The way in which we value property has been changing in the past year or so. Blame all those foreign buyers who have been busy buying up the smartest addresses in central London, and are used to thinking in terms of square feet (or metres), rather than following that good old British tradition of counting the number of bedrooms.
So, are we setting too much store by size? Estate agents commission floor plans from specialist companies, of which there are loads nowadays, but the results vary in both quality and diligence – which could affect the value of your house. Why? Is it a wonky tape measure, wonky maths or wonky ethics?
Take my own home, a late-Victorian semi in southwest London. As a test, I commissioned three floor-plan firms used by local estate agents to measure it.
It is not an especially complicated property – there aren’t any of the nooks and crannies, odd-shaped rooms or other peculiarities that might be expected to lead to discrepancies. Yet all three came up with varying estimates of how large it was. The difference between the biggest and the smallest was 100 sq ft – the equivalent of a small room, and about 4% of the total square footage. Given that houses in the street have been selling for about £700 per sq ft, that equates to £70,000. The discrepancy, it transpired, was due to the companies’ differing policies on whether or not to include a walk-in wardrobe or a utility room. If I were selling, I would want these included, but since I can’t sit or sleep in either, their value is limited.
In fact, the difference was quite modest. As a buying agent, I have seen a variance of as much as 10% for the same property in the brochures of different estate agents. A particularly blatant example involved a London riverside penthouse flat I was shown last year. According to the sales particulars, it measured 3,100 sq ft. Which was odd, because when it was built in 2000, it measured 2,800 sq ft, and the owners could not, by definition, have converted the basement or extended into the roof.
When challenged, the floor-plan company said it was its policy to include void areas. The flat had double-height ceilings with mezzanine levels and open areas to the side of staircases, which had been included in the square footage; so had a storage room down in the underground car park. Given that the flat was priced at £1,000 per sq ft, this made a difference of £300,000. After some fraught negotiations, £250,000 was shaved off the price, and the client cheerfully moved in.
We acted for another purchaser in May this year, who wanted to buy a detached modern house near Kingston upon Thames, in Surrey. Three sales-agent particulars again came up with different sizes, from 5,100 sq ft to 5,500 sq ft – a difference of 400 sq ft, or 7.2% of the total. The asking price for the house was £2.5m, which meant, at £454 per sq ft, a discrepancy of £181,600. The market was hot at the time and, although the vendor acknowledged the discrepancy, he continued to demand the full asking price. Our client reluctantly paid. But there are no prizes for guessing which measurements he will use when he sells.
Even today’s high-tech measuring devices leave room for “user error”, and, without industry regulation or stricter policy guidance, mistakes are made, which people unwittingly pay for. This is a ridiculous state of affairs. Measurements are not subjective – they should be a statement of fact.
The solution would be for us all to agree what we are measuring: external, gross internal or net internal? Some firms may include boot rooms, wine cellars, roof terraces, hallways, staircases, storage facilities or even outbuildings in the overall total living space. Others may measure deep into eaves, fitted wardrobes or alcoves. Even when the methodology is clear, how many people think about checking how accurately the plans have been measured? Not too many would be my guess. In some instances, people are being charged tens of thousands of pounds for space that doesn’t exist. That must stop.
These days, even secondary locations in London can command £1,200 per sq ft. A well-proportioned six-bedroom family house with a couple of reception rooms, a study and a playroom will cost something in the region of £4,000 per sq ft. With a 10% variance in total measurement, this would equate to a difference in valuation of £480,000 – which could come to light when the house is next sold and accurately measured. As long as prices are rising, this is a risk many may be prepared to take. But if, as now, the market is wobbling, it could be a cause for concern.
In any case, even if we suppose that the square footage has been accurately measured, is size actually that important? It may be the primary factor if you are a buy-to-let investor, armed with your spreadsheet, comparing two flats in a new development in the London Docklands, or Leeds, or Manchester, but things are not always that simple – especially for those buyers who, like most of us, are planning to live in the property themselves.
Property in Britain comes in such a vast range of architectural styles that a pound-per-square-foot calculation will never be as applicable here as in many other parts of the world. How can you compare flats in a white stucco-fronted Regency townhouse, a Victorian conversion and a modern block, square foot by square foot? You need to be absolutely confident you’re comparing apples with apples and pears with pears.
It is important to know how big a property is, of course, but let’s not become too obsessed with this one fact. Quite apart from the accuracy problem, remember there is so much more to the value of a property, including its location, condition, character, layout, ceiling height and aspect. There are other factors, too, such as noise levels and what the neighbours are like. Just think of all that when you see the agent reaching for the tape measure.