Whither London?

I feel as if there is a crescendo of doom-mongering about London.

Some of the most expensive footfall in the world

Most notable for me was a piece a week or two ago by Simon Kuper in the FT. Kuper argues that three things threaten to diminish London, risking it following Vienna and Constantinople into decline:

  • Covid-19. Covid means lockdown. And lockdown means working from home. Kuper argues that “though working from home threatens all cities, it disproportionately threatens London”.
  • Brexit. The “UK-EU trade deal does little for London”. In the first week of the Brexit new world, apparently €6bn a day of stock trading moved from the UK into the eurozone, which alone could be worth has much as £20bn a year of lost revenues (a quarter of the UK’s services trade surplus). I hear rumours that Goldman Sachs is yet to move 2000 roles from the UK into the EU. That is a lot of tax that won’t be paid to HMRC, and fancy dinners no longer being enjoyed in the West End.
  • The role of English. Kuper argues that “a decade ago there was no obvious European substitute for London. Now, cities like Berlin, Copenhagen, Amsterdam have become quasi-bilingual business hubs.”

Kuper cites house price data as suggesting that “local rivals are eating into London’s supremacy”: London’s prices have fallen (in international terms) since 2016, whereas Parisian prices are up about 25%. More money is going into Paris’ office space than London’s in 2019, the year before the pandemic.

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May 2020: A sunny month

Well, May 2020 was the month that highlighted, as the Economist put it, Boris’ short-Cummings. Remember much else happening that month?

In May the UK started unlocking, slowly. The government(s) has(ve) been slowly releasing the strait jacket to fit what people (in London at least) have been doing anyway for a week or two. I’ve stayed healthy, and my boundaries have enlarged slightly – by which I mean I had my first Zoom party, and there are slightly more restaurants available on Deliveroo.

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I’ve sold my house, and I’m down over £500k

My Dream Home saga nears its conclusions. Longsuffering followers will recall that, in the last instalment in Q4 2016, I had abandoned my effort to sell my Former Dream Home into the Brexit referendum aftermath, in favour of renting the property out to some (North) Americans. I reasoned, three years ago, that I could well expect to sell the property for 1.20X (where X was the supposed fair market value) in 2020, by which point Brexit would be well and truly behind us…..

What happened next?

Well, the (North) Americans proved to be fine tenants. They looked after the place and kept on renewing. My rent increased by 2% each year. I used a managing agent, so the deductions were swingeing, and I had the occasional cost to bear too. But overall the landlord experience proved to be relatively painless.

Until Q2 this year, when the fine tenants gave notice. He had received a job offer back in the mother country and was off to take it.

Losing these tenants left me in something of a quandary. Brexit was due to be done in June 2019 (remember that?), except that pretty clearly it wasn’t. Property prices (and rents) hadn’t budged materially since late 2016. Yet somehow I felt a different mood – a “well I can’t put my life on hold forever” sentiment that tempted me to attempt a sale for the second time.

Moreover, with the void period starting in June, the timing felt good to ‘test the waters’ for selling the house, but reverting to let it in time for the busy ‘back to school’ season in September. So I decided to give it a go, and put my Former Dream Home on the market to sell. I listed it at a somewhat lower price than last time – essentially the price that I had accepted an offer on in 2016.

When is a sale a sale?

Cutting a long story somewhat short, the market felt completely different this summer than in the summer of 2016. I had far more interest in the house. I even had an offer, that I was prepared to accept! Not once, but in fact three times….

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