London mega mansion sale: discounts on capital homes

In early summer, the sun was shining, the air smelled of the scent of lilacs and Kam Babai was full of optimism when he put his former family home on the market for £7.95 million. The magnificent seven-bedroom Gothic parish house in Chiswick had just been completely renovated and Babai thought another family would buy it. But over the following weeks his optimism faded along with the lilac blossom. Buyers came to look. One even made an offer, but couldn't find the money and had to decline.

"I am a commercially minded businessman and £6.95 million on the books is better than £7.95 million off the books," says Babai. Across Central London, property owners are coming to similar conclusions. Trophy''Mansions, beloved family homes, glamorous townhouses on prominent streets and fancy garden square apartments are all slashing seven-figure sums off the price to attract buyers.

Babai bought his former rectory house in 1999, renovated it and moved in with his family. In 2016, in the midst of a divorce, the family moved out. The house was rented out for £500,000 a year until 2021. Then, with the post-pandemic housing market booming, Babai, founder of luxury boutique company K10 Group, took it back, renovated it and put it up for sale.

For him, losing a million pounds on paper is not a problem. He has big problems keeping the house empty while he pays about 10 percent interest on the development loan he took out to''Brexit and the pandemic, they rose just 3.5 percent to 1,733 pounds per square foot. The same trend of a decade of sharp price rises followed by a long flat level is also seen in the property market across central London, and it appears that buyers have finally realized that their central London home is not as brilliant an investment property as they thought it would be.

Another problem

The other problem is that many of the homes now being sold at a discount were actually grossly overpriced from the start. Buying agent Joe Eccles, managing director of Eccord, agrees with this. 'We had a shortage of offers during the pandemic, estate agents were desperate for clients, so they''were setting higher prices to get orders,' she says. "There were also sellers who were very confident and unrealistic about the value of their homes. "

Cold, hard reality

The cold, hard reality of the central London market is now forcing these owners - and agents - to change tactics.

As a real estate agent, Mark Schneiderman, principal of Arlington Residential, finds himself in some very delicate conversations with potential sellers about price over the past few months. "Most owners''real estate people in the middle and high end of the market think their house is worth more than it really is,' he says. "You're trying to explain to someone who thinks their house is beautiful but which hasn't been renovated for 15 years that a buyer is going to come along and want to redecorate everything. "

Traditionally a central London market.

Traditionally, the central London market has been supported by wealthy foreign buyers, but Eccles says that while there are many willing buyers, few are actually pulling out their wallets. "They are around, the interest is there, but they are very discrete and not obliged to buy," she says. "They still love London, but unless there's a really compelling reason, they just say, 'We'll come back next summer'.".

Dell agrees that the market''Foreign buyers have been undermined in recent years by increases in property purchase tax - some aimed squarely at foreign and secondary homeowners, and the possibility of the abolition of the 'non-resident' system - which allows foreign nationals to live in the UK and pay minimal tax - by a possible future Labor Party government. "We have to be honest with ourselves," says Dell. "There are places in the world that are more welcoming and friendly to foreign buyers than we are, like Dubai or Portugal. "

Another deterrent to foreign buyers has been the introduction of stricter anti-money laundering regulations, which has prompted more dubious foreign buyer market actors''look for other countries. In addition, the decision to impose a travel ban and freeze the assets of Russian real estate owners after the invasion of Ukraine also sent a clear 'go away' message." Schneiderman believes central London won't revive until interest rates go back up. Rich people in big houses, he says, may have enviable Instagram-worthy lives, but they are no more resilient to economic hardship than other people. Their energy bills are huge, city bonuses aren't what they used to be, and parents expect to have to pay VAT on school fees if the Labor Party wins the next parliamentary election. When interest rates were low, many of them took out big mortgages. Now they are wondering,''how to keep paying them. "Even people who live in nice, expensive homes do some calculations," Schneiderman says.