Property: The tide turns on the Thames

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The Independent Online
BUILDERS are dusting off schemes for London Docklands in a move that could herald recovery for the worst victim of the property slump. The prices being asked show how things have changed since the optimism of the late Eighties.

Barratt London will announce plans on Tuesday for more than 270 homes at Rotherhithe costing pounds 65,000. In the mid-Eighties, that sort of money might have stretched to a pokey box away from the river.

The most expensive flats in the first phase are pounds 110,000, but buyers will look across the Thames to property in Wapping that once fetched almost three times as much.

Lessons have been learnt from the slump, when cramped and badly designed boxes quickly became unsellable, David Pretty, Barratt's chairman, says. He has altered the original plans, increasing space, raising the quality of fitted kitchens and bathrooms and switching to low-rise, neo-classical designs. 'People just did not go for the modern look,' he says.

As the first Barratt homes are finished, Fairview will be starting work on more than 110 flats and houses at Timber Wharves, across the river in the Isle of Dogs. These will concentrate on local first-time buyers, so they will be even cheaper, ranging from less than pounds 50,000 to about pounds 80,000.

Both developments are possible because land prices have crashed by more than 50 per cent. 'Now we can produce homes that locals can afford,' Chris Walker, of Fairview, says. Barratt's buyers will benefit from the death throes of the giant developer Rosehaugh, a former partner in the scheme. Mr Pretty bought the company out at a knockdown price, and the proceeds are going into improved specifications.

PUBS are changing hands nowadays like fivers at a racecourse. The big breweries have shed thousands and almost as many appear to have gone bust, shattering the dreams of those who cashed in their homes during the boom to enjoy a long, liquid retirement. But even the successful ones can hit problems. The Ploughboy at Disley, Cheshire, which turns over pounds 68,000 a year, is back on the market for pounds 50,000 after a sale fell through at the last minute, according to agents Christie & Co. Perhaps the potential buyer had second thoughts about the proud boast that 'Dylan Thomas drank here'. A little checking would have shown that half Britain's pubs could make the same claim.

FALLING interest rates have finally tipped the balance against renting, persuading potential buyers to move into the market. Agents across the country are reporting a rise in inquiries since the latest interest-rate drop.

'We have seen a 50 per cent increase in buyers from rented accommodation registering in the range from pounds 50,000 to pounds 150,000,' says the agent Michael Hobbs in Bath. Most are keen to buy now or in the new year.

Only a month ago, Cluttons worked out that it was cheaper to rent than buy two- or three-bedroom homes in a typical central London area such as Fulham, where prices range from less than pounds 80,000 to more than pounds 350,000. But with special mortgage offers as low as 6.5 per cent being touted by lenders, a buyer could now borrow say, pounds 175,000 and pay out less per month on a mortgage than the rent.

A two-bedroom flat worth pounds 120,000, for instance, would cost pounds 770 a month on a 95 per cent repayment mortgage offered at 6.5 per cent by the Royal Bank of Scotland. This compares with an average rent of pounds 953 a month.

A three-bedroom home worth pounds 185,000 would cost a bit less than pounds 1,290 a month at the 7.25 per cent charged by National & Provincial for loans exceeding pounds 150,000. Renting would cost close to pounds 1,670.

As ever, the choice isn't that simple. Both schemes will revert to 8.5 per cent after 12 months if base rates do not fall.

But buyers with enough savings to put down a 25 per cent deposit can pick up similar deals, from a variety of lenders, that stretch over two to three years.

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