A place in town? Just the ticket

Buying a London pied-Ã -terre could be the commuter's answer to increasingly intolerable rail delays, putting an end to the stressful daily journey to and from work

The misery of current train journeys into London is making some commuters think longingly of owning a small place in town. Country homes bought on the strength of railway timetables have become more like exile than an escape from city life. It is the pied-Ã -terre that offers respite from stress, not the rural pile.

The misery of current train journeys into London is making some commuters think longingly of owning a small place in town. Country homes bought on the strength of railway timetables have become more like exile than an escape from city life. It is the pied-Ã -terre that offers respite from stress, not the rural pile.

While the leap from disrupted travel to buying a second home is large, those who have considered investing in a London property are finding it a good reason for taking the plunge. They know the value of living centrally and that it can only increase.

Philip Harris, who moved to Lincolnshire with his family, has given up the daily commute from Peterborough. Since the Hatfield crash and speed restrictions on the line, his usual 45-minute journey has become almost two hours. The final straw was the day he spent seven hours on the train to and from work. "I have given up and now stay with a relative in London during the week. With the prospect of this going on for weeks, even months, if we had the cash I would definitely think of buying something small that could eventually be rented out. At least I would see a return on my investment, which is more than can be said for a season ticket."

At Frank Harris and Company, estate agents with offices in the City and Bloomsbury, frustrated commuters have been making enquiries. Nick Scott from the City branch saidthe prospect of long delays and journeys continuing was the final straw. "We sold a one-bedroom flat in Charterhouse Square to someone who lived in Hereford and wanted to move in the next day. He paid £192,000 for it and could certainly expect to let it out for £270 a week should he decide not to use it for a while. It is in a well-serviced bloc overlooking the square." At the sought-after Barbican a studio flat sells for around £120,00 and a one bedroom for £165,000.

In Bloomsbury, with its older houses and mansion blocs between the City and the West End, the pied-Ã -terre market is particularly strong. At the cheaper end of WC1, a good quality one-bedroom flat priced at around £160,000 would two years ago have been £110,000. This sort of capital gain has prompted many investors to sell their properties, and some found that early in the year tenants were insisting on rent reductions to stay on.

"Since then rents and demand has been rising. Anyone considering buying as an investment cannot hope to see a 20 per cent growth in capital values over two to three years again," says Frank Harris. "They must take a more traditional view over a longer term. I would expect to see an 8 to 10 per cent increase over the next 12 to 18 months with rental yields of not much more than 6 to 6.5 per cent."

A shortage of one-bedroom flats is apparent, and developers who have tended to favour two-bedrooms are changing their schemes. John Whiles of architects Jestico & Whiles has found that the 15 per cent usually allocated to smaller units is being radically increased. They were responsible for the revamping of the stable block in Euston station goods yard, and the one bedrooms sold quickly for £140,000.

In Mayfair, Wetherells are selling one-bedroom flats in Berkeley Street for £300,000. Peter Wetherell says buyers looking for a pied-Ã -terre must watch out for escalating service charges.

After a summer when prices fell slightly, the confidence of would-be investors was dented. But with pundits suggesting lower interest rates and an increasing need for rented accommodation, the current stable buyer's market is as good any to invest in. Nick Pearce of Beaney Pearce, estate agents in Kensington and Chelsea says he regards the winter months as a good time to enter the market.

Sophisticated investors have picked up on a change being proposed by the Government on commonhold and leasehold reform. This would do away with the residence test for flats and replace it with one based on two-year ownership. At present the freehold cannot be bought or a lease extended if it is in the name of a company because of the need to live there for a minimum of three years out of ten. In future, though, short leases would become a more attractive proposition.

However, this is not a step to be taken by the unwary, warns Ben Pridden of Beaney Pearce's Sloane Square office. There is no hidden profit to be made, since the owner will get the market price and speculators will be thwarted by the ownership test.

Two flats with 16-year leases have recently been sold by Beaney Pearce in South Kensington for £305,000 and £365,000. For properties in this area it appears a snip, but to extend the lease you could expect to pay at least the same again. Robert Orr-Ewing, head of lettings at Knight Frank, believes the proposed changes could free up a stickier part of the market. He estimates that in central London that could account for 20 to 25 per cent of the stock. Away from this specialist market, new investors are appearing. Penny Riches of Knight Frank's buying department has seen would-be investors sitting on their hands because prices were too hot. "Some of them waited too long and seriously missed out."

Simon Agace, chairman of the Winkworth group of estate agencies, says buyers are taking advantage of the 10 per cent fall in guide prices. A flat that was £160,000 pre-summer can be bought for about £155,000 now, which represents good value, he says.

For Philip Harris and his group of disgruntled commuters that is very good news.

Frank Harris and Company: 020 7600 7000

Knight Frank buying department: 020 7629 8171

Jestico & Whiles: 020 7380 0382

Wetherells: 020 74936935

Beaney Pearce: 020 75909500