Pockets Of Opportunity In The Far East End Of London
“The British financial crisis, like the U.S. one, deeply hurt nationwide real estate prices,” writes Global Correspondent Paul Lewis. “And, as in the United States, there are areas of Britain where the drop was particularly severe because of local conditions. The East End of London is in a particular down-drift because of overbuilding. The on-again, off-again, on-again popularity of the new financial center at Canary Wharf led to a special bust in property values in Docklands, along the Thames Estuary. There are real bargains to be found down the river from Canary Wharf in the area I call the Far East End.
“The East End suffered huge damage during the Second World War, as it was the easiest place for German bombers and V-2 missiles to hit. Then it suffered again as containerization removed the need for docks and warehouses east of the city center. So, starting at Tower Bridge in the 1950s, the Docklands became a new location for housing.. And then 40 years ago a new financial center was plunked down at Canary Wharf and transportation provided to those living and working nearby.
“Forget about areas ripe for letting during the London Olympics this summer; they are already discovered. Moreover, the most affordable part of Olympicsland is a huge slum zone called Poplar, the poorest district in all of London. Try to avoid it at all costs.
“I would focus on areas with amenities that will enhance property values in future years even if the Olympic boomlet is elsewhere. Areas I like are E10 and E16. In E10 I like around the Canning Town express Underground Jubilee Line to central London, near the Excel Exhibition Center and the City Airport. On the local tinker-toy train, called the Docklands Light Railway, you would be near stops like Beckton Park, Royal Albert, Prince Regent, Customs House, and Royal Victoria, a total of 1 to 5 stops from Canning Town, the rail center in E10. In E16 you are just south of the new City Airport and the Thames flood barrier, with the Silvertown or Star Lane DLR your communications link.
“Now you have to agree that these names are veddy British. These bits of the Far East End were overbuilt massively for the future Lehman Brothers staffers, Bear Stearns bankers, and AIG credit default swap experts who were going to move to London to work at Canary Wharf. The amenities are American-style.
“For retirees and anyone over 62 years of age, the transport situation is pure bliss. With a fixed address, you quality for a ‘Freedom Pass,’ which gives you totally free transport by bus, train, DLR, underground, or overground, throughout the entire London Transport System and any railway travel within the city limits. This is worth thousands of pounds annually, and the system is laxly administered by the local post offices.
“Another benefit once you have become a resident is the National Health Service, which leaves Obamacare and other programs in the dust. This is free and covers medical visits, drugs, and hospitalization. Your U.S. Social Security pension is not tapped for NHS fees. You also will not be taxed on your Social Security pension by either the United States or Britain if the total is less than US$85,000, but, of course, you need to check about unearned income and private pension payments.
“The cost of living in London is somewhat higher than in the United States, but traveling to European destinations is a lot cheaper from this base. Other bargains include basic staples such as milk, potatoes, bread, and, goody, wine. But be ready for sticker shock on the prices of clothing and shoes and also getting shoes repaired. Dry cleaning and laundry are cheaper than at home. It’s a mix.
“The Far East End area was a center of build-to-let, a British yield play appealing to people seeking fixed income. Many of them have not found the tenants they need to pay their mortgages. Prices have therefore dropped precipitously overall, and, moreover, there are special situations you can profit from. One example: the Drushba program at the local public (free) school at Prince Regent has attracted lots of Russians (not the oligarchs, but those providing them with financial and legal services), who want to keep their children speaking Russian. You hear more Russian than English along parts of Prince Regent Lane.
“The area is open and has lots of parks and often appealing views of the River Thames or canals and tributaries. It is more suburban than London in feeling. I think most people would not miss a car and use the free public transport.
“However, to be perfectly frank, the main appeal of London retirement and real estate for North American expats-to-be is that everyone, just everyone, speaks English. You do not have to study Spanish or French or Portuguese. What a relief!
“Having said that, be careful of some terms of art in the estate agent lexicon that you will run into in this depressed market. ‘Local authority’ means that the apartment (flat, in Britspeak) was put up for housing poor people. Many such buildings were privatized over the decades, and they are often good value. However, in E10 and E16 there are plans afoot to actually tear down some social housing areas right around the Canning Town center of the borough. In perhaps five years, these apartments will be bought by the government at market value-plus, and you would have to move. The plus ranges from 7% for apartments rented out to 10% for owner-occupiers.
“And because of the overhang of destruction to come, you cannot get a mortgage for these apartments. You have to pay cash. The result is that the cash is actually a huge bargain, if you are willing to inconvenience yourself and take a chance that you will be able to buy something better after staying in your council flat at Canning Town in E10 for five years, I think a good bet. For an asking price of GBP165,000 (negotiable) you can buy a three-bedroom apartment with reasonable centrally heated facilities, including a living room, an eat-in kitchen with all the necessary appliances, and a full bath. It is on two levels so you have to take the stairs. There are public green spaces in the complex, but the area is heavily industrialized.
“In another council building in E16 at Colman Road also under planned tear-down there is a huge four-bedroom, two-bath, a good walk from Custom House DLR station, for GBP240,000. It’s offered by W.J. Meade agents, from their Stratford office (local phone: 020-8166-8073). It’s on three floors (the master bedroom floor does not have a bathroom), is in very good order, and has a spanking modern kitchen and its own parking. It is a good walk along Prince Regent Lane to the DLR station but very near the King George Park and the Newnham City Farm, where you can buy fresh produce (veggies and eggs) from the allotments. It is a bit like living in an English village, although, of course, you are in London. Note that there are not many restaurants and shops, just as in an English village. It is also far from the DLR, a good 20-minute walk.
“A third council flat is at Ripley Road on the corner Prince Regent Lane in E16 with four bedrooms and one bath–really proletarian. It is a three-story maisonette with a fitted kitchen (clothes washer but no dishwasher) and tiled bathroom, plus a small balcony. It is under reference 527787478 at Your Move James Muir (local phone: 020-3318-7515) and appears not to be slated for tear down. It is cheap, GBP165,000. It is also near the King George V Park and the Newnham City Farm but nearer the DLR at Prince Regent.
“Other offers are for time shares, or shared ownership, a special market in E10 and E16. These are apartments in new blocks rented out now, usually on one-year renewable leases, whose owners need cash. Sometimes the rents do not cover the mortgage. So owners are selling a half or a quarter of the apartment (done by quarters of the year, not by rooms) under time-share rules. For someone wanting to live in London, this does not mean you get to stay for three months or half a year. It means the income from a tenant for that period goes to you rather than to the seller. You may be able to negotiate to inhabit the apartment and buy out the owner over time.”
Kathleen Peddicord
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