Three-bed property near Covent Garden bought for £130,000 in 1990 realises return on investment of more than 800% for owners
A former council flat in central London has changed hands for £1.2m in what is thought to be a new record for an ex-local authority apartment.
The three-bedroom property near Covent Garden has been sold by the original buyers, who bought it from Westminster council in 1990 for £130,000 under the right-to-buy rules introduced by Margaret Thatcher. Although it failed to reach the initial asking price of £1.35m, the sellers are unlikely to have been disappointed with a return on their investment of more than 800%.
The property is not the first ex-council flat to be marketed for more than £1m this year. In May a two-bedroom home above Stella McCartney’s boutique in Fulham came on to the market for £1.15m. Last year, two large houses were sold by Southwark council for almost £2.96m and are now back on the market for more than £3m each.
Situated in Siddons Court, a mansion block which was once entirely owned by Westminster council, the £1.2m flat is in a part of London popular with both buyers and renters. The 1,118 sq ft flat boasts its own private front door entrance, a third bedroom and an eat-in kitchen separate from the main reception room.
The estate agency that oversaw the sale described the area as a “fantastic location” just behind the Royal Opera House. However, its statement also explained why most would-be homeowners now see the centre of the capital as out of bounds. “With central London property prices at a premium, and with demand for properties far outstripping supply, we weren’t surprised that this former council flat reached this impressive price,” said Barry Marner at estate agent Barnard Marcus.
According to the property website Zoopla, the average asking price for a two-bedroom home on Tavistock Street, where the flat is located, is just under £1.2m.
Barnard Marcus said it had been bought by an owner-occupier rather than an investor. However, property experts say ex-council properties have become very popular with buy-to-let investors looking for easy to maintain, purpose built flats to let.
They have been described as a gold mine for landlords, as rents in refurbished properties in some parts of London have hit £400 a week, while two-bedroom flats can command as much as £600 a week. In 2014, a two-bedroom flat in Siddons Court was advertised for rent at £525 a week.
Since right-to-buy was introduced in the early 1980s more than 2m properties have been sold off across the country. Currently, council tenants in London can get discounts of up to £103,900 on their property if they decide to exercise their right to buy. Under new rules being brought in by the Conservative government the right to buy will be extended to all housing association tenants, while councils will be forced to sell off their most valuable stock to pay for replacement homes. Councils in London have warned that this could lead to the sell-off of thousands of homes in the capital.
Tracy Kellett, a buying agent for wealthy house-seekers, said ex-council homes were of interest to homebuyers and investors: “Any stigma is waning fast as there’s a whole generation of people who don’t even know what a traditional council house is or was. Investors are keen as they often give great yields as purchase prices are lower than average.”
“Homebuyers are caring less and less, particularly if they are on developments with high owner-occupier ratio – the bottom line is they will get more house for their money, a key driver in today’s high-cost housing market.”
This article was written by Hilary Osborne, for theguardian.com on Thursday 13th August 2015 19.44 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010