Author: Nic Pejacsevich

While there might not be a great deal to celebrate as we live with a pandemic, this week saw the sixth anniversary of Nic and Patrick founding Nicolas Van Patrick. Given what has been thrown at us during that time, that we are still here, and remain optimistic for the future, it feels right to acknowledge the occasion.

It has not been an easy ride thus far but it has been an incredible one, full of satisfaction and fun. There have been challenges galore, including stamp duty hikes targeted at the top end of the housing market, the Scottish independence referendum, the on-going Brexit debacle, Coronavirus, and President Donald Trump to name but a few. We have managed to survive it all, which is why we remain positive about the prospects for PCL.

The mini-bubble that the housing market is experiencing is not uniform with a very different picture in PCL to the rest of the country. Transactions are starting to happen again but while outer prime, such as Wandsworth and Putney, the country and Scotland are seeing plenty of activity as people move for gardens and more space, PCL relies on international buyers. People tend not to buy houses and flats in Knightsbridge and its environs out of necessity – ours is a much more discretionary and yes, fickle market.

In Knightsbridge, the property market has been hit hard by the inability of international buyers to travel. We have properties which would have sold under normal circumstances but are taking longer because relatively few domestic buyers can afford them. The Chinese have been our biggest buyers over the past few years but they haven’t really been in town because of quarantine at either end. Likewise, Middle Eastern buyers can’t get here.

There is always a market but because it is mainly domestic or international-domestic, buyers must perceive they are getting value. Subsequently, there is activity where there is good stock and it is well-priced. For example, we made a strong reduction on one property in Ennismore Mews that had received limited interest since it was launched just after lockdown lifted. The phone started ringing straightaway once the price was reduced, with domestic buyers showing an interest.

Likewise, we are about to exchange on another property in Kingston House South, which was reduced by nearly £500,000, again after little action. The price reduction has generated some traction and more than one bidder.

Pricing can be a thorny issue but we maintain you can never undersell a property if you market it correctly. Price it right, reflecting its true value, and buyers will compete. If you overprice, there is a risk the property will stagnate. Buyers will then think something is wrong with it, when actually it is only the price.

In the build-up to Christmas we tend to be busy with deals, and it is not unthinkable that this will happen again this year. We started seeing green shoots of recovery towards the end of the fourth quarter of last year and the first of this one, with many foreigners wanting to step into the UK market before Coronavirus put a halt to that. We remain positive about PCL – we have been talking to a lot of Pakistanis and Lebanese about London, and there are always people who need to move capital and see London as a safe bet for their future. The fundamentals are still there. Once we get the American election out of the way and the issues with the EU are sorted, the picture will be clearer and those who have already done their FX trades and have been sitting on the side-lines for a while, will come in. The 2 per cent stamp duty surcharge for overseas buyers from April may also focus the minds of buyers to get something done before then.

Meanwhile, we are tucking away the deals where we can, which we will take every day. The buyers we have are committed. We believe it is important for our business to keep talking – Zoom may have soared in popularity in recent months out of necessity but there really is no substitute for getting out there and meeting face-to-face. We are positive for the future. Here’s to the next six years – and hopefully beyond.

Encouraging pipeline as domestic buyers seek outside space

Since lockdown started to ease and property viewings were once again allowed, we have managed to build a pipeline of deals at Nicolas Van Patrick where there wasn’t one before. This is hugely positive and gives us room for cautious optimism – even though our usual buyers from overseas are still not able to travel due to flight restrictions and quarantine, there is a market from serious domestic buyers who need a home. We are particularly busy in the £1m to £2m bracket and for big houses with gardens as people search for more space both inside and out, better equipping them if we have to deal with another lockdown.

We have a good selection of properties for sale and there are some interesting deals to be had, which were not there before. Not only do we have good stock, it is reasonably priced which is always our preference; if property is marketed at ludicrous prices, it doesn’t do anyone any favours. The market is more price-sensitive than it has ever been so vendors need to employ a degree of realism if they are going to enjoy a successful sale.

The buyers we are seeing want to transact which is not always a given, particularly as our market is usually quite discretionary. Knightsbridge is unique compared with many other parts of London which are driven by real need and family buyers. Ours tends to be a more discretionary market, with fewer families and mainly driven by foreign investment. But the cash buyers from Europe, China, America and the Middle East we would normally see are not here. They are conducting virtual tours – we can see there is a lot of curiosity out there as to what is available – but that’s as far as it goes for now.

Domestic buyers who are mindful to purchase have a definite advantage they wouldn’t normally have because the usual competition from overseas buyers with deep pockets and no need for mortgages, is not there. While domestic buyers are more likely to need finance than their overseas counterparts, it is a good time to take on a mortgage as borrowing is incredibly cheap. However, we would advise using the services of a good mortgage broker to iron out any issues that may arise, as borrowing adds a level of uncertainty and greater potential for a deal falling through.

We are finding that patience is of the essence – for both buyers and sellers. Where sellers are flexible and in touch with reality, deals have kept going when they might otherwise have faltered. If you read the tabloids, you may be forgiven for thinking there is a booming housing market (the Express had the front page headline ‘House prices bounce back to hit new high’, although it was referring to asking rather than sale prices). While the suggestion is that sellers can ask for as much as they like, that may be the case in some areas but is not the case around Knightsbridge.

Undoubtedly, the housing market has some wind in its sails and if we get good news about a Covid vaccine, it should make it easier for buyers from overseas to return, as would lifting of quarantine restrictions in those countries. There is also the extra 2 per cent stamp duty for non-doms, which will be introduced in April, to consider. We had expected a busy autumn as buyers from overseas took the plunge before then but now, who knows? If travel restrictions change in the next couple of months, we might have a reasonable autumn, although we remain cautious for the outlook for market as the furlough scheme comes to an end.

It is good to be back. The government’s announcement that viewings could recommence in England has enabled the Nicolas Van Patrick team to get back to the office and as back to ‘normal’ as possible. Of course, things are very different after a 10-week lockdown as we all come to terms with living and working with a pandemic but it is good to see each other again in person and be back in the office doing deals.

Our patch, Knightsbridge, is undoubtedly much quieter than usual, mostly because the shops and restaurants which the area is famed for, are closed, and flights aren’t arriving from the Middle East or anywhere else for that matter. When one of us popped into the NVP office during lockdown to check all was ok, we will never forget the quietness of it all. With Ramadan not long finished and Eid following, normally Knightsbridge would be buzzing but it couldn’t be more different. We await Harrods re-opening on 15 June with an eagerness we did not think was possible.

While it is a surreal situation on many levels, there has been an uptick in new instructions, enquiries and offers as people pick up the pieces and get on with their lives. These are positive early signs which we hope will turn into solid transactions. If property is priced correctly, there is interest and the phone is ringing. We have received enquiries about one flat throughout lockdown; there has now been six viewings with three offers at asking price. Some might question whether we were underselling this property or is it simply a good flat priced well? 

There is much speculation over the movement of house prices. The truth is no-one really knows and much of the data being published now is pretty historic. What we do know is that the biggest impact a property has is at launch. If vendors are realistic and price correctly, they will benefit from that first flurry of activity and generate interest. But if you get it wrong and over-price, you will lose that initial impact and end up chasing down the market over a protracted period.

As always, best-in-class will command a premium; everything else needs to be priced attractively. Buyers are likely to want a discount 5 to 10 per cent below where prices were in March. The £1m to £2m market is likely to continue ticking along but we are more worried about the £3m to £9m market, which has been tricky for a while. Frustratingly, there was potential that was about to unlock at the start of the year as the market picked up but it is largely decimated now unless there are big discounts on offer or the property is best-in-class. With bonuses not going to be paid this year as a knock-on effect of Covid-19, there will be less money around to spend on this level of property.

Still, on a wider level, there are indications of strong pent-up demand. Property portal Rightmove reported its busiest day on record on Wednesday 27 May with more than six million visits to its listings, an 18 per cent increase on the same day a year ago. Certainly the domestic market has much going for it – if a buyer has not lost their job and is prepared to take a long-term view, then mortgage rates are super cheap and it could be a good time to step into the market. 

Many details still need ironing out before we can establish the true direction of travel for the housing market. Many of our clients are Middle Eastern and of course not able to travel. Government proposals for a two-week quarantine period will undoubtedly have an impact. And then there is the question as to how many people will come over to the UK even when quarantine is lifted. This is having a considerable impact on the student rental market around Imperial College London, for example, – on one or two-bed flats up to £1,000 per week – as the usual flow of Middle Eastern and Chinese tenants is on hold.

For now, and the foreseeable future, gloves and masks on viewings are the new norm that we all need to get used to. We are less convinced by virtual tours, even though most of our buyers and tenants come from overseas. A virtual tour is a nice thing to have but whether people will actually transact on the basis of this is another matter.

We are glad to be back but we are back in a very different environment. At the moment we can’t do our job out on the streets talking to clients but as lockdown eases we hope those days will return before too long.

Before Covid-19 hit, we had much to be optimistic about. Following a strong final quarter to 2019, we were upbeat about the prospects for the housing market in 2020. It wasn’t just Nicolas Van Patrick who took this view – the industry as a whole was more positive than we have seen in a long time. Data and statistics from research departments, portals, agents and lenders all reflected our sentiments.

There is no doubt that Covid-19 has completely derailed this, sending not just the property market but the global economy into freefall. However, we always try to look for the positive where we can – let’s face it, there is enough negativity out there. One glimmer of hope for us is that even in the midst of this unprecedented lockdown we are still getting enquiries from buyers and are talking to a couple who are contemplating making an offer without even seeing the property. On top of this, the sales pipeline we had going into this pandemic has remained committed, even though the likes of Michael Gove have been advising people not to exchange. Thankfully, we have exchanged and completed on all our deals and the five still under offer remain committed and on track. This gives us reason to stay sanguine and believe our business will get through this.

The problem is we aren’t sure about exact timescales – how can we be, when the government advisers who pop up on the television every afternoon don’t seem to be any the wiser? It would be fantastic to know when we might begin to get some sort of new normality in place by being able to return to the workplace but there is no sign of that yet.

If we presume there might be some sort of activity in the workplace at some point in the second quarter, we would expect the market to be in a Mexican stand-off for a few months. Buyers could well make silly offers to take advantage of market volatility while sellers, who more often than not are forced, may sit back until the lay of the land is clearer. This is unlikely to be apparent for some time.

There is no doubt that fortune will favour the brave, with opportunities to pick up some great deals. Sadly but inevitably, there will be casualties of the virus, with some falling into hardship as a result of losing their jobs. But for most of our clients who tend not to have debt on their properties, they should be able to sit back and wait for the dust to settle. With interest rates at a rock-bottom 0.1 per cent, those who have mortgages on variable or tracker deals have never had it so good.

The Nicolas Van Patrick best-case-scenario is that we might return to some ‘normality’ in the fourth quarter of the year, although we would caveat that by saying we need to see how things progress over the next few weeks and months.

Agents who are overstretched or don’t have a solid lettings book will go into insolvency or merge with others to try and survive, which is what happened following the 2008 financial crisis. In the end, the strongest will still be here and with even fewer players in the market, this will create opportunities for them.

After a tricky few years, the housing market got off to an encouraging start in January, with Rightmove reporting its busiest month ever and estate agents witnessing a significant uptick in new buyer registrations. With rumours of a 3 per cent stamp duty surcharge to be imposed on foreign buyers in next month’s Budget, there is certainly an impetus and opportunity to buy now, and we have seen renewed interest from overseas purchasers as a result.

There is still a lingering hope in some quarters that the Chancellor will reduce stamp duty in the Budget. Indeed, the Conservatives flirted with this in their manifesto. But stamp duty on residential property raised £8.3bn for the Treasury in 2019, and it’s unlikely the government wants to sacrifice any of that income. What’s more, there were 5,300 £1m-plus sales in the final quarter of last year, debunking the myth that stamp duty is having a negative impact on transactions at the top end of the market. The other issue is that if stamp duty was reduced, it would be of most benefit to those in London and the south-east where property values are higher, at odds with the government’s focus on the north.

The real issue for the housing market remains the supply drought. Given the lack of stock, there is a lot to be said for bringing your home to market now. There are more buyers willing to transact, for one, with offers coming in at asking, or even above asking, price. Many buyers seem to feel that it is the right time to step back into the market, with prices for some properties lower than at any time in the past ten years.

Choosing the right agent to bring your home to market is an important decision. Why do so many vendors choose an independent Knightsbridge agent like Nicolas Van Patrick? After five years operating in SW7, we have the numbers to prove that we punch well above our weight. We are the only independent agency in the top ten of agents operating in the area by market share. More importantly, we have, by far, the highest listing to exchange percentage of any agent in the area at 59 per cent. The reason why many trust their home to us rather than one of the bigger agencies is that when we agree a transaction, you are in the hands of professionals. We usually get a deal through – we have the diplomacy and know-how to do so. We know what we are talking about, our clients acknowledge that we make sense. 

It is why we started Nicolas Van Patrick in the first place – we felt there was a place for an agency which stood for quality rather than quantity. Those vendors who give us the opportunity to sell their home find themselves in very good hands. Every instruction is important to us. We are equipped to give it the time it needs, which is of paramount importance to our clients. Buyers respect that we are not just trying to do a deal at any cost, so there is confidence from both sides. If problems arise during a transaction, we are able to solve them.

So, the message is: don’t wait, come to market now, take advantage of the ‘Boris Bounce’ and beat the rest of the competition. There is no point waiting for stamp duty cuts which are unlikely to come; indeed it is more likely there will be increases. Knightsbridge is looking undervalued compared with the rest of PCL – we had one buyer approach us the other day who had shifted her attention from Holland Park to Knightsbridge because the former has become too expensive.

And when you do come to market, choose a boutique agency to ensure your instruction gets the time and energy it deserves.