Prime London property prices follow different rules to the rest of UK

Following a number of interest rises by the Bank of England property prices of London's best homes have still not seen a slow down. Six months ago agents were talking about prices starting at £1000 a foot (appx £10,000 a meter) and now London's best properties are pushing towards £2000/ a foot.



The top end of the market is fueled by foreign investment; in excess of 50% of properties over £2 million pounds are sold to foreigners. Mostly this demand comes from people who have nothing to sell resulting in a further shortage of stock hence keeping prices strong. Globally, as emerging economies grow and people become wealthy, many aspire to own property in London's best streets. One agent told me recently that he was house hunting with a Mongolian investor looking to buy a £12m home!



We have yet to see the effect on prices as a result of demand from China, India and Brazil.



Those who own London's best homes can also afford to hold on to them so don't expect to see any bargains any time soon. If demand softens prices will just go flat rather than down in London’s best addresses. Sellers will simply sit tight and wait, they can afford to.



London's mature rental market also provides an attractive option for many unwilling to sell in a weaker market. Traditionally as interest rates rise, rentals get stronger. A recent report conducted by the National Association of Estate agents confirmed that the average time a rental property stays on the market is down this year compared to same time last year.



That’s the word on the street, what the agents are saying.

London property and new regulations

Finally; much needed regulations are coming to the property industry and for those of us that have found the old ways frustrating it’s a delight.



On the 6th April 2007 the tenancy deposit scheme was introduced. In simple English this means that all tenant's deposits (for assured short hold tenancies) are to be held in a custodial or insured scheme. Landlords are obligated to ensure that deposits are released within a set time and any disputes are handled by qualified arbitrators. Failure to comply will result in heavy penalties and may also have legal implications on the tenant's obligations.



More information at:



http://www.direct.gov.uk/en/TenancyDeposit/index.htm



1st June 2007 will see the introduction of HIPs, the home information pack. This means that any property that comes to the market after this date must have a home information pack or face a fine.



A HIP must have: details of the title to the property, local and water searches, details of leasehold information and an energy certificate.



It is estimated that close to £350m is lost each year from aborted property transactions. Buyers offers are accepted and then the facts about the details of the transaction are realised, the process takes an average of 6-8 weeks. This results in many transactions being aborted at a huge cost to all parties.



More information at:



http://www.homeinformationpacks.gov.uk/consumer



Still no sign of the government requiring all property agents to be licensed but hopefully that will soon follow! It is madness that people’s largest ever transactions can be handled by an industry that is not required by law to be qualified. The good news is that most reputable agents are self regulated and voluntarily belong to governing bodies like the NAEA (National Association of Estate Agents) and ARLA (Association of residential letting agents).