Thanks to a willingness to take risks, an instinct for the next big thing and a large dollop of good fortune, Jonathan Downey has scaled the London ladder over the last 20 years to become a property millionaire.
In 1996 he was a 30-year-old corporate lawyer working in the City. The phrases “Generation Rent” and “Bank of Mum and Dad” had yet to be invented, and it was nowhere near as difficult as it is today for young, single professionals to find a foothold.
His starter home was a 1,500sq ft flat near Bunhill Fields, Old Street, which cost him £235,000 — “a fortune in those days”.
Downey, now co-founder of street food market network Street Feast, had recently returned to the UK after two years working in Abu Dhabi, with his savings of expat cash to put down as a deposit. He fell in love with the open-plan warehouse flat and also with the Old Street area.
“Even then lots of architects and artists and designers were living there,” he says. “It felt quite cool, and undiscovered, though it was a bit of a wasteland in the evenings and weekends.”
RAISING THE FUNDS
After his stint in Abu Dhabi he had a £25,000 deposit, and took out a “self-certified” mortgage to raise the other £210,000. This form of lending meant borrowers could tell lenders what their income was but didn’t have to provide back-up paperwork. Self-certified mortgages were banned in 2011 on the grounds they were an invitation to buyers to overstretch themselves.
This was certainly the case with Downey. “I was really nervous because it was more money than I had,” he says. “I had the £25,000 deposit but the flat was a shell when I bought it and I maxed out three credit cards fitting it out and buying things like washing machines.”
Adding to the financial pressure he was simultaneously investing in his first bar, Match, in Clerkenwell — the site is now owned by the BrewDog chain.
In 1998 he and his partner had their first child, and by 1999 both Match, and a second bar he had opened, were doing well enough for Downey to quit the legal profession. In 2004, after the birth of their second child, Downey and his partner split up.
When he met somebody new, he remortgaged the flat to cover the deposit for a home in another untested area — Dalston. The couple, who have two children aged 12 and 13, bought a four-bedroom semi-detached house for £725,000. It’s now worth £2 million. The flat, meanwhile, was let out, comfortably covering its mortgage.
In 2013 Downey co-launched Street Feast, which operates in Dalston, Shoreditch, Canada Water and Lewisham. At about the same time his relationship broke down and he returned to the flat.
Exactly 20 years after he bought it, the property is now on the market for £1.6 million. It has been a great investment, with an almost sevenfold increase in value.
But as a base for a father of four it has limitations. “It is a great bachelor pad, or for a couple, but though it’s the size of a four-bedroom house it is laid out with one bedroom,” explains Downey, 50.
With his eldest children likely to leave home in the next few years he is considering, when the property is sold, investing in two cheaper flats, one for him and one for them.
He likes Haggerston and is also looking at south-east London locations on the London Overground. Brockley is a current favourite for its value for money by Zone 2 standards.
Downey thinks property in Canada Water could flourish. Sellar Property Group, of Shard fame, is building a tower there, while British Land has plans for a £2 billion regeneration.
“Canada Water is like King’s Cross was six or eight years ago,” says Downey. “Roger [Madelin] at British Land was responsible for King’s Cross when he was at Argent, so I think they will do a good job.”
Downey is, however, painfully aware that being a property success will be far harder for his children than it has been for him. “The price of property in London is insane,” he says. “I don’t know how anybody in their twenties or thirties manages to buy anywhere.
“Everyone is being pushed out of London. Perhaps home ownership is not going to be an option for kids in future.”