Central London Market Update | With Becky Fatemi of Rokstone | 2021 | Marylebone Mayfair Belgravia

Listen to Becky Fatemi of Rokstone give an honest look at how the prime central London market has developed. In this episode we will be discussing areas such as Marylebone, Mayfair, and Belgravia, including some examples of how rent prices have sifted amid the pandemic.

Get an insight into the evolution of the NW London property market in the first half of 2021. Learn about the new shift in interest, and the "heavy hitters" that will return to the London property scene.

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Transcript

London Property Home of Super Prime where you can find informative, educational and entertaining content covering all aspects of property. 

Today we're in conversation with Becky Fatemi and we are going to get our market update. 

Hi Becky, hi how are you very well thank you for having us. 

Thank you for having me so. 

What we really want to talk to you about today is what do you think's been going on in the first quarter of 2021 in the market? 

I think what's been going on in the first quarter of the 2021 market is we have seen a lot of demand for a very specific type of property. 

Things have changed with the pandemic, so people want outside space. 

They want a building of fewer apartments because they don't want to be in a lift with too many people, they really want their own. 

Front door and the demand for Notting Hill and moving further out has gone through the roof. 

Our biggest demand has been houses on communal gardens in Notting Hill. 

So, although your firm is based off Baker Street you follow your clients, don't you? 

You go to any location that somebody wants you to work in? 

Yeah, so you're getting an overview of all the different. 

The areas of London, so are you saying that Notting Hill is the one that's been the busiest for you? 

So far for Rockstone, we're a firm that specializes in really setting lifestyles more than just the bricks and mortar. 

And when I set up the firm, although we are based in Malabon on Charlton St, which was voted apparently the coolest St in London. 

In Europe we cover the whole of central London and it's matching really the client and the buyer to where they are wanting to go to match their lifestyle. 

So, we have the perfect vision over the whole of Prime central London, and we have seen clients who historically lived in Mayfair and only may from Belgravia, now open it up to Saint John's Wood Hampstead. 

Notting Hill, those areas that are giving them more green and more access to bigger rooms. 

Bigger proportions because architecturally that's where you get those type of buildings. 

So, this is something that we keep hearing, talking to people about this particular market update is that you're getting a lot of people, mostly domestic, because obviously there's no international travel and these domestic people are looking for where they can work from home more comfortably. 

They can have the space and. 

You know they can have outside space as you say. 

So, what do you think is going to happen to the places that leaving they're leaving behind? 

So, the places that have been left behind in the first quarter of this year have noticed an unfortunate real price reduction. 

So, to give you a prime example, the street that we're based on in Malabon. 

If we look at the rental and the sales market. 

Of those flats, this is a red brick mansion block lead St of over 300. 

Apartments ranging from one to two beds historically, that would have been your European foreign worker who would have come over here working in the banks. 

A student working at one of the universities who was paying 750 a week for rent. That rent has now dropped to 500 or 550, meaning that the landlord is probably not covering the new tax changes and. 

Not covering the mortgage, and so they're finding that the value of their property is dropped because there is more supply now as clients can't rent out their flats for the premiums that they used to get. They're now selling. So, on my street, we've noticed 20% more supply. 

By a 20 to 25% price drop on the sales and on the lettings so that market has been really, really badly hit which is the buy-to-let market and that one- or two-bedroom central London tenant. 

So, the best time to have ever rented in Marylebone is now you can get A1 bed for 300 a week, which would have cost you 500. 

Week A2 bed for 500 a week which would have cost you 700 a week. So, this is the time to rent or buy far more centrally in adversity times before, but on the flipside, anything that does tick all the boxes has rocketed in price. 

Yes, and when you say tick all the boxes you're talking about their new. 

Pandemic requirements, yeah, so we would say the new pandemic requirements from any buyer, whether it's domestic or international, is, as you pointed out, extra space to have the separation. 

So, if the kids are now on lockdown, you're going to need a space for them to work. 

Not so close to where you're going to be working as parents with. 

Zoom if your nanny is living out, you might want her to be living in or them to be living and you're going to need access to outside space. 

You're going to want bigger proportions because spending 24 hours a day is something that we've never been accustomed to. 

In my 25-year career I've been dealing with clients who travel in and out and this is their third or fourth home across the way. 

Now we're finding these buyers stuck in that one place out of the four countries, or if they're living here now, now you are seeing your husband daily and all the kids. 

Uhm, going back to the one or two bedroom by two, let's, uh, properties that are being hit is there a solution that you see for what to do with these people? 

I mean, you know, could they be peer to test for people who moved out of town and they don't want to go into a hotel? 

I mean what? 

Do you see any form of trend coming up or is there something you would say to people hey go out and buy all the one and two bedrooms and do XY and Z? 

What do you think? 

I think it's very difficult to advise clients now, because as you know the government changing the rulings daily for travel and for vaccination, there is no clarity but one thing we've always been sure of in central London being a conservation area is the build cannot happen in those prime areas such as Marylebone, Mayfair, Belgravia. 

And when travel does. 

Resume, which it will one day people are going to want to come back to the city. 

I am noticing a lot of my clients who did this mass exodus to Cotswold. 

Words got bored, you know they thought it was going to be this incredible journey and then thought actually I want to come back to London. 

So, I think it is the perfect time to rent a smaller unit that you could have as a bolt hole if you've moved to the country to have a place back in London. 

And it's also the perfect time to invest because the interest rates and the buy-to-let rates are so low. 

It's all about a long term. 

10-to-15-year hold now because of the ADA stamp duty and the changes. 

But while the rates are so low, why not lock into a low fixed rate? 

You will find a tenant; it's just you won't be making that much of a disposable income on the profit as much as anymore. 

Yeah, and I think we've all sort of culturally on the rental side changed because the Airbnb kind of culture has made us all a little bit less paranoid about letting people into our homes, and that's been helping a lot of people pay their overheads, and I wonder whether as we come out of the pandemic. 

Whether the planning department is going to have to adapt a bit. 

And allow things like more than 90 days so that you can provide this flexibility. 

Sort of having you know a P edit air as a service where people can come and rent and you know check in. 

Check out using Airbnb, you know, and using these kinds of services. 

I think the markets definitely changed and as well as a lot of the local agents. 

And for us, we're now looking at that ability to short let within the parameters of what's allowed a property and get it set up for short, let's so it's just continually being short, let I think property management arms of companies such as estate agents and property management. 

Companies also are taking responsibility to ban Airbnb in some of the buildings which I don't think is a bad thing because it's allowing long term tenancies and a better quality of life for the actual residents are living in the building and it gives them a regular income to come in. 

On the flip side of that though, it has altered the ability to make money quickly off your property. 

On the Airbnb side as well, we've also got clients that are renting out their properties for shoots, so we've got a client that owns over £100,000 a year. 

It's an amazing converted church in West London and he has an income of £100,000 a year from daily shoots for fashion agents. 

These adverts, so I think it's about looking at the different incomes that you can bring into your property when you're buying, which is Airbnb, which is the short-let availability arm. 

I am I next to a train station. 

Could I use this to rent out for shoots for rental? 

I think you have to be a lot more open and selective on what you're investing in. 

Yeah, and also, I think you know going back again to the subject of Airbnb they call them OTA's I have now. 

And there are different notes online travel agents as they call them that specialize, as you say, in different kind of rentals from shoots to, you know, people traveling for history of art or people traveling for a specific reason, and you know it. 

It's very possible that the world will change into. 

Making these rental investments work in a different. 

Way yeah, I think that's the difference between a good agent as well is that you know we've been doing this for. You've been doing it for much longer than me and I've been there for 25 years, but. 

We advise with the long-term spec of where London is going, so it's not just about selling the flat opening the door, setting it to the buyer, it's about, well, hang on. 

Let's have a discussion. 

Is this really the right thing for you and hand holding? 

You know you're about to have a child. 

You need a lift with a double buggy. 

You know you're going to need someone to park the car. 

You know all of these questions and I think. 

That is what's going to differentiate agency. 

In relation to where the world is changing 'cause you're going to have to be a lot more reactive to understanding how the world is changing to best advisor-client and for the smaller boutique agents such as Rokstone it is repeat referral business that we rely on. 

So, I think I've really enjoyed it because I think my father, you say you know the turkeys can fly in any market, but. 

When the wind changes, it comes crashing down and I think that's what's happening. 

Now you're seeing finally, the quality of agent and the advice that's being given, which are the ones that are surviving. 

That's a that's a very good point because people go to a person now, not just for finding a house. 

They go to a person for an entire solution and advice that you know as you said, with the buggy and the and their children. 

If it's your first child, you. 

Might not even have thought about that. 

And also, we find that clients don't think about the schooling, the catchment and also you know the journey of the. 

If you want a private school in central London, that journey starts the minute you're pregnant. 

That doesn't start when the baby is one or two. 

And moving it starts when some cases where you haven't even had the child yet and you start your investigations and it's extremely competitive. 

We're talking about schools that have 100 places, you know, and London is the heart of the wealthy capital of Europe and the world. So, things like that you want to be projecting and having those conversations. 

With the client. 

So, when we when we all got hit by Brexit and tax changes and what have you and had a really dull time in the marketplace, I think the last thing any of us expected was this mini boom that we've had over the past sort of six month. 

With international travel opening up, we're probably going to see another boom, but. 

With your view of the different jurisdictions with different areas, I should say that you've been working in. 

What do you think happened to property prices? 

Do you think that they've changed, or is it too soon to tell what's happened? 

I think since we've had the boom prospects it. 

What's happened to property prices is that there has been a cooling it and I think what you've got to consider is the micro markets and the micro streets and then the micro buildings and then the micro flat in that building. 

And I think that's where the and I'm going to be brutal the night Franklin Savile's reports are so wrong in the message that's sent out. 

The wealth reports, you know. 

We talk about a boom, but we're talking about a boom in certain very finite pockets which tick all the boxes. 

So, you'll have you know a scheme and base. 

Water, which is just £110 million worth of sales for the prime flats that have the best terraces with the. 

Best views, it doesn't mean that the building next door, which is a 1930s purpose-built block is going to maintain the same price per square foot. 

And you're literally talking a building that's a block away. I think that as I said, anything with outside space has suffered, and we're talking a 20% decrease. I think prices are where they were in 2013, 2014. 

I don't think people are seeing an increase in their investment seven or eight years later. 

I think we are forever in a peak and a trough. 

We never know the peak until we've been through. 

Trough but the sentiment right now definitely is. I'm looking for a lot more bang for my buck, so if I'm dropping £1,000,000 in London, that property has to take so many more boxes, which is what we touched upon earlier than ever before. 

So that journey of finding a flat is your now look, not just looking at 6, you're looking at 20 or 30 options. 

You're looking with five. 

Or six agents. 

And again, you're being a lot more particular. 

And then you've got the valuation. 

Then the solicitors are. 

In, in and I believe that everyone has a fast, stronger opinion and is safeguarding their opinion to make sure that they don't get sued later on. 

The surveyors the value is you know what happened in the last boom was the surveyors got really hit badly with misrepresenting where they thought the values were. So, surveyors at the moment are down binding by 10 to 15%. 

On an already soft market, so there are some rude awakenings for a client what we're finding. 

Is if you look at this as a circle is when your market when your properties lost value, what you usually tend to do is think right? 

I'm going to sell now and perhaps at a loss if it's not the prime property that everyone looking for. 

Actually, why don't I refinance? 

And that's what's happened. 

People have locked in tenants for three years and adverse to the one or two years. 

We're now looking at three-year tenant. 

See durations, but more importantly, we're looking at people who've just refinanced. 

I've got a client who owns the house and checked his egg. 

Who leaves it empty? Because it costs him £400 a month to run the costs of having a tenant in there plus the tax plus the agency fees plus the hassle of having the tenant outweighs just having it sitting there where it costs him £400 so. 

The discrepancy in the market is the interest rate. 

Is there anything that we haven't covered that you want to share? 

With us I would love agents to stand strong on their fees. 

I would love a situation where we had a Union where we all came together and actually weren't so protective of what we did and clients and actually talking to each other. 

I believe we all pretend to talk to each other, but really, we're so guarded. 

On the fees we have the lowest state agency fees in the world and we are probably the most specialized in central London. 

We control the market because we're sitting in a position where clients use us and respect our opinion. But I think we should all be sticking at 2% on fees and going into evaluation with someone who's just as accredited. 

An experience at me who drops their fees, discredits what we've worked hard to. 

Achieve we only get paid in the event we sell the property. The client won't sell if it's the price they're not happy with, so it should be 2% and that should just be it moving forward and no negotiations. 

So, we should all come together because we deserve to be paid that much for what we're doing at the moment. 

More than anything right now. 

If anything, our fees should be going up. 

I've had this conversation, you know, in in in what we do and on camera with people before and I got a call after a comment I made on this subject, which I think the reason our fees are so low. 

Is because deliberately there are no barriers of entry for people to be agents. 

Yeah, so anybody with a mobile phone can call themselves an agent slowly, which makes our lives so hard because we have to go in first, then prove to be innocent. 

Yeah, we walk in. 

It's like guilty before you're innocent and the problem is. 

That if they actually license agents, yes. 

Then it creates a barrier to entry, which I don't think they necessarily want to do because they think it will lead to less jobs being in this space. 

But if you license agents then the fees will go. 

Up I 100% agree with licensing agents, I think. Why would we? Why should we not be credited and why should I mean? 

If you take, you should know the information that you're going to be tested on anyway, so no one should have an issue. 

With the Estate Agency Act or the KYC compliance rules, we're all doing it and should be doing it, but I definitely agree. 

And also, licensing should come with a number of years. 

You have actually been a listed agent, whether it's dependent on whether you've been on LonRes or how many sales you've done. 

Or I definitely think that there needs to be a gatekeeper too. 

To increase the value of what we do and so often, I'm sure you're in the same position as us. 

We're giving away free advice. 

You know, I don't call my lawyer, and I don't call my doc. 

Peter, and have a conversation. You know, I get a bill for £150 to £300 for consultancy work. 

So now if a client calls me for advice, I charge a consultancy fee, and if they're not happy with that then don't ask for my advice. 

That's it. 

Well, the more frightening thing, fees aside, the more frightening thing is that you know buying. 

Property is. 

The most expensive thing most people do in their life. 

And doing it with somebody who's not qualified to advise you. 

I mean, you'd never buy shares from, you know, a guy who says I'm a stockbroker. 

He has to get qualifications. 

Yeah, so I think that's actually the more frightening part of this whole thing. 

Absolutely, and I think comply. 

I mean no compliance wise. 

We've been made to become compliant as agents. 

That's another thing. 

We're being made to fit the bill of a foot. The bill of this, you know, I'm spending on average 800 to £1000 per deal on compliance to make sure that we are totally compliant, which we are very, very. 

We you know we have strong sentiment on that and that's something we definitely want to be part of. 

But who's covering the costs of that? 

For me, no one. 

So that's an added cost when I'm trying to survive in the first place. 

I don't think that we have the respect that we should have, and I also feel that we're not supported enough as small businesses by the government either. 

I haven't had the best support in the pandemic that I should have had. 

As an entrepreneur who employs. 

Nine people with a team of six consultants on top of that. 

So, I'm here trying to. 

Change the narrative and finding my hands very much tide with lack of support. 

So, I think there is a Union needed where we actually all do come together and speak. 

You know whether it's a conference or a seminar, and we say what's happened? 

How are you finding things and how can we all come together? 

We don't do that, and. 

We should well hopefully with social media. 

And the Internet that will become easier. 

Yeah, well, I think it's a great thing you're doing 'cause it's allowing people to get educated and get a real truth with the individuals who you respect because the respect is there from us as well. 

To do it. 

So, I think this is a brilliant idea. 

Yeah, definitely logging, yeah? 

Thank you, thank you very much. 

Thank you for talking to us. 

Reply for absolutely thank you. 

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