it had been seriously tarted up. There was just a couple of problems.

It was noisy. And the ground floor was very dark (no wonder he retreated upstairs). If it had been 50 yards to the west it would have been a great project.

Once again, we had to walk away.

By now - mid September - the bank's meagre interest rate was beginning to look a better option than property for our cash.

Depressed we retreated back to Walton Street to welcome my stepson from Hong Kong with dinner at The Enterprise. At least his arrival would take our mind off property, or so we thought...