We explore London’s property market with local expert Karim Bazzi. Karim is the founder of Homes One, a property search business in central London. In the past ten years he has helped his clients purchase £300 million worth of properties. Karim specialises in high end transactions, investments and residential developments. His extensive network of professional advisors and industry professionals, as well as an intimate knowledge of London, enables him to tackle any issue arising throughout the property purchase process.
(interview date: summer 2016)
What is it like to live in London?
It is the most amazing, vibrant city to live in. the food has become the best in the world. London is divided into South, East, West and North. Generally I have observed growing up that Londoners tend to very much stay where they grew up (albeit further out since it has become so expensive). Therefore those who grew up in Kensignton live in Hammersmith, those in Chelsea in Fulham, those in Notting Hill in Queens Park, Kensal Rise, those in Islington maybe Stoke Newington.
How has the market changed in the past ten years?
Over the last ten years Prime London property has gone up 147% whilst the FTSE has gone up 23%. There has been a huge increase in supply of new builds and the number of different nationalities purchasing them.
What direction has taken 2016 so far? (interview date: early june 2016)
The most notable fact about 2016 has been the reduction in the amount of transactions. This has been primarily due to the extra taxes placed by the chancellor in the budgets and has been compounded by the UK vote on EU membership.
What are the current average prices per square foot for the main central boroughs?
Prime central London will start at around £1000 per sq ft and can go as high as £6000 per sq ft. the majority of properties though will be in the range of £1500-2500 per sq ft. The most expensive areas are Mayfair, Knightsbridge and Belgravia.
Where do you see the opportunities?
We feel that there may be opportunities in new build developments, because of the over- supply, if they can be bought at the right price. East London is set to dominate price rises over the next 5 years. We also feel small family period houses in zone 2, where locals tend to live, will remain solid investments.
What are the typical types of properties?
Is it mostly old properties, flats, houses, new build? Historically there have been very few new build properties as a proportion of the housing stock in London. This changed dramatically around 2010 and we now feel that new build is in equilibrium.
What are the transaction costs involved with buying in London?
Transaction costs have been historically very low but this government has raised them considerably in an effort to cool the market and raise more revenue. On average the costs to purchase in London over £1 million are from 6%-12%.
Is there a central listing of properties for sale?
There are various aggregate sites that I am sure are well known. Rightmove, on the market, Prime Location. There is also an agent only website which the public do not have access to called Lonres.
Difference between a freehold and leasehold?
A freehold property means that you are the full owner of the land on which only your property sits. It is the preferable scenario. Leasehold properties are quite unique to the UK. An individual or estate owns the freehold and effectively a leaseholder takes a tenancy for a prolonged period of time.
Therefore when you purchase a property you are not purchasing the land in the case of a leasehold but a very long lease. However the key to note here is that you are almost always able to extend your lease and the freeholder has to sell it to you at a market price.
Are there restrictions for international buyers?
There are no restrictions for international buyers except there is now an extra 3% levy on second home purchases, which also applies to UK residents owning more than one property.
Can you help international buyers source financing?
The main advice we give is to use someone who is a broker used to dealing with foreign nationals. This is a competitive market and finding the right deal is important for our clients.
Does the buyer have to be in London for the closing?
No, the solicitor can act on his behalf as long as all due diligence has been carried out.
A final advice for an international buyer looking to buy in London?
The best properties are often traded very quickly, often without appearing on the open market. It is vital that you have the right team in place, both to find the property, negotiate and act quickly on your behalf.