Thousands of house deals collapsed in London due to Brexit

Thousands of house deals collapsed in London due to Brexit

Thousands of house sales across London have collapsed since the Brexit vote as alarmed buyers scramble to pull out of “overpriced” deals, the Standard has learned.

The surge in “failed sales” comes amid growing evidence of a sharp fall in prices since the 23 June Referendum - with one early survey suggesting a 12 per cent drop.

The fallout has been most severe in the centre of the capital, where agents said that up to two-thirds of the offers they were handling on he day of the Referendum have been withdrawn or are being renegotiated.

Many chains of deals involving family homes across London’s residential neighbourhoods and into the suburbs have also come unstuck as a direct result of the Brexit bombshell.

Accountant Harry Speller, 36, and speech therapist Meg Newman, 37, lost a £605,000 offer on their terraced home in Forest Hill within hours of the result.

Mr Speller said: “We weren’t worried about selling at all before the vote and we thought Brexit would only affect high end flats and luxury homes. But our estate agents said loads of people dropped out of deals that day.”

Data from property analysts, Propcision, suggest the number of sales falling through in London has almost doubled from around 5 per cent to more than 9 per cent.

Property buyer Henry Pryor said many agents were desperately scrambling to keep chains of buyers and sellers intact. He said: ”I have even heard of the people at the top end of the chain offering to buy the £200,000 flat at the bottom end just to make it all work.”

According to figures from the house move services website reallymoving.com  central London prices have slumped 12 per cent in the first month after the Referendum - with 10 per cent coming in the first week when political turmoil was at its peak.

Chief executive Rob Houghton said: ”That was an unheard of fall, I’ve never seen a week where we’ve seen a change that dramatic.” 

More worryingly for estate agents the number of transaction has collapsed by 44 per cent as the market ground to a halt, particularly for more expensive properties in the £3 million to £10 million bracket.

James Benson, head of sales at Westminster estate agency Bensons, said: “Buyers are feeling very nervous. So much dust has been thrown into the air by the referendum. Nobody knows when it’s going to settle and how it’s going to settle.” 

He said around a third of deals had collapsed, a third were being renegotiated and a third pressing ahead regardless.

Other agents said increasing numbers of “desperate vendors” are prepared to accept previously unthinkable price cuts. 

Matthew Wright of the Marylebone and Mayfair branch of estate agents Winkworth said: ”There are definitely people more eager to sell than previously who have instructed us to take quite substantial discounts.

"The rule of thumb is that people are offering 10 per cent below, but we have had offers at 50 per cent below and plenty at 20 to 25 per cent.

“We have seen people who really don’t want to be in the UK anymore. There are lots of French people round here who are almost taking it personally, they don’t feel welcome.”

Figures from London property analysts LonRes showed that the number of properties being reduced in price jumped by 163 per cent in the 12 days after the referendum.

In one dramatic example of a post-Brexit price reduction this week agents JLL said the owners of a spectacular triplex penthouse overlooking the Houses of Parliament were prepared to accept offers as much as to £1 million below the £6 million asking price to secure a sale before the end of August.

In another example, the Middle Eastern buyer of a two bedroom flat in the Riverlight development in Vauxhall has cut his asking price from £985,000 to £845,000 to secure a quick sale before the completion of the scheme. Christian Barr, new homes manager at agents My London Home, said the cut was “related to Brexit.”

In Chelsea this week photographer and film maker Amanda Eliasch cut the asking price of her five bedroom house from £7.95 million to £7 million to reflect the “new realities” of the market.

But veteran developer Harry Handelsman, founder of the Manhattan Loft Corporation, said he was upbeat about the longer term prospects despite Brexit. 

He said: “The result was disappointing but, having lived in London for 25 years, I believe in its resilience and that despite the setback, this great city will continue to grow.”

'Sale collapsed on referendum day'

Emma Kolasinska, a TV producer from Forest Gate in east London, had agreed to sell her three-bedroom Victorian terrace house for £645,000 but the sale fell through because of Brexit.

The 35-year-old, who is moving to Bristol with her husband and two young children, accepted an offer on their house which then collapsed on the day of the referendum result.

She said: “Our property is on the Crossrail link so we found buyers within a matter of weeks – a lovely German couple that had lived and worked here for a very long time and had good jobs. 

“The first time they came round they said they were worried about Brexit and we said ‘there’s absolutely no way that’s going to happen’. Then it happened. 

“I felt sick and wondered how long until it fell through. At 11.30am on the day of the result we had an email saying they’d pulled out. I imagine they don’t feel very welcome anymore. It’s sad – they loved it. 

“It is truly awful, I have never been quite so shaken by a political result. It meant we lost the property I found in Bristol and consequently the schools fell through for my children.

“It means I’ve had to start again in terms of finding somewhere to live.” 

Mrs Kolasinska sold her property on Friday after accepting an offer £10,000 below the original asking price. 

“If you ask an estate agent in any other part of the country they will say Brexit has had no affect at all but in London there are far more EU buyers.  

“I’ve lost the money absolutely because of Brexit. It panicked us and stopped us from waiting for another buyer in case it got worse.

“If the referendum had gone the other way we would have had the confidence to hold on and wait for someone to meet our original asking price.”

'We couldn't take on the commitment and backed out'

Tim Milford, 32, a project manager from Forest Hill, south-east London, withdrew a £680,000 offer on a three-bed house in East Dulwich, with his wife Isabelle who is originally from Germany, because of their concerns over Brexit.

A few days after the referndum vote the couple, who are selling their flat, pulled their offer because of the uncertainty in the market.

Mr Milford said: “Everything was all ready to go – the chain was formed and we were looking forward to it and then the referendum came along. My wife is German and we were uncertain about what was going to happen and didn’t feel we could take on the commitment of a house. 

“A big part of our identity is that we are European and we weren’t sure fundamentally whether we wanted to stay in the country given the Brexit referendum result. Even if we are going to stay there is a big worry for people that you would be buying at the height of the market.

“There’s a lot of nervousness. I felt really bad for the woman we were buying from.

“We tried to claim back money for the surveys and legal costs on insurance but were told Brexit wasn’t covered, so we’ve also lost £1,500 there.

“I think Brexit will hit everyone in the pocket, except lawyers.

The couple still intend to sell their home and plan to move into rented accommodation to wait and see if the market stabilises before buying.

'We've had to start from scratch'

Accountant Harry Speller, 36, and speech therapist Meg Newman, 37, decided to move from Tower Hill to Bromley when they discovered they were expecting their second child.

Their £605,000 terraced house had been on the market for several months before an Irish buyer and his wife put in an offer. They pulled out immediately after the Brexit vote.

Mr Speller said: “It was very frustrating, they had got the survey done and we had spent weeks negotiating. 

“By the time they dropped out all the other buyers had found somewhere else so we had to start again with all the pressure hanging over us.

“We thought about knocking the price down because we needed to get settled before our daughter starts school.

“We weren’t worried about selling at all before the vote and we thought Brexit would only affect high end flats and luxury homes.

“But our estate agents said loads of people dropped out of deals that day.

“We didn’t panic and we ended up getting lucky, finding another buyer a couple of weeks later.

“We consider ourselves very fortunate for getting our pre-Brexit price and then seeing others drop in value by £50,000. Other people must have had a nightmare.”