The American politician Jacob Lew was White House chief of staff for Barack Obama and later the US’s ambassador to Israel.
Safe to say he has had his fair share of difficult conversations. His advice on how to horse-trade is especially pertinent in London’s prime property market right now: “The most critical thing in a negotiation is to get inside your opponent’s head”.
London is certainly a buyers’ market right now. Whilst house price analyst LonRes reports that transaction numbers have increased by 2% in the past year, indicating buyers are inching back into the fray, average sale prices are down 5%.
This is naturally frustrating for vendors, many of whom started out with over-ambitious ideas about what they think their properties are worth and have had to trim back both their expectations and their asking prices. Others have given up on selling altogether – LonRes found that the number of homes withdrawn from sale in the capital has jumped by almost 60% in the last year.
DELICATE BUSINESS
Given the fragile sensibilities of these bruised homeowners negotiating discounts is an extremely delicate business.
I always advise my clients to avoid making an insultingly lowball offer on a property they have their heart set on.
In reality, the majority of central London homeowners own their homes outright and can afford to wait for a sensible offer.
Starting off negotiations on the wrong foot can backfire. You have to think beyond just: “Is this property a really good deal?”.
If it is something which is rare, which really suits you, and which won’t come up all the time, then we have buyers who will decide that although a property isn’t a steal, they love it and want it, and will own it forever.
Tom Kain, a partner at Black Brick, says that the added value a buying agent brings is their ability to glean as much information about the vendor’s situation as possible, and pitching bids accordingly.
“Sometimes we will make a low offer and then just leave it on the table for a week or two,” he says. “The psychology of buying is a very delicate thing.”
A TAXING PROBLEM
Fears that the Government would impose a draconian “Mansion Tax” on high value homes put the brakes on the prime market for months as buyers awaited clarity about how much they might have to pay to own a home in London.
The reality, announced in November, was considerably better than many had feared. But its implementation may prove to be a longer-term headache.
From 2028 owners of homes valued at £2m-plus will pay an annual surcharge on their Council Tax. The levy will range from £2,500pa for homes worth up to £2.5m up to £7.500pa for homes worth more than £5m. The vast majority of those properties are, of course, in central London.
As ever with these sort of root-and-branch changes the devil is in the detail.
Current Council Tax valuations are woefully out of date. Before charges can be made the government will have to carry out a wide-ranging valuation exercise.
It has confirmed those charges will increase annually in line with inflation, with revaluations will happen every five years going forward.
Exactly how this can be achieved remains to be seen. Late last month the Government launched a consultation on its proposals, confirming it intends to use AI, alongside “professional valuer judgement” to assess individual properties, based largely on recent local sales data.
But I’m a million per cent certain that a simple comparison with other nearby home sales will not produce an accurate valuation on a PCL property.
What it would have to do is actually physically go into those comparison properties and actually compare them – everything from their ceiling height, to their condition, to their aspect and views. These little nuances can make a massive difference.
The tax is also likely to have a major impact on London’s prime rental market, since the Government expects the owner of the property to pay the surcharge.
For landlords it means an extra up to £625 per month to find at a time when London rents have begun to plateau after years of inflation-busting growth during the pandemic. According to the Government’s Office of National Statistics, London rents increased 2% in the year to March.
THE SHOCKWAVES OF CONFLICT
Property consultant JLL has downgraded its forecasts for Prime Central London (PCL) property prices, blaming the war in the Middle East for damaging buyer confidence.
Pre-war the firm had expected 2026 to “usher in a new phase of the housing cycle”, with cuts in interest rates underpinning the plateauing of prices in Central London after several years of annual falls.
But central London is a discretionary market which is hugely impacted by sentiment, and on that basis JLL believes that prices will fall by 5.5% in central London by the end of 2026.
The picture elsewhere is more positive. Beyond central London buyers tend to be more needs-based – first time buyers keen to get out of the rental trap, families upsizing, relocators looking for a home in a London village.
But JLL forecast that a combination of rising inflation and higher-than-expected interest rates means that it will also experience a price fall this year, of 2.5%.
Far from being deterred by the prospect of further price falls Black Brick’s buyers appear to be excited by the opportunity the current market affords them.
What is coming up is that lots of clients feel that the current market is a good buying opportunity.
For instance we have a European client who has always wanted a PCL property and has been watching the market for years. He thinks that it is now good value.
Although the wider PCL market is generally sluggish, with buyers not feeling a huge sense of urgency to move, there are also sweet spots where buyers need to be on their toes.
Kain says freehold houses in the £2m to £5m bracket, in good condition still attract considerable competition and sell well in PCL.
“The market is very nuanced,” he says. “I have a client currently looking for a mews house in Mayfair or Belgravia in that price bracket, and it is surprisingly active out there.
“The key to success is gaining access first to compelling deals, such a receivership deals, before they reach the open market. This is where working with us gives buyers the edge and a first mover advantage.”
CONCIERGE SERVICE
With buyers increasingly keen to have professional assistance as they house hunt, Black Brick has hired a trio of experts to boost its buying and rental search services, as well as upgrade and expand its property management division.
Alex Oliver returns to Black Brick after a successful stint as director of another buying agency, and is well schooled in advising wealthy clients about property acquisitions across London.
Lorraine Germaix, who has a background in tech, will work with clients looking to buy or rent homes.
And Emma Soanes, who has spent years managing high end London properties, will work with our property management team.
Black Brick’s property management service has proved hugely popular with time-poor clients, many of whom are based overseas much of the year.
They appreciate knowing somebody is keeping an expert eye on their home while they are not around, and are ready and able to deal with issues from organising maintenance to managing staff and even overseeing building projects.
We realise that, when in London, clients want to be able to relax and enjoy the city, not worry about hiring a cleaner or having to get the washing machine replaced.
Which is where the idea of Black Brick Concierge was born, offering lifestyle support to clients beyond their property needs.
Black Brick can recommend and secure reservations at sought-after restaurants, access sold-out events and assist with private memberships. We can also arrange travel, making sure that our clients make the very most of their time in the capital.
ACQUISITION OF THE MONTH
Back in Black Brick’s early days we helped a client buy a property in Hampstead Garden Suburb. Almost two decades later they came back to us because they wanted to move somewhere more central – but still in North London.
St John’s Wood, with its lovely high street and easy links to the West End, seemed an ideal choice. The property is a second home, and our clients were particularly keen to find a house within a secure, gated community. This was not an easy request since few such properties exist. But we found one: a discreet, private road a short walk from local amenities.
The six bedroom property was not listed on the property portals but since it was a probate sale the house was in need of a refresh.
We factored this into our negotiations, getting quotes to assess the scale of the works needed. The house had originally been listed for £4.95m but had been taken off the market because it failed to find a buyer.
The owners had decided to try again with a lower asking price of £4.5m. Black Brick was able to view the property before its relaunch and negotiated a final price of £4.15m, the 7.8%discount in part based on the cost of necessary upgrades which we were able to prove.
The house measures 2,707 sq. ft, and benefits from a double garage, private garden and is in a rare private and gated cul-de-sac consisting of just 5 houses.
