CHOICES: London-based Malaysian Lai Sim Soh dishes out some advice on which of the seven types of apartment to buy in London
The old joke in the property world is that only three things matter: location, location, location. That is certainly true in London where different postcodes and streets within postcodes can have properties with widely different values and growth prospects. But the type of property is also very important to consider. As an old city which is constantly changing, London offers many types of apartments.
This is a good thing because it means the buyer has plenty of choice but it is very important to understand the pros and cons of each type of property before making an offer.
The apartments which are presented by estate agents in Malaysia are usually in large, new builds by developers. To buy other types of apartments, you will normally have to search for your property locally either via a buying agent or by visiting the estate agents themselves. Alternately you could search online using property portals such as Rightmove or Primelocation.
In broad terms, there are seven types of flats on offer in London:
Purpose built blocks;
Flats over shops;
Ex-local authority blocks;
- New-builds: These are springing up mainly on brownfield sites all over London, especially around the city fringes and new frontiers. Typically these new-builds have about 80 – 150 apartments, contained in one or more blocks.
Advantages: Almost all of these apartments have fully fitted kitchens and bathrooms. Space is usually tight but well used.
Layout is generally good except for those apartments which have been squeezed in to accommodate another flat. The ultimate finish depends on the cost of the apartment but they are normally attractive and functional, a result of developers employing interior designers to give the ‘wow’ factor.
There may be underground parking but usually it comes at a cost. The more exclusive developments have facilities such as gym, swimming pool and provide concierge services. From the higher flats, views may also be stunning.
There will also be a 10-year National House-Building Council warranty. (NHBC is the standard setting body and leading home construction warranty and insurance provider for new and newly-converted homes in the UK)
Disadvantages: New-builds are often more expensive per square foot. You would normally expect to pay a premium for the pristine condition and being the first owner. Additionally, marketing in a foreign country also allows the estate agent to charge more for a development as the audience are less familiar with the location.
As many of the new developments are marketed overseas before they are launched in London, foreign investors typically own between 50 to 75 per cent of these apartments. Foreign investors tend to buy the more centrally located apartments for their children studying in London or own use but the ones at the new frontiers are usually for letting out. So for such properties, there are many absentee landlords renting out properties and this in turn, means a large transient population. A large transient population usually means that after a while, the properties tend to get run down as tenants do not generally look after the properties as well as their own.
There are also investors or property clubs who buy to “flip”. Buying to flip means that they never intend to live there themselves or even to rent out, but to sell straight on at a profit. This can mean a lot of empty flats whilst the properties are being resold. With the current double dip recession, these properties are proving harder to sell and these investors are now considering letting these properties.
Therefore, if you are a buy-to-let investor, you will be competing with lots of other investors to find a tenant for your property. More competition means a lower rent or furnishing your apartment better to attract a tenant quickly.
Within a new-build, apartments are usually released in phases, long before the development is fully completed.
There is also likely to be a long snagging list as the first people into a new block often find many things go wrong as the place has not been tried and tested. As the apartment will often still be a building site, tenants may be reluctant to move in until the whole development is almost complete.
Service charges may be low to begin with to attract buyers and subsequently increased. Developers often sell on the freehold upon completion and, as the residents’ association has yet to be formed, the opportunity to buy the freehold will be lost. Even if there was a time lag between completion and the selling of the freehold, usually only owner-occupiers will be interested in forming such associations.
Well run residents’ associations normally result in lower service charges than one run by a managing company appointed by a developer.
- Conversions: In London, there are many huge Victorian and Georgian townhouses, often five or six-storey high. Such houses are increasingly being broken up into smaller apartments and sold separately.
Advantages: There are usually about four or five apartments per building. Conversions are frequently sold with a share of freehold although in prime Central London, there are still mainly leasehold properties. Conversions usually have a much lower service charge as there are fewer services available. However please note that some large conversions like the Lancaster Gate Developments have very high service charges because of the available facilities and exclusive services
– the porters are dressed in morning suits and top hats!
Conversions, when done properly, are absolutely stunning. What you get with these properties are high ceilings, elegant proportions and period features but sympathetically modernised.
There are many conversions in prime Central London, these being in the Kensington, Chelsea and Knightsbridge
Disadvantages: Despite the grandeur of some old buildings, conversions, especially the older conversions done by amateurs, can be badly done. The sizes of the apartments can vary tremendously.
The layouts of such conversions are badly thought through and the sizes of some of the rooms are disproportionate. Walls can be thin and there may be only one bathroom in the whole apartment.
Very often, common parts are dilapidated and rundown and this can happen whether it is a leasehold or share of freehold property. With a leasehold property, the landlord may be irresponsible and therefore is not concerned about the state of the property as long as he gets the ground rent. In the case of share of freehold, the joint owners do not form a residents association for the maintenance of the common parts and the building.
Some conversions have service charges and some just share out the cost where there is work to be done. Normally if it is a leasehold property, the landlord will levy a service charge for the general maintenance of the building whilst if it is a share of freehold,the owners will jointly share the cost as and when the cost is incurred.
Consequently this can lead to disputes over apportionment of costs. Such owners sometimes maintain that they do not have the funds to do the repair work; for example, if the roof needs repairing there is no urgency for the owner who lives in the basement!
- Mansion Blocks: These are purpose built blocks which date back to late Victorian and early Edwardian days. You can recognise them very easily because they are usually red bricked on the outside and are very big.
Advantages: The apartments are generally well laid out and spacious, with high ceilings. Common parts tend to be well kept and there is normally a resident porter or caretaker. There is also usually a communal garden which is well tended. Most importantly, mansion blocks are found in very central locations in London.
Security is normally excellent and the block will almost always be managed by professional managing agents.
Disadvantages: There is usually an antiquated communal heating and water system in place and the provision of these is included in the service charges. With the communal heating, the heating comes on at predetermined times, whether you wish them on or not. Also, the service charges tend to be high.
The decor is often dated and there may be limited car parking facilities.
If plumbing work is required in such a mansion block, you will need to request for the managing agent to drain down the hot water and heating system as most of these apartments do not have their own isolator valves. This means that the supply of these utilities will be turned off for the remaining residents.
During the winter months, turning off the supplies can only occur for several hours per day. If your renovation work cannot be completed within the timeframe, this process will be repeated the following day. For each turn-off, a fee, usually several hundred pounds, will have to be paid to cover the costs of the managing agent.
Another disadvantage is the drainage, plumbing and sewage system. The existing systems cannot cope with the large number of power showers and kitchen appliances. Additionally, a new toilet cannot be added easily and cheaply unless it is located near a pre-existing sewage pipe. Stay away from chemical toilets as it is more trouble than it is worth.
Leaks are also common in mansion blocks and it may be difficult to discover their origin.
- Flats over shops: Flats over shops are generally not very popular with investors or owner occupiers.
This is not the case with new-builds which often have more upmarket retail or office space below.
Advantages: Such flats are generally in very convenient locations and are generally cheaper to buy.
Disadvantages: The lease situation will usually involve the shop and can be part- commercial and part-residential. You will have no say in the kind of shop you are over, and if the use of the shop changes over to a pub or a betting shop, your flat may lose value. In addition, such flats are less easy to sell and often have dilapidated common parts and nasty doors.
- Ex-Local Authority Blocks: This refers to a property which was formerly owned by the council (municipality). In London, this usually means purpose-built blocks of flats. At one time, flats in these blocks were distinctly cheaper than others but it now depends on the location and the condition of the estate.
Advantages: The apartments are often fairly big and very spacious with lots of storage space. The service charge is comparatively cheap compared to the new-builds. The buildings are looked after by the local council and so there are rarely serious management problems.
Disadvantages: Because they are ex-council flats, there is still a stigma attached to living in such a flat. These blocks rarely have any architectural features of merit and, from the outside, can be off-putting.
Common parts and lifts may be covered in graffiti or vandalised. In the majority of ex-local authority blocks, there will be a mix of leaseholders, tenants of leaseholders, property investors and social tenants. This means that these blocks tend to have a lower value than in the private sector.
- Maisonettes: A flat on two levels with internal stairs and/or its own street-level front door. There are fewer of these flats in London. Some mew houses (formerly stables used to keep horse-drawn carriages of owners living in the nearby Victorian or Georgian houses) have been converted into maisonettes or they could be purpose built.
Is there a best buy?
Probably not, as each type of apartment has its particular pros and cons. Whichever apartment you choose depends on your objectives. The main things to look out for are:
~Location of the apartment : How central do you want the apartment to be? Prime Central London is very expensive and on average you will need to pay at least £2,000 (RM10,000) per sq foot. Where is the nearest underground station? Are the shops, restaurants and cinemas within walking distance? Is there a park in the vicinity? If not, do you have access to the river, canal or a small garden square?
~Parking: Do you want a parking space? If you have a car, this will be an important consideration as parking is very expensive in London, typically about £4 (RM20) an hour and that is if you are lucky enough to find a space. Please note that not all councils will have resident parking permits.
Recently, Westminster Council tried unsuccessfully to start charging for night and Sunday parking but this may still return at a later stage. Most of central London is covered with double yellow lines and if you do not have a designated car park, you could be driving round the area in circles, trying to find a car park.
~Which flat? My general advice is that, whatever type of apartment you are buying, always buy first floor or above. If the building has four or more floors, you would want a lift. Where it is a tower block, go as high as you can afford as you generally have a better view higher up. Try to get a flat with a balcony, no matter how small. Being in a flat all day long can be quite claustrophobic and a little outside space, however small, helps tremendously.
If possible, avoid ground and basement floor flats, especially those that face out to the streets. There is more chance of vandalism and you are also more liable to burglary. Additionall, you will be disturbed by the front door continually opening and shutting, and the sound of other people’s doorbells. It is true that if you like a garden, then it is a trade off worth considering.
One word of warning, do not buy a basement flat if there is no outside space, however small. In older buildings, especially conversions in Georgian houses, the doors of the basement apartments almost inevitably face the vaults (communal areas for keeping bins, etc). In addition to the lack of light in the apartments, the view of the vault is never nice, no matter how well it is kept and in a worst case scenario, there may be a stench and rats to accompany that view.
Damp in basement flats is not uncommon and is expensive to get rid of. There may be little pools of water on the ground as there may be inadequate drainage. There are also lots of leaves and rubbish which are dropped by passers-by to sweep away.
Occasionally, you may hear rumbles, especially at night, as your apartment may be located above an underground train tunnel.
Lai Sim Soh is a Malaysian living and working in London. She runs an interior design and residential property manage ment business, and through www.my- ukpropertyconnection.com, she specia- lises in managing properties owned by people from Malaysia, Hong Kong and Singapore.