If proof were ever needed of the ongoing demand for basement space in London, this month, the amount of cash paid smashed all expectations, after a developer signed over a staggering six-figure sum for the mud underneath an existing block of flats.
The ground underneath a London mansion block was sold for £150,000 at auction as an ‘unexcavated basement’. It has no planning permission and it is believed to be the first time that such a deal has been struck where the developer must work around – or rather below – existing homes.
This is yet more evidence of extreme measures being taken to develop homes in the capital where prices have soared in recent years. “Iceberg homes” as they are colloquially termed, are not new and existing owners have sought to take full advantage, even if the process is controversial among neighbours who fear the construction noise and disruption.
But in this deal, the developer will not own the property above ground level, which is a mansion block in an exclusive street in Bloomsbury.
The extraordinary offer of a solid, ‘unexcavated basement space’ came up at auction with the freeholder’s consent to develop. However, planning permission has yet to be approved by the local council and it is likely to cause outrage among those living in the block, who will have to endure months of building work.
The plot had a £120,000 guide price, but eventually sold at the auction for £150,000, with the unnamed buyer gaining access to almost 2,000 sq ft of ‘subterranean potential’.
The deal could be a big earner for the developer as the typical price of a one-bedroom flat nearby is £650,000.
Iceberg homes have cropped up across swathes of London
Bloomsbury has already benefitted from the substantial regeneration of neighbouring King’s Cross, with further gains possible once the final works are complete in 2020.
The average value of residential property in Bloomsbury has reached £768,669, up by 15.8 per cent over the last year alone. Even if the buyer chooses to do nothing with the land, there is still good potential for further capital growth.
Are you on safe ground with your London property deal?
Property conveyancers in London will be very familiar with the cut throat nature of the transactional and development market in the race for space across the capital. While this example is the first of its kind, it does open up the potential for further subterranean freeholds to be exploited, where loopholes and title boundaries collide.
Now imagine your client has just completed on a multi-million pound apartment in that block in Bloomsbury – what would they think about your advice on the available planning information?
Would they have appreciated the uncertainty, future noise and disruption that is now inevitable as the developer goes for full permission?
DevLondon from DevAssist provides a unique two stage, detailed interpretation of the current planning conditions, un-built planning consents and through freedom of information requests with the relevant council we find out any pending applications or pre-consultations that have taken place.
With the stakes this high in London, how can your client afford to be without it?
We have done a number of reports on this development. Buyers may think they have water views over the top of the existing structures. They do, for about the next three years then we predict that the temporary exhibition structure will make way for a small development of about 1000 flats rising about 25 storeys out of the ground! What value do you attribute to water view. Charles Chatterji, a registered RICS valuer says
“the loss of such a water view in this case could take as much as 25% off the value of a property.”
DevAssist do huge amounts of work in London. In the high value areas one of the most common risks we uncover are basement extensions. Sometimes referred to as Iceberg homes these amazing feats on engineering are great for the end users.
The neighbours however may not receive these plans quite so favourably. If the property you are buying shares a party wall with a property that is proposing a basement new areas of advice are needed. A party wall agreement for one will be required. Will this impact the availability of buildings insurance? Is the lender aware of this? What about the noise? Do you work from home? Have you a young baby? Many homebuyers in London are grateful for a DevAssist report because no one else told them what the new neighbours were planning. This is why we created DevLondon so that buyers can open their eyes and understand what is really happening in a location.
A beautiful listed building with views over open land to the South.
Emerging policy showed us that all the fields to the south were being promoted for a major expansion of the town. In the future the views will be a primary school and a large new housing development. Views can have a dramatic impact on value. Don’t overpay on your purchase.
Just like the Sussex case study see how this established cul de sac built in the late 1980’s can be extended.
The abutting land showed great potential and on further investigation we established that the original developer was in fact selling a ransom strip (a small strip of land normally retained by developers at the end of cul de sacs that controls future development).
The house house wasn’t going to be the equiet end of the line that the buyer expected. Who would not want to find that out (probably the seller!).
This what the buyer thought they would enjoy forever. It turned out to be about 6 months before the three storey educational bock was built right in from of their house. What is worse news for them is that their solicitor advised to spend the tiny amount of £96 on a DevAssist report. They declined and guess what they have to put up with now. If if your solicitor advises it – do it. This could have been avoided.
A view over water is often considered the safest of views. This is not an unreasonable statement and whilst we admit changes to sea views are rare this case study proves the benefit of our reports.
We have already informed a number of property buyers in Brighton about the extension to the Marina. Despite the obvious implications of 850 flats being built the height of the proposed eleven structures will reach 40 storeys.
This report revealed a high risk site immediately adjacent to the subject property.
Site 1 had failed planning history for the erection of 10 houses. The application was refused by the Local Planning Authority due to the scale, bulk and density of the proposed dwellings.
The DevAssess report identified this and made the client aware that a resubmission would be a very real possibility. A developer could very easily submit a new application for perhaps 6 houses instead of 10. Just because permission has been refused once it doesn’t mean the risk of development is gone. By analyzing decision notices we are apple to provide a professional opinion as to the continued risk posed by those sites that fail at planning.
In this case we were also able to identify that whilst sites 2 and 3 have no relevant planning history and are therefore low risk, the existing buildings are at a similarly low density and these sites may be promoted for development in the future.
This purchaser, not unreasonably, expected views over the local park. It turns out the council are planning to reduce the size of the park to one third of its original size and introduce a super store to replace the view that the property previously enjoyed.