The arrest this week, as part of a Serious Fraud Office probe, of the property magnates Robert and Vincent Tchenguiz was a reminder of the days of cheap money even as new housing data laid bare the long-term damage being caused by the current mortgage shortage.
Today cash purchases are accounting for an ever larger slice of home sales — 40 per cent in the final quarter of last year, up from 32 per cent in the previous three months, according to a study published today by Savills. A decade ago, when the Tchenguiz brothers were making headlines for their business coups, only 11 per cent of transactions were mortgage-free. This evidence of the increasing difficulty of obtaining a loan raises fears that the recovery will be even slower to arrive than previously forecast in locations where there are fewer buyers with deep pockets.
Able to secure finance without much fuss, the Tchenguiz boys — who are co-operating with the police and are confident that they will be cleared of any allegations of wrongdoing — built a £4 billion property empire and pursued a Hello! magazine-type lifestyle of parties and glamour model-dating. However, although the banking crisis may have curtailed their once-frantic corporate activity, it has not much reduced their creature comforts. The Veni, Vidi, Vici, Vincent’s 130ft yacht, was this week at Cannes for a lavish bash at MIPIM, the international real-estate conference.
At this summit, the mood was surprisingly upbeat about the UK market, or, to be more precise, the market in London, the place with the highest concentration of people with cash. There were announcements about thousands of new homes in Battersea, Earls Court, Newham and Stratford, which coincided with the latest survey from RICS, the estate agents’ body, showing that prices are rising in the capital, against the trend everywhere else.
Metropolitan members of RICS report that there is a lack of stock to sell and a rush to complete on homes of £1 million or more before the introduction of the new 5 per cent rate of stamp duty on April 6. Some of the London agents handling this type of residence will even privately admit that they have never been so busy or made so much money. The survey’s London respondents do moan about the lack of loans, but the anxiety voiced over this issue is more muted than in other regions.
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It is clear that the days when Robert and Vincent Tchenguiz and the would-be owners of semis in the suburbs could expect the answer “Absolutely, yes!” to a loan application will not be returning any time soon. What’s less clear is the level of government concern about this. In the Budget the Chancellor must acknowledge the link between the revival of the housing market and wider economic recovery and explain how he intends to compel mortgage lenders to co-operate.
Money pit
There is a gender divide in the reaction to the property pictured above. The wives just gasp. The husbands look excited. We are not talking so much about the asking price of the Knightsbridge mansion — £20 million — as about the vast, several storeys-deep hole dug at the back of it by the previous owner, with planning permission to create parking, an aquarium, a pool and other facilities that the super-rich consider to be essential.
According to Charlie Noel-Buxton, of Cluttons, the estate agent handling the sale, the husbands tend to think “What fun!” at the prospect of this subterranean playground; wives, by contrast, seem to concentrate more on the 18-month construction period. As reported by The Times this week, the house in question, 31 Brompton Square, is in the hands of receivers, following the reversal in fortunes of Achilleas Kallakis, the former international businessman occupant. Bids to become the next owner — and to pay the £10 million necessary to fill that hole and revamp the listed mansion — close next Tuesday.
After the makeover, some claim that the price tag could be as high as £45 million. Excavating the basement is the home improvement that adds most value, but rarely on this scale.
And so to bed
The hospitality industry has become the source for many recent interior-decor trends, including beige, metro tiles and parquet flooring. The latest feature to be imitated is the deluxe hotel bed, densely upholstered with duvets, covers, throws and serried ranks of pillows. As we report on page 10, John Lewis is now offering seminars in the hotel-bed look, for which flat, not fitted, sheets are required and several types of pillowcase. The five-star establishment bed could join the list of things that help to sell a house — bad news for those with children who neglect to make their beds in even the normal way.