Year: 2020

Summer market is hot as buyers and sellers race to take advantage of the tax break — and reassess their lifestyles after lockdown

Property values have hit a record high for the second month running, as the summer house price boom for buyers and sellers continues apace.

The stamp duty holiday announced in early July, combined with a post-lockdown surge in properties being put on the market and a widespread reassessment of what people want from their homes, has led to a whirl of activity.

Latest figures from mortgage giant Halifax reveal an average price of £245,747, up 5.2 per cent on a year ago. This is the highest level of price growth since late 2016 in the immediate aftermath of the EU referendum, which was followed by prolonged market stagnation.

Nationwide’s most recent figures also showed house prices rising at their fastest rate in 16 years thanks to the stamp duty holiday, which means buyers and sellers can save up to £15,000 in tax until the end of March next year.

Property website Rightmove agrees the tax break has lit a fire under the housing market, with a record number of homes sold within a week of being put up for sale.

What will happen to house prices in 2020?

Going forward, however, the picture remains uncertain. Economic anxiety, the likelihood of a no-deal Brexit, and a looming jobs crisis when the furlough scheme ends next month point to house prices dropping in the medium term.

Russell Galley, managing director of Halifax, said: “Notwithstanding the various positive factors supporting the market in the short term, it remains highly unlikely that this level of price inflation will be sustained.

“The macroeconomic picture in the UK should become clearer over the next few months as various government support measures come to an end, and the true scale of the impact of the pandemic on the labour market becomes apparent.

“Rising house prices contrast with the adverse impact of the pandemic on household earnings and with most economic commentators believing that unemployment will continue to rise, we do expect greater downward pressure on house prices in the medium term.”

Knight Frank forecasts a 15 per cent drop in home sales this year and expects “muted” price growth in the second half — although it predicts regional markets will be stronger than London.

However, the estate agent distinguishes the coronavirus crisis from the 2008 financial crash, saying that political uncertainty and stamp duty changes have kept house price inflation in check in recent years, meaning there is more scope for prices to rise.

Can I get a mortgage after lockdown?

A squeeze in mortgage availability is also likely to have a dampening effect on house prices as a growing number of buyers find themselves locked out of the market.

This is particularly damaging for first timers, who have made up the biggest group of home buyers in recent years.

Miles Robinson, head of mortgages at online broker Trussle, said: “First-time buyers in particular are facing increased scrutiny from lenders, tighter criteria and a shrinking range of high loan-to-value (LTV) products.

“The number of 90 per cent LTV mortgage products available has dramatically decreased, with 92 per cent of deals pulled from the market since March this year.

“Alongside this, rising house prices mean first-time buyers will be getting less for their money, presenting a further hurdle to getting on to the property ladder.”

Only eight per cent of agents expect house prices to increase over the next year, according to the latest survey from the Royal Institution of Chartered Surveyors. This indicates flat or marginal house price growth in the coming 12 months, the group said.

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You no longer need planning permission to add two more floors to flats, offices and houses. Airspace development creates room for 41,000 new homes to ease the London crisis.

Could there be a simple solution to London’s housing crisis? One that has been right under our noses — or, to be more accurate, just above our heads — all along?

From this month, changes to the planning system will unlock a hitherto overlooked housebuilding resource that could change parts of London’s famous skyline forever: airspace development.

Airspace development and, to a point, homeowners will be able to add two storeys on to a private house, a block of flats, a shop or an office block, or really any kind of existing building, to create extra living space without the need for planning permission.

Red tape is being cut in order to reduce urban sprawl and pressure on greenfield sites, while allowing cities to grow.

“Before [the change was announced] we got about three enquiries per week,” says Richard Taube, managing director of rooftop development specialist Upspace. “Now we are getting 15 to 20.”

There are restrictions under the new rules, however. The existing building must be detached, while listed buildings and those within a conservation area may not be used for airspace development.

Despite the limitations Laith Moubarak, acquisitions director of airspace developer Click Above, is enthusiastic about the potential: “Land in town and city centres is scarce and therefore the new rules will most certainly impact housing supply. Addressing the housing shortage makes sense.”

The prefab method

Mani Khiroya is managing director of Fruition Properties, which has built 300 flats atop other buildings in the capital since 2008. He favours a contemporary building technique that harks back to the post-war era — the prefab.

Firms build prefabricated “pods” in factories, constructed from lightweight panels and complete with everything from fitted kitchens to electrics. The pods are then simply craned into position.

“It is quicker than building on site and it minimises the disturbance for people living below,” says Khiroya. “A big education piece has to be done around prefabrication, but a building built in a factory is just as good as one built on site.”

These rooftop homes are appearing all over London. Right on the fringes of the Nine Elms regeneration zone, Click Above has just finished adding two two-bedroom penthouse flats on top of a small block.

It all happened with astonishing speed. The apartments were built off site and then craned into place in the space of a single weekend, after six weeks of preparatory work.

The flats are now on sale priced from £675,000 (corbenmews.co.uk).

Click Above’s Laith Moubarak says the firm has plans for another 150 new homes in similar rooftop developments and is in talks with “numerous” councils about adding flats above council-owned buildings: “Off-site construction results in at least half, and often 60 per cent time savings, compared to a traditional build.”

The traditional option

Traditional building methods are far from redundant on rooftops. In central London, Fruition Properties has been busy adding extra floors to Victorian buildings using traditional bricks and timber.

At The One, in Porchester Road, Bayswater, the firm was able to add eight flats above a period pub. The project took eight months to complete.

Meanwhile, at Madison Apartments in Fulham, Fruition took an old, run-down office building and converted it into 16 flats with a spectacular penthouse built on the roof. The project took 18 months.

In Finchley, the company took a Twenties dairy that was being used as workshops, and over a period of 18 months converted it into eight flats, with a new penthouse built on to the roof.

The potential to create 41,000 new homes

Analysing Ordnance Survey and Land Registry data, estate agent Knight Frank has identifed 23,000 buildings, in travel Zones 1 and 2 alone, that could be suitable for rooftop development, potentially providing space to build 41,000 new homes.

This sounds like a lot, but bear in mind that London Mayor Sadiq Khan estimates the capital needs 66,000 new homes to be built each year to accommodate current and future Londoners.

Even so, rooftop developments have the potential to help the housing crisis in a substantial way.

What about the pitfalls?

The Royal Institute of British Architects says the change in regulations is “deeply concerning”.

In its official response to the Government’s proposals, RIBA warned: “The poor quality of existing residential development under permitted development is creating large quantities of unsafe and poor-quality housing that will create long-term problems for the housing stock. Policy on this matter should not be focused on numbers alone. Quality is vital.”

A loosening of planning controls is also of concern to Peter Murray, chairman of New London Architecture.

“In theory there is nothing wrong with building on top of buildings,” he says. “But it will have quite a visual impact. The risk is that not enough thought will go into the design of these extensions. You need good architects, but a lot of people will just ask their builder if they can do something.”

Design issues aside, neighbours can also be seriously impacted by nearby developments that could block their light and overlook their homes.

However, Richard Taube of Upspace says permitted development does not constitute a free-for-all.

“You still have to do daylight and sunlight assessments and things like that,” he explains. “We can’t just build what we like. But before [the change] everything was very subjective and some councils were resistant.”

The nitty-gritty

You can only add to apartment blocks that are at least three storeys high. And if you want to add two extra floors to your home you will be subject to the normal planning rules, which are tough.

As well as meeting building and design standards, Click Above’s Laith Moubarak points out that the change in permission only applies to detached homes built between 1948 and 2018.

“It is only applicable to a small number of [private residential] London properties.”

Freeholders are within their rights to carry out a rooftop development without the permission of their leaseholders — but freeholders generally prefer to get their leaseholders on side, offering up incentives such as better fire safety, improvements to the communal areas and landscaping and a future reduction in service charge, in return for them putting up with the disruption of building work.

If residents share the freehold and decide to develop their rooftop, they could sell the rights to the airspace to a developer, and split the proceeds.

The typical payday for a London airspace development would be in the tens, rather than hundreds, of thousands of pounds per person.

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Covid-19 has changed lifestyles, teaching us to value neighbourhoods where we feel at home and safe.

London is set to become a series of “mini towns”, where everything you need — from shops and schools to restaurants, recreation and entertainment — will be no more than 15 minutes away from your front door.

A new report launched today presents a snapshot of a post Covid-19 capital in which we stay closer to home. The study by New London Architecture (NLA) sets out a vision for the city and how it must shift to survive the coronavirus crisis and be adequately equipped for the future.

“No event has affected public life like Covid-19 with its sudden shutdown of social and economic activity,” says Peter Murray, chairman of NLA. “However, it also offers a chance to recreate London in a way that is sustainable and socially inclusive,” he adds.

The body of architects is calling on government to ensure that London’s villages, both the new and the old, are healthy and active, fairer and affordable, and zero carbon.

Flexible buildings are the future, the study also finds. It paints a picture of drones delivering parcels to the top of offices, and high street units that switch easily from shop to workspace to pop-up food kiosk in order to keep pace with consumer whims.

The report analyses the last 15 years of change, too, which has been dominated by showpiece architecture, such as Battersea Power Station and Chelsea Barracks, designed to beautify inner London. The next 15 years, however, will be about the regeneration of town centres to serve the community.

The rise of the 15-minute village

What Murray describes as “astonishing” change since 2005 was driven by record population growth and investment.

London grew from 7.5 million people in 2005 to 9.3 million this year, dwarfing the increase in New York, Paris or Sydney.

This attracted funding which powered the development of business districts such as Canary Wharf. Over that period 6.3 million square metres of office space was created in London. Yet fewer homes were built here than in those rival cities.

In the next 15 years the emphasis is predicted to shift from commercial to neighbourhood development. In the post-pandemic era, with families under financial pressure, there will be an even greater need for affordable homes.

“Covid has highlighted people’s appreciation of their neighbourhood. A new localism is changing London,” says Deirdra Armsby of Westminster council.

The report predicts a faster uptake of the new “15-minute village” concept by councils and developers, where all amenities are within a short stroll or cycle from the front door.

From dropping toddlers at the crèche, to exercising, shopping and working, daily needs will be met on the local high street.

“London has always been a city of villages, and those centres which can accommodate a mix of housing, workplaces and leisure will be the most resilient in a post-Covid London,” says Catherine Staniland, author of the report.

The need to be cleaner, greener and leaner

The Government has committed to bringing all greenhouse gas emissions to net zero by 2050. The construction industry needs urgently to clean up its act but lifestyles must change, too, as highlighted by the pandemic.

The reduction in road traffic during lockdown drastically cut air pollution and carbon levels, and pavements and cycle lanes were temporarily widened.

But such changes must not be reversed, argues Heather Cheesbrough, of Croydon council. “Continuing to promote walking and cycling is a huge opportunity for boroughs to help make the switch to sustainable travel and to take the motor car out where possible,” she says.

London’s parks continue to become more important post-pandemic. The rewilding of the capital’s dead industrial land and waterways, the planting of trees and widespread creation of living walls will aid mental wellbeing and filter the air, while addressing the ecosystem crisis, too.

Landmark Pinnacle, one of London’s tallest residential towers at 75 floors, is on the South Dock in Canary Wharf with views over the Thames.

Residents will be able to cycle to Bank, Waterloo and King’s Cross in under 30 minutes using the Cycle Superhighways network.

Prices for a one-bedroom apartment start from £559,000. Call Knight Frank on 020 7718 5202

Stratford’s in the spotlight

Stratford is one of the most transformed areas of the last 15 years, according to New London Architecture.

The east London neighbourhood was earmarked for regeneration from the early Nineties and the plan submitted in 2003 to turn it into a major new employment district with 4,500 new homes and a vast urban shopping centre in the shape of Westfield Stratford City, was the largest planning application ever in Greater London.

These ambitions helped secure the 2012 Olympic Games for the capital. The former 2012 Athletes’ Village is now residential East Village, home to more than 6,000 people, 23 shops, a school, a health centre, 35 acres of parks and public gardens.

The regeneration ripple has spread from there into Hackney and out to Royal Docks. Loft apartments are for sale currently at Stone Studios in Hackney Wick E9, between Victoria Park and the Queen Elizabeth Olympic Park, with prices starting from £442,500 up to £1.1 million.

The building has a concierge, a restaurant and bike storage. Contact Savills on 020 7226 6611.

Available for rent are 128 new apartments and 12 mews houses in the 1,200-home Sugar House Island scheme in Stratford.

There will be a new primary school, a row of independent shops, a dance studio and communal parks. Eight train stations, two cycle routes and five bus routes will service the new neighbourhood.

Rents for a three-bedroom mews start from £1,500 per month.

Investment for London’s villages

London is unlikely to attract the same levels of overseas funding after Covid-19.

A new breed of investor is needed to make “local” viable. Andy Downey of civil engineers Elliot Wood calls for enterprising ethical developers to help create a “fairer and more resilient city”.

And perhaps the large pension funds backing factory-assembled housing could now focus on creating communities.

Investment in London’s villages shouldn’t signal the end of central districts. But it’s time to invest in the town centres full of boarded-up units, charity shops and takeaways.

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