A Fragmented Market
Prime Central London continues to struggle with a higher proportion of discretionary buyers. Central London is marginally busier while residential neighbourhoods further out such as Islington and Belsize Park are significantly more resilient with more competitive bidding scenarios. Best-in-class family homes at all price ranges continue to be sought after and can still set price records.
Savills’ latest forecast is notably more optimistic about growth beyond Prime Central London (PCL). It expects outer Prime London to outperform PCL over the next five years, while the UK housing market as a whole is forecast to outperform London.
To Rent or to Buy?
One reason for a sluggish central market is the increasing number of London professionals with the means to buy a flat who are instead opting to rent for the foreseeable future and invest surplus savings in the stock market.
Many perceive the current case for buying as ambiguous at best. Stamp Duty, effectively a tax on movement, remains the main disincentive to buying. Other concerns around the leasehold system, stagnant prices and higher interest rates are leading some to simply invest surplus savings in the stock market in tax efficient wrappers.
Others (thankfully for Perrygate!) are crystallising gains from stocks or company options to fund a deposit and own an asset they perceive as having greater long-term stability. Beyond financial considerations, home owning can bring a range of practical and intangible benefits. Some are taking the view that there hasn’t been a better time in recent memory to buy a centrally located London flat.
Buying System Reforms
The government has proposed reforms to the home buying process in England and Wales with the aim of making transactions faster, more transparent and less prone to collapse. This would bring our buying system more inline with the rest of the world.
The aim for the “preparation of ‘sales packs’ prior to listing, including searches and a property condition report” is perhaps the most notable. In practice, the standards and transparency of any pre-purchase property condition report would need to be clarified.
While it remains to be seen how some proposals will be implemented, it is encouraging that the inefficiencies in the current system are being acknowledged.
Am I actually in a bidding war?
One of the greatest frustrations for buyers is the lack of transparency in the offer process. There is no central record of bids, nor any requirement for estate agents to verify competing offers in writing. As a result, buyers are often forced to make important decisions with incomplete information.
While most agents won’t outright invent rival offers, assessing the credibility of other parties is not straightforward. It is not unusual to discover a higher offer comes from a buyer who isn’t currently proceedable or the offer was only made verbally. Offer discipline and remaining inquisitive is vital.
Fee Change
We have recently revised our fee structure by increasing the base fee for our Buying Service to £14,000 while reducing the maximum success fee to 1.1% of the purchase price.
This enables Perrygate to stay very competitive within the industry while ensuring we can still work with a small number of clients at any time and provide their search with the utmost care it warrants.
When Perrygate was founded in 2018, we made a deliberate decision to have as transparent a fee structure as possible with no third-party commissions paid or received. While this approach may have slowed our growth, it has consistently delivered better value for clients and allowed us to build a network based on trust, reputation and results. Hopefully this gives us a firm foundation for the coming years.
