First-time buyers struggling to find a home within budget and in a great location could try looking up. Experts estimate flats above shops are 10 to 15 per cent cheaper than “normal” flats in the same area, enabling you to move to a smarter neighbourhood.
Most flats above shops are also part of period properties. A flat in a Victorian or Edwardian parade will often have a decorative, wide frontage, spacious rooms with high ceilings, fantastic windows, period features and thick, soundproof walls.
In north London, Jeremy Leaf, principal of Jeremy Leaf & Co estate agents, says a typical one-bedroom flat above a shop in east or north Finchley would cost about £300,000. A similar property in the area, not above a shop, would cost £350,000 to £375,000. A two-bedroom flat over a shop would cost, on average, £350,000 to £375,000, compared with £425,000 to £450,000 for a period conversion.
In south-east London, Christopher Wall, partner at Proctors estate agents in Beckenham, says a one-bedroom flat over a shop there would start from £240,000 and a two-bedroom flat from £280,000. This is a considerable saving over “normal” flats, priced at close to £275,000 for a one-bedroom property, and £320,000 for a two-bedroom home.
“The biggest problem with flats above shops is that some lenders will say no,” says Wall. “Even if you’ve got a really good deposit you may find they either say no, or that the mortgage deal is not as good as you might otherwise get.”
PROS AND CONS
The HomeOwners Alliance agrees some mortgage companies are reluctant to lend on flats above shops. However, given low interest rates, the possibility of missing out on the best deals isn’t a huge problem. A mortgage consultant will advise on who will lend to you.
The riskiest buy is a flat above a restaurant or takeaway. High buildings insurance premiums are sometimes charged because of the perceived risk of fire, and not everyone wants the late-night noise of a restaurant emptying out and early morning binmen, or the food smells, difficult parking and London “wildlife” scavenging for scraps.
A safer bet would be a law firm where everyone goes home — quietly — at 5.30pm. But noise problems lessen the higher up you are in the building.
Wall also has a word of caution on access. Flats with their own private front doors are nicer to live in and easier to sell than those with doors in dark alleyways or behind shops, or, worst of all, through the shop itself.
Buying agent Jo Eccles, managing director of Sourcing Property, agrees buying over a shop can be a “superb” way of accessing an area you might not otherwise be able to afford. “Your building insurance will most likely be slightly more expensive, but then you are paying less for the property.”
Ben Madden, managing director of Thorgills estate agents, says homes over shops on his west London patch generally come at a 10 to 15 per cent discount.
However, keep your search to realistic areas. A four-bedroom flat above a designer shop in Mount Street, Mayfair, sold in recent years by estate agents Wetherell, went for £13 million — a record price for a flat above a shop.