Property: pounds 1,000 a week? It might not be enough

Swanky pads and family homes for high earners to rent in London are becoming scarce, and prices are soaring.
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The Independent Online
London, according to the residential-letting side of Winkworth, the estate agents, is not just Europe's pre-eminent financial centre, but "probably its only capital city capable of housing and providing for up to a million high-earning UK professionals and foreign nationals seeking temporary and permanent accommodation."

High earners are not alone in seeking property to rent in London. There are also the "comparatively well-off" and the "comfortable" and, particularly at this time of year, the foreign students funded by well-off parents who are house-hunting before the new term begins at the capital's universities and colleges. A lot of people, in other words, are chasing rented accommodation and, in spite of London's capacity, it is getting harder and more expensive to find. This, as another estate agent admits, "is brilliant for us. Just brilliant. Anything we get that's good is instantly gone".

At the Docklands office of letting agents Clutton's, Juliet Hoeg says, "I wouldn't like to be quoted exactly about our volume, but it's substantial. We're very busy.

"The tenants here tend to be single or professional, and comparatively few have families. As far as nationality is concerned, maybe 40-50 per cent of them are British and the rest are Americans, Japanese, Germans, Scandinavians - a complete cross-section of anyone with offices, banks or finance houses in the City. Half the lettings we handle are corporate, the rest on short-hold but frequently not for specific periods."

Until six-month short-holds were enshrined by the 1989 Housing Act, corporate lets were the ideal - especially corporate lets involving foreign companies and tenants who would not become superglued to the properties.

Because degrees of anguish in the landlord-tenant relationship have persisted in spite of further sharpening of the law and the legal process, the all- foreign tenant, with the lease signed for and covered by the employer's company rather than the individual employee, remains the ideal. Such tenants are, however, increasingly hard to find. According to Mrs Hoeg, "What often happens now is that companies won't sign the contract for people they're re-locating within the UK, and will only do it for people they're bringing in from overseas."

In the vast majority of cases, the new short-hold arrangements work well. "We look after two buildings with a total of 150 flats which are owned by one client, and others have huge portfolios," says Mrs Hoeg.

In the original development corporation area of Docklands - Limehouse, Wapping and the Isle of Dogs north of the river and Shad Thames, Rotherhithe and Surrey Quays to the south - approximately 30 per cent of landlords are from the Far East, mainly Singapore and Hong Kong.

Apart from those seeking boltholes before the latter's handover in June, most have bought as investments because of proximity to the City and, as Mrs Hoeg says, "of prices for buying or renting which give you more bricks for your money in Docklands than in the West End".

"And," she adds, "in new-builds or warehouses which have been completely refurbished with snazzy kitchens and bathrooms, there's often a very high quality of 'spec', with a view over the river or a peaceful bit of water thrown in."

For this expect to pay as much as pounds 850 a week or, for a studio, as little as pounds 180, depending on location, and as long as you're not too worried by the lack of infrastructure - schools, shops and parks - you will still be getting a comparative bargain.

How long for remains to be seen. In what Mrs Hoeg calls the "Mayfair of Docklands" - the area south of the river and just to the east of Tower Bridge invested with chic by Sir Terence Conran and guests at his restaurants there - the ratio of owner- occupiers to tenants has somersaulted in the past few years from 20:80 to 80:20.

"Some landlords who bought for investment at the top of the market and then got stuck with letting when they couldn't sell without losing heavily in the slump have sold on to their tenants now prices are even exceeding the previous peak," says Mrs Hoeg. "Also a lot of tenants who never contemplated staying have decided they like the area so much that they've bought."

The rise in Docklands rents suggests that the lack of infrastructure in the area may soon feature adversely when potential tenants weigh it up against other areas which are more central and attractive (if still some way out of town) such as Brook Green in west London.

According to Winkworth's summer price guide for London property, for instance, a four-bedroom house which sells in Surrey Quays for pounds 180,000 and fetches pounds 250 a week rent still offers quite a price advantage - for those renting - over South Kensington where a house of similar size costing pounds 400,000-plus can fetch pounds 800 to pounds 2,000 a week. But when one in Brook Green - closer to Heathrow, schools, parks and a wider choice of shops and restaurants - can be rented by a family for pounds 700 a week or less, the advantage begins to shrink dramatically.

"Because of the Lycee in South Kensington and the junior school on Brook Green itself, we get a lot of French families here looking for houses and big flats to rent," says Wendy Hutchinson of local estate agents Finlay Brewer. "All told, foreigners being relocated probably account for about 25 per cent of our total, and generally they're looking for smarter houses or modern or refurbished flats with porters and good security,

"At the scruffier end of the scale, because of proximity to tubes and buses, we get a lot of new jobbers coming from university for shared accommodation, paying pounds 85-100 each a week for a room in two- or three-bedroom flats or "tired" houses. Nothing tip-top, because people who own property with good decoration and up-to-date kitchens, bathrooms, showers etc don't want three young professionals who are going to have parties and people staying all the time; they want to let to families."

Even here, when a company brings in an employee and family from overseas, the company is likely to provide a rent allowance but to be reluctant to sign on the dotted line of the lease. This may, perhaps, have more to do with recognition that responsibility for choosing where to live is better left to individuals, particularly when there's such a bewildering choice.

And the choice of areas is always increasing, beyond the more obvious residential areas or dormitories for the City and into the City itself and its north and western edges, with refurbs and trendy loft conversions in redundant office space in areas such as Clerkenwell, and south across the river in the rather Dickensian warehouse-and-workshop streets of Southwark.

For would-be tenants, the fees charged by reputable letting agents for admin and paperwork are likely to be around pounds 75 plus VAT; for landlords, the agent charges around 10 per cent of the rent for the period, plus 5 per cent or more for complete management fees which should not be deducted until rent starts to be collected.

Along with half-a-dozen member companies in the Council for Mortgage Lenders (CML), the Association of Residential Letting Agents (ARLA) is promoting a scheme to help owners of second properties use them as sideline investments to help pay their mortgages - which, because of the extra commercial rate hitherto added by many lenders to standard interest. has all too frequently made this unprofitable.

"This is still a niche market, but it's a growing one," says a spokesman for the CML. "As property values increase and more people who have been forced to let houses feel they can at last afford to sell, it could be important for helping to provide an alternative."

And maybe it could help accelerate a process already detected by Wendy Hutchinson in the environs of Hammersmith, Shepherd's Bush and Brook Green.

"A lot of people coming into this area fresh would like to rent, find their feet, see if they want to stay put or whether they have to move because of their jobs. But some are now saying rental prices are so extortionate that they'll buy if they can, and if they have to move, let instead."