On sale, two bedroom flat in Mayfair for £500,000 – in one of London’s most expensive areas to live – is there a catch?
In 2016, less than five per cent of homes in Mayfair were priced below seven figures and none come on the market for under £750,000. The apartment has two bedrooms, an en-suite bathroom and cellar – and even has world renowned restaurant Claridge’s on its doorstep.
According to Wetherell, the estate agent marketing the property, the two-bedroom apartment, a stone’s throw from Claridge’s, is the “cheapest flat currently for sale in posh Mayfair and the West End”.
Based on the DMZ data guide to London house prices, a typical two bedroom apartment in the central London neighbourhood goes for £2.8 million. This is an astonishing six times higher than the price of the flat which Wetherell is advertising. Notably, the average price of property in Mayfair goes for £4.66million.
Now for the catch – the lease on the property expires in 12 years! However, Wetherell pointed out that £500,000 over 12 years works out at £801 per week – considerably less than the £1,300 average weekly rent for a two-bedroom apartment in Mayfair.
It would cost approximately £150,000 to extend the lease to a standard Grosvenor 20-year lease.
Although there are other costs associated with the property, including a hefty £5,334 annual service charge plus £500 per year for ground rent, Mr McManus (managing director of Wetherell) said the cheap purchase price will allow the buyer to save on taxes.
“At this below market price the property also falls below the stamp duty and other main tax levies for higher priced homes so the purchase would also be more tax efficient for the buyer,” he said.
Peter Wetherell, chief executive of Wetherell Estate Agents, says it could be worth between £1.8 and £2 million – netting the buyer a potential £1 million pre-tax profit.
“This flat has forced me to ‘eat my words’ and to retract a bold claim I made just last year” said Wetherell.
“Last year we forecast the extinction of the sub-£1 million flat in Mayfair. Well this flat clearly proves that mega-bargains can still be snapped up in Mayfair. Like the Dodo, sub-£1million flats are still extremely rare in Mayfair so we expect it to sell extremely quickly.”
The spacious property on Davies Street, W1, is located in Erskine House, a recently created apartment scheme which was originally a terrace of late Georgian houses built in 1824-1827, converted by Grosvenor in 2003.
Buyers must also fork out service charge of £5,334 per annum plus £500 per annum for ground rent.
DMZ thinks if you are in the market for bargains in prime London, then this unique property could be the next step for you! Described as a “proper Chelsea gem” by estate agent Douglas & Gordon, the one-bed, two-storey house has just 290 sq ft of floor space, approximately 26 sq m.
The house, which is up for sale for the first time in 50 years, needs a full refurb – photos on the site show damp and mould in the living room, kitchen and bathroom.
DMZ‘s data guide also suggests that Chelsea house prices have fallen by as much as 13% year on year in January, so it could be better to hold off and see if there’s further room for a discount!