A London developer is offering buyers a free Renault Zoe electric car (RRP £18,045) if they purchase one of their new units.
Based in the affluent Muswell Hill in north London, the developer is also offering to pay for the eye-watering £153,000 stamp duty on the £1.99million homes.
Created by JAMM Living and called the ‘Pinnacle N10’, the homes are described as a popular London ‘village’ where the fashionable city lifestyle can be enjoyed with maximum convenience. Think Notting Hill, Muswell Hill.”
In a further freebie, anyone who puts down a £2,500 deposit on a property is given a free iPad and free ceiling speaker and Sonos upgrade. Looking at the marketing material, there were originally 22 apartments, of which 14 have already been sold and 6 houses, of which only 4 have been sold. The low house sales must be particularly painful for the developer as they typically receive the largest margin on these builds.
A senior exec from Jamm insisted that “this is absolutely not a sign of desperation”. Director Tim Jackson said, “There is a lot of nervousness out there with the election and Brexit, and buyers are looking for excuses not to buy. We’re giving them reasons to buy.”
In a worrying time for new build developers, other freebies on offer across the Capital have included free furniture packages up to £20,000, John Lewis vouchers and free 3-year travel passes. Property moguls have admitted that there is a glut of supply in new builds across London, however some are still adamant that conversions of older properties, Victorian and Edwardian, still offer great value for investors.
Property investment firm LCP placed the blame on the stamp duty hikes for a collapse in sales numbers, claiming new flat sales in central London plummeted over 40% in the last quarter of 2016 compared to the previous year. They also say average prices fell nearly 9% over the same period.
Recent Land Registry figures show that the city’s financial districts average property price plunged from £861,000 at the time of the Brexit vote to £773,000 in February – a whopping 15% decline. Prices across London’s outer boroughs continue to rise, and monthly rent has dropped from around £1,300 to £1,200 in March 2017 according to Your Move.
Buying Agent Henry Pryor speculated that a squeeze in foreign investment is dragging supply down, “The Chinese are finding it more difficult to borrow from their own banks and the gloss has gone off the London market. Foreign buyers were a very significant part of the new-build market, but they can’t get a yield, and they now can’t flip them for capital gain.”
DealMakerz agree that there is an obvious supply gap in new builds across the capital.
The fallout of foreign investment due to domestic restrictions has been palpable, especially for high value developments like Pinnacle N10, but it isn’t the primary cause for the ‘free car’ deal we see on offer today. A perfect storm of the UK leaving the EU, a snap General Election, prohibitively high stamp duty costs for £1m+ properties and a huge oversupply across London new build developments are all contributing to the wild ‘everything must go’ attitude on show with current developments.
It’s going to be increasingly difficult for prime London development projects promoting a ‘village-like’ feel to drive through large deals under these conditions. However, the current market appears ripe for period conversions, with original features still dominating the market for speculative and ‘live-in’ buyers alike. DMZ’s advice is: hold off any large new build deals in prime London, at least until there’s more groundswell for demand. Look for deals in Zone 2 & 3, with a lower cost but a higher potential end margin.