Market Insights July 2024

Please find below our July Market Insights, outlining the key themes we’re seeing in the prime central London property market this month.

As always, the team and I would be delighted to discuss any property search, acquisition or property management requirements you may have.

Best wishes

Jo Eccles

Founder and Managing Director, Eccord

+44 (0) 20 7244 4482

jo.eccles@eccord.com

LinkedIn | Instagram

Buyers more focused post-election

A change of government appears to have brought fresh focus to the market. We have received multiple new buying client enquiries since the election ranging from £2m to £20m, with a number of buyers who have been sitting on the sidelines for some time now deciding to press ahead.

Some are moving within London for schools, whilst others have been searching in the market independently for a while without success and are now seeking professional representation to move forward. We are also seeing an influx of new international investors entering the market at sub £2m, which is quite common during the summer months.

Interest rates remain a concern for mortgage buyers; whilst ordinarily we have an approximate 50:50 split between our cash and mortgage buyers, currently 70% are paying cash as mortgage buyers remain on the sidelines.

Since the interest rate hikes, the first sub 4% mortgage rate has been announced and, whilst buyers are mindful that we could see additional rate reductions, some are keen to are buy now to avoid a likely influx of competing buyers once mortgage rates are lower.

Amongst the Non Dom community, some have already left the UK in favour of locations such as Dubai and Madrid – interestingly we have heard of no one moving to Italy, despite having been originally tipped as one of the most likely exit destinations. 

But most are still busy running the numbers on their options as they await the finer detail of the impending changes to the Non Dom tax regime. Many of the private banks and tax specialists who entrust their clients to us, estimate that only one in ten will actually leave the UK, most of whom will be highly mobile global UHNWIs who can base themselves anywhere and aren’t tied to the UK for wealth creation or children’s schooling.

Of our own clients who may consider leaving, depending on the small print, reassuringly none are planning to sell their London home. London remains a location they enjoy and want exposure to, and we expect most will either keep their homes as a London base or will rent them out, which will be welcome news for tenants seeking prime and super prime rental homes.

£32m trophy home acquired for US client

As some global UNHWIs make plans to relocate away from London, others continue to arrive and put down roots for the long term.

We have just exchanged contracts on one of the largest transactions of the year, a £32m trophy home in the heart of Notting Hill, for a client relocating with his family from the US to London – a good reminder that London still holds significant appeal for international buyers.

After an initial weekend video call where we advised on pricing, housing options and schools, our clients flew to London for a viewing tour of the very best houses. We sourced seven of the properties off market or via direct approaches to the owners, ensuring the entire market was covered.

They fell in love with a turnkey period house in Notting Hill, but there was already another interested buyer who was able to exchange sooner. Our intricate knowledge of the buying process and our reputation in the market enabled us to gain the trust of the seller, and we negotiated a two week exclusivity agreement in return for a £100,000 non-refundable deposit.

This example highlights the competition for best in class properties, and the value of professional representation and expertise required in prime and super prime transactions. The strategy we proposed required a big leap of faith from our clients, but they put their trust in us and in the process, and it paid-off.

Having undertaken significant due diligence in advance, and after assembling the best team of lawyers, surveyors and other specialists, we successfully exchanged four days ahead of the deadline and as a result our clients are looking forward to their new London home.

Bank of Mum and Dad continues to play a significant role

The Bank of Mum and Dad continues to play a growing role in the property market and was involved in almost half of UK home purchases by individuals under 55 last, year according to one recent study. In London, two thirds of buyers benefit from financial assistance from family members when buying their first home.

Among our own clients, parents buying for adult children are noticeably active in prime central London this year. They are typically spending between £2m and £6m to set their children up in their first (or second) home and at the same time reduce future inheritance tax liabilities. We recently exchanged on a £4m duplex in Chelsea and a £6m lateral apartment in Notting Hill, both financed entirely by the Bank of Mum and Dad.

Buying a property for an adult child can require careful navigation and our role is often instrumental in helping to bridge the gap between the younger and older generations’ preferences and comfort levels, in terms of property style and location. Some parents are reluctant buying in areas they are less familiar with, therefore educating them about different locations and options is critical to ensure everyone is on board with the final purchase.

For parents buying as an investment for younger children (we have acquired properties for children as young as four years old), rental yield and capital growth potential are the main priorities, ensuring that by the time their child comes of age they will have accumulated a substantial pot of rental income with which to begin their adult life.

Landlord and tenant price expectations are misaligned

A continued shortage of rental supply is leading to higher than usual renewal rates, as tenants face limited choice, but there is some disconnect between landlord and tenant expectations. Some landlords believe rents are going up more than they are, and some tenants are coming into renewal negotiations expecting to achieve a price reduction.

There is a significant amount of sensitivity on both sides and for landlords at the start of a new tenancy, any who insist on overpricing their property during the marketing phase are achieving limited traction in attracting good quality new tenants.

Within our own portfolio, our landlords listen to our professional advice, and we are achieving an average 5 – 6% uplift at renewal. The continued and overwhelming feedback from our landlords is that their number one priority is for a stringent vetting process to ensure we are placing good quality, reliable tenants in their properties.

This is closely followed by net yield, which requires a proactive and experienced property management team to oversee expenditure and maintenance, protecting cashflows and net rental income.

Keeping good tenants in place for the long term is a focus for our landlords, as it offers security of income and the avoidance of ‘refresh’ costs that are often required in between tenancies.

Double hire within our Property Management Team

We are delighted to welcome two new property managers, Steve Wilson (RHS) and James Markham (LHS), to our team, who bring a wealth of additional technical property knowledge and experience to our business.

Steve Wilson has joined as Senior Property Manager with over a decade of technical experience managing properties for individual and portfolio landlords in London. Joining alongside him as Property Manager, James Markham brings extensive skills gained from managing rental properties and overseeing residential renovation projects in the UK and abroad.

As our portfolio and reputation continue to grow, more than 50% of our £1.5bn rental portfolio now comprises landlords who have appointed us independently and solely for property management, with no prior experience of our property search service.

Together, Steve and James will work closely with our rental specialists to provide a fully joined up service for our landlords whose properties we proactively rent out and manage.

We are delighted to welcome Steve and James on board and they look forward to adding value to our landlords and tenants in the coming weeks and months.