Author: By Laura Conduit, Partner at Farrer & Co
1 Feb 2022
Rather dramatically, The Times recently reported that “in today’s market you have to be ready to fight and scratch someone’s eyes out.” This commentary on the current state of play in the London residential property market came from a respected buying agent who was observing how competitive the market is in certain price bands and localities.
In the capital, the market does seem to be bubbling under the pressure of a scarcity of supply – an issue that has long affected a city with limited space – and a surge in demand as international buyers return to the market due to easing Covid travel restrictions. No doubt, it is a competitive market. But that doesn’t mean you have to lose out. How, then, can those from overseas searching for best-in-class homes in the prime central London get ahead?
Build your team of wingmen
First of all, engaging a professional team before you commence your search is key. The best advice I give my clients is usually during the first 30-minute phone call where we might discuss tax, structuring, finance, timings and tactics. The same, I suspect, goes for early conversations with buying agents, mortgage brokers, bankers and surveyors.
Appointing a team before you even view a property means you are armed with the information you need. It also means you can present yourself to the selling agents as proceedable, professional and in control; something that will stand you in good stead when it comes to making an offer. This should include clearing compliance and Know Your Client (KYC) checks. These days, estate agents are legally obliged to carry out AML checks not only on their own clients (the seller) but also on the buyer with whom they are entering into a business relationship by virtue of facilitating the sale.
Digest the detail
Ensure that you have understood your tax and structuring position before embarking on making offers or negotiating price with a seller. All too often overseas buyers agree a deal without understanding the tax consequences (and therefore overall cost of a transaction).
Fine tune your finance
With mortgage rates still low, most overseas buyers who are not looking to bring all of their wealth into the UK will be well-advised to consider taking mortgage finance if they are concerned about their IHT position. If this is the case, then starting to line up that finance by dealing with London account opening and credit applications (which can take several weeks with some of the private banks) is essential if you are to be able to position an offer as competitive as a genuine cash buyer.
Keep people on side
Be nice to the selling agent if you are dealing directly or, better still, ensure that your buying agent is somebody well-liked and well-respected whom you can trust to negotiate on your behalf and ensure, if there are competing offers, yours is the successful one.
Look beyond your bank balance
The winning bid does not always come down to price alone. Proceedability is key. To that end, you may wish to make an offer that includes a very fast exchange of contracts or, perhaps, puts forward an exclusivity deposit, which you are prepared to lose in the event that you change your mind and decide not to proceed with the purchase. Sellers find this level of commitment incredibly attractive.
Buy blind if possible
If you are not based locally, consider whether you are comfortable buying unseen, relying on virtual viewings and your local professional advisers.
Organisation over anything
As you can see, ultimately, being organised is key in getting ahead of the game. Once a deal is agreed, this still rings true. Prioritising the purchase and ensuring that either your PA, family office or you are available to progress conversations means that the dreaded gazump due to procrastination or delay is avoided.