London Property: Dark clouds on the horizon but lots of sunshine on the way

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After several bleak years the fun had returned for estate agents and the buyers returned in droves; some helped by the Government and some funded by international money looking for a safe haven and a sound property market. It was time again to consider buying the top of the range BMW; booking the villa in Ibiza and slipping into Bond Street for a Rolex Daytona. But there are black clouds forming on the horizon. This time not from lack of buyers, although after consideration lack of properties is a slight worry; instead, there is a plethora of problems that have not been faced before.

The first is led by the man who gave us Poundland. Laughed at by everyone as a feeble idea in 1990, Steve Smith’s Poundland had a million customers when he sold his shares in his business for £50m. Steve is now planning an online estate agency designed to save on estate agency fees. Estates Direct, a hybrid online and office-based agency offers to sell your home from £390 + VAT. There have been cheers from the public who are well versed in looking at property websites, so one that saves them money is a brilliant idea.

The second issue, which matters to Londoners, is the unknown status of the Mansion Tax, this has been running for some time but the boom in the market has given the subject front row status.

The final problem is really for top estate agents who target the Russian market, can their clients pay for the property and more importantly, with threats of fines on ‘buy-to-leave’ investors, will they remain in the market?

According to London Residential Research there are 288 towers in planning or under construction. This is good news for the penthouse interior designers, Nicola Fontella of Argent Designs, Karen Howes of Taylor Howes and Joe Burns of Oliver Burns and equally could be a good source of revenue for the estate agents.

However developers are increasingly savvy and there are no easy pickings from them. Leading developer, the Berkeley Group, has an efficient and capable IT division harnessing the power of the internet. They have taken matters even further by creating the Berkeley Academy. There is now a team of professionals recruited from the hotel and airline sector, who understand customer service and are very knowledgeable about the Berkeley product.

The well-oiled machines of Knight Frank, Savills; the super smooth Mark Collins of CBRE and the ebullient Gary Hersham at Beauchamp Estates are knowledgeable, well respected and can ride out any storm. However, the high street could be the loser again with smaller agents closing and chains reducing their number of shops. We have seen it all before in the retail sector.

We asked property professionals for their view.

Caroline Takla, The Collection LLP (http://www.thecollectionllp.com/):

International buyers have always been interested in London which has become a truly global city to live, work and play. Our super-prime clients have a raft of advisers to help them maintain their wealth, what they need from us is professional advice on buying a home in London. The internet will be an alternative to an estate agent, but buyers at the top end of the market who are buying homes and investments worth millions of pounds and whose confidentiality is paramount, need to know everything about an area and rely on their advisers to guide them from the post-codes to the best schools. They may look at the internet but they need a ‘trusted advisor’ to help them, which is our role.  Political uncertainty is more of an issue than the Mansion Tax.  Many homes in the London Boroughs are worth around the £2 million mark and I feel sorry for the average Londoner who will be penalized by this tax.

Russell Taylor, Head of Residential at Montagu Evans (http://www.montagu-evans.co.uk/):

Our reputation is based around our core business of chartered surveyors and property consultants. The internet estate agents may have an impact on the high street estate agency but the Russian market is concentrated on high end residential and some commercial. Our focus is on the global market for highly prized London development sites and clients appreciate our expert knowledge and holistic approach.

Gary Hersham, Beauchamp Estates (http://www.beauchamp.co.uk/):

The continued speculation about the introduction of a Mansion Tax could have an impact on certain sectors of the market.  However, with these tax increases bringing the UK in line with other countries at this stage it looks like the changes will be absorbed by the market.

The views expressed in this article are the opinions of the author.