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Chains in London - James Bailey, Henry & James

Bet your bottom Euro there are chains in London

Property chains are a phenomenon typically seen in suburban London or the countryside. It is very rare to see a chain in prime central London simply because so many properties are pied-a-terres or second homes. However with so few properties on the market in the capital, London is now suffering from chains as well.

Chains happen whenever someone is selling their primary residence. Moving house takes organisation, packing and arranging new school places. Completions of six months to a year are not uncommon. It can be frustrating and costly for all involved, especially if the would-be buyer has to rent until completion day.

The reason this is now hitting prime central London has to do with a combination of a rising market and a distinct shortage of properties. Discerning vendors know that the market in London will continue to creep up in 2010 and beyond, mainly due to the weak pound and lack of supply. Good offers, at or near the asking price are being turned down because an even better offer could be around the corner. With interest rates so low, no one wants cash in the bank either.

In a rising market, no one wants to be left without a foot on the property ladder. Instead, people want to trade up or trade down immediately and with such a shortage of properties, we are at a stalemate. We are seeing an influx of Euro-rich buyers swarming the prime London market but are thwarted at every turn.

The situation is not going to resolve quickly, either. Until supply increases – and that seems unlikely at present – few people are going to risk getting off the proverbial ladder. Lending practices have not helped matters either and mortgages are still prone to very strict criteria and bridging loans are almost non-existent.

The market will eventually right itself, if not as quickly as some would wish. After all, banks want to lend – it is how they make money – and more mortgages are slowly finding their way onto the market. Supply will increase in time, as well, as confidence improves. As frustrating as the current market is for those in the industry, we all know this is a temporary state and people will put their homes on the market again given time.

James Bailey

James is head of sales at Henry & James. www.henryandjames.co.uk


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