Properties in London appeal to overseas buyers

Despite the wider UK housing downturn, there is a corner of England which continues to boom, on the back of greater demand, particularly among overseas nationals.

This corner of the country is Prime Central London which covers areas such as Belgravia, Chelsea, Hyde Park, Kensington, Knightsbridge, Mayfair, Notting Hill, Marylebone and St John's Wood. The average price of property in these areas is currently £3,968,300 – over 10 times the all-London average, according to property consultants Knight Frank.

Prime central London is a highly desirable place to live; popular with Brits and overseas nationals. There is an array of different types of residential properties, as a consequence of the wide range of residential architectural changes that have taken place over the years. There is a fine mix of houses and flats, from Victorian terraces to contemporary apartments.

Growing demand from rich international buyers is helping to create a new global super class of property in prime central London, including St Johnn's Wood.

Leading St John's Wood estate agents, like Behr & butchoff, Sandfords and Winkworth, have seen a hike in demand for property for sale in St John's Wood as well as property to rent in St John's Wood, especially from European buyers looking to escape the Eurozone turmoil.

Andrew Ellinas, Director of Sandfords, said they have: "seen a surge of interest in property as a result of the Eurozone crisis, with many properties sold over the last month going to cash-rich Europeans as well as those from the Far East."

Historically in Britain, residential property prices demonstrate a distinct spatial pattern over time, rising initially in a cyclical upswing in prime central London, then wider London and the south east, before spreading out over the rest of the country. This is known as the ripple effect.

Despite strong demand for homes in London, the supply of new residential properties coming onto the market in the area remains at an historical low, placing upward pressure on property prices in the capital, despite stringent mortgage lending conditions.

Ed Mead, Director of Douglas & Gordon, said that destinations in prime Central London "are the sort of areas that have been appealing and seem to be going up in value, when everything else has been flat or going down."

Mr Mead added that the appeal of these districts lies in the fact that they are relatively safe areas.

As well as increasing prime central London property prices, rents are also on the rise, which is a highly attractive proposition for buy-to-let property investors.

Unsurprisingly, there is evidence to suggest that property investors are indeed returning to the London housing market in droves, tempted by a sharp rise in rents, increasing property values, a shortage of new build homes coming onto the market and less severe buy-to-let mortgage borrowing conditions.

Gary Patrick, regional sales director of London-based house building firm Barratt London, told the press: "Rental returns and the potential for capital gain in the London property market have been convincing motivators for both domestic and international investors to add to their portfolios."

Central London Estate Agents - Property for Sale in Marylebone & Mayfair estate agents

Tenants expect higher standards as rents boom

With demand for rental properties in London going from strength to strength, most estate agents project that rental values will continue to rise in the coming months, with the greatest growth anticipated in prime central London, where various property consultants expect average rents to increase by as much as £15 per week to £1,052 by the end of this year.

This translates into an additional £780 a year for tenants that agree to the increase. If accurate, tenants in the capital are likely to be paying 30 per cent more than they were at the trough of the market in December 2009, when weekly rents stood at £809.

The latest data from buy-to-let mortgage specialist Paragon shows that landlords are benefiting from a booming rental market, with more than a third - 34% - of landlords reporting that they have increased their incomes from their property portfolios. Figures in July revealed that rents had risen above the £700 per month mark for the first time ever in the UK.

"Tenant demand has been growing for a number of years, but in recent months it has accelerated considerably," said Nigel Terrington, chief executive of Paragon.

However, with higher rents come higher expectations, according to Adam Feather of Robert Anthony, the Hampstead estate agents, which offers property to rent in Primrose Hill and property to rent in St John's Wood as well as Hampstead, Swiss Cottage and Golders Green.

Mr Feather says that more professional landlords in the capital should consider appointing a London property management firm to ensure that tenants receive a good value-for-money rental service.

"Tenants in general are now paying more money in rent and as a consequence now expect an even better service, which means that they have come to expect a 24/7 management service when they rent a property. Unfortunately, for most landlords it is almost impossible to live up to their expectations, which is why a professional property management company is ideal."

These days more and more tenants request managed properties as it allows a more professional service, removing the emotion from both sides, according to Foxtons.

In a direct message to landlords, a statement on the company's website says: "Only you know how much time you can spare to deal with your tenant's telephone calls and the resulting work.

"Our comprehensive property management service is designed to give you peace of mind and relieve you of the commitment of being a full-time landlord, which is why we look after over 5,500 properties on behalf of clients both in London and around the world."

Leading Central London estate agents, Sandfords, renowned for offering a premier service for both tenants and landlords, wisely advise that in order to get the best return on their investment in the fiercely competitive London premium lettings market, 'landlords must offer their tenants the highest levels of service'.

This ultimately means a professional property management package that includes services such as collecting rent, handling administration as well as assistance with more complex issues and the provision of a 24-hour emergency helpline.

Landlords are currently thriving from booming rents, but in order to maintain the good times, they need to properly look after their property investments, which includes their tenants, which is why it is necessary that they go the extra mile, ensuring that their property is well looked after from the moment a tenant moves in.

Properties in London in high demand

Whether it is a property for sale in London or property to rent in London, demand for homes in the capital is at a historic high, particularly in primary locations in the heart of the city.

Central London estate agents are receiving multiple viewings and offers per property in London, whether to let or for sale, thanks in part to greater appetite from domestic and international buyers and tenants, which in turn is pushing property prices and rents higher.

As far as the sales market in London is concerned, Adam Feather, head of residential sales at Robert Anthony estate agency, commented: "Properties in London are attracting a high volume of enquiries and actual viewing, with many homes being sold for in excess of the asking price, due to high demand and a lack of housing stock.

"Many people see London as a good place to buy property. The problem we have is that we do not have anywhere near enough homes for sale in relation to existing demand. The supply-demand imbalance is greatest in the heart of the city. Consequently, prices will continue to appreciate in prime areas."

Overseas buyers are particularly keen to invest in London, especially since the Eurozone crises, with many properties sold going to cash-rich Europeans looking to move some of their wealth into the stability of the prime London property market. Property for sale in Marylebone, for example, has been attracting affluent buyers for a number of years.

"Demand for properties priced between £1.5 and £4million is intense, resulting in properties selling within an average of just seven days in Marylebone," said Andrew Ellinas, director at Sandfords Central London estate agents. "For those looking to secure their offspring in good educational establishments, Marylebone has well regarded business schools, increasing its popularity with buyers from the UK and overseas.

Many overseas nationals also want to buy homes in London for investment purposes, with a supply shortage often pushing property prices and rents higher.

A significant hike in tenant demand is increasing rents across London, which is great news for buy-to-let investors - domestic and international - seeking to capitalise on higher rental returns.

Fresh data released by buy-to-let lender Paragon shows that more than a third of landlords – 34 per cent - experienced increases in rental income in the third quarter of 2011, compared to 29 per cent in quarter two.

Just over 10 per cent of landlords said their rental income had increased by between two per cent and four per cent, whilst 13 per cent of landlords increased rents above that level.

Nigel Terrington, chief executive of Paragon, said: "Tenant demand has been growing for a number of years, but in recent months it has accelerated considerably.

"With tenant demand only looking to increase further in the coming months, landlords are likely to continue to experience increases in their rental income, especially given that 49 per cent of landlords said they expect demand to further increase in the next 12 months."

In spite of recent growth in rental values in London, research by Oxford Economics suggests that rents will climb further moving forwards.

According to the think tank, home ownership across England, particularly in London, is set to fall in the next few years, effectively meaning that around one in three people will be renting, which in turn should place upward pressure on private sector rents.

Indeed, average rents in the private sector are set to rise by 19.8 per cent over the next five years alone, driven largely by the growing demand caused by a lack of affordable mortgage deals for would-be first-time buyers.

Commenting on the findings of the Oxford Economics Research, the head of the Housing Federation David Orr, said: "For the millions locked out of the property market the options are becoming increasingly limited as demand sends rents rising sharply and social homes waiting lists remain at record levels."