By Edward Towers
It’s not news that we’re in an unprecedented economic time. Almost every industry is experiencing historic levels of uncertainty and undergoing rapid-fire changes to how they do business.
As an MRICS Chartered Surveyor and residential buying agent in Prime Central London, I have spent over fifteen years advising clients through all sorts of situations — from the 2009 recession to Brexit — each requiring a bespoke approach.
Experience has taught me that it is absolutely vital not to simply fall back on generic advice, as the macro and micro economic and (in the case of Covid-19) physical situations are so different in each crisis.
As a boutique firm of residential buying agents what advice are my colleagues at Aykroyd & Co and I giving to help our clients to adapt and even thrive in the current unique climate?
Our clients — based in the UK and overseas — are a mix of investors wanting steady income and capital growth and owner-occupiers looking for the perfect home at the lowest price. They remain cautiously optimistic, as do we, taking the view that PCL residential property remains an excellent long-term investment.
They are also looking for opportunities that may emerge from this dramatic shift in the marketplace. Prime Central London residential property has long been considered a blue-chip investment; indeed, it has been the best-performing asset class in the world over the past 25 years. Our service is to locate and acquire best-in-class properties for our clients and then negotiate the lowest price possible, to help maximise opportunity and minimise risk.
Here is an overview of the advice we have been giving:
- Keep calm and carry on
It’s important to cut through any headline-driven sense of panic and act in a considered manner. In most cases, it’s best to stick to your original property plan, whether this includes buying a new family home or investing in a block of flats.
However, it is vital to target the right blue-chip property and also the right seller to get best value. In the current market, this can only be done by seeking expert advice.
- Think long-term
This is a temporary crisis and could be one of the better buying opportunities of the last few years with the correct advice regarding negotiation and values. We always recommend at least a 5-10 year hold and this hasn’t changed.
- Build in value
By building in value your asset can grow despite the downturn. Look at short leases to add value by extending them for less than the same property on a long lease or buy unmodernised and pay less stamp duty.
All of these things we advise clients on so that their asset costs them less to buy and grows even in a soft market.
- Buy best in class
Best in class property keeps its value better in a downturn and rebounds most quickly in an upturn. Best in class PCL residential property is a gold-standard investment.
As well as value wise it will also be more liquid over a generic property due to rarity value, even with less buyers.
- Look for the opportunity
When there’s dramatic change, there is also opportunity. In this case, one of the key opportunities is readily available, extremely inexpensive financing.
Mortgages are the lowest they have been for years and for dollar- and euro-based investors, the opportunity is that Sterling is at a multi-decade low, down nearly 10% since the start of the year.
- Build a crack team
The best advisors can save you hundreds of thousands – or more. No individual outside the industry can source best in class properties in London without a buying agent, due to how many properties are now sold off market and because many of the best agents are now self employed.
Nor can they negotiate the kinds of deals we can — using industry comparables and other realtime data the public don’t have access to — or get those deals over the line. For our clients, we also bring in a range of other key advisers, from currency brokers and tax lawyers to mortgage brokers and building surveyors.
Recently we saved a client over £80,000 in stamp duty by alerting them to the fact that what they saw as one house actually qualified as three dwellings and we consulted specialist tax advisors regarding Multiple Dwelling Relief.