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.
Phil Spencer is chief executive of Garrington, a property-search business;
020 7376 6780, www.garrington.co.uk
The Royal Institution of Chartered Surveyors produces codes for measuring commercial properties so it could also do so for residential.
Andrew, London,
Square meter is also what is used in France to set up a price index. This index is an average. Specificities of a property such as age of the building, quality, maintenance etc...produce the fluctuations around the average. Yet, the index can be set up for small area of a city (e.g. at the level of arrondissements in Paris) which gives a good idea of the expected price. A noticeable deviation from the average price is an indication for the potential buyer and calls for a justification.
Number of bedrooms has the disadvantage that not everyone has the same idea of what a bedroom'size is.
Elise, winchester,
Here in the States, where cost per square foot is king, one doesn't compare " white stucco-fronted Regency townhouse, a Victorian conversion and a modern block", one compares like to like. A good agent will value a house with others built in the same neighborhood, amenities, the same age and with the same sq. footage.
Of course they all won't match exactly, but you do the best you can to get good comparable houses and it works much better than the UK system, where my 4 bedroom terrace is really 3 bedrooms and one largish closet with a window.
alice, Salado, USA/TX
The number of "bedrooms" is also used to cloud the valuation - as this can bracket your price.
In my block - one of the flats was coverted from a 2 bedroom to a 1 bed flat - they took a beating in the price - though i must admit it was an extremely spacious 1 bed flat.
Part of the valuation (as driven by new build/cookie cutters and buy to let investors) is the return on their investment. So more bedrooms means more "return" hence a higher demand for properties with more than 1 bedroom. But looking closely you see that 2 double bedroom is only large enough to hold a double bed and a wardrobe!
What we should be considering is the proportions of the rooms in relation to the size.
Phelix, London, UK
surely you can't let the incompetence of those floor plan firms to get in the way of having a much more accurate way of working out whether the house is worth the money you are paying for. I have seen house claiming to have three bedrooms and in fact the second and third bedroom are too small to be inhabitable. If buyers don't start to be more proactive and demand more information; they will forever be in an adverse position. I agree with Dominic, take your own tape measure.
Echo, Cambridge,
Square footage is just a guide, not a value. £ per square foot seems to be a relatively recent import from the commercial market where floor space alone is critical for capacity, operating costs etc. The RICS has a well-developed (over decades) code for square footage and valuers in the market typically attempt to negotiate away stairwell space, corridors etc. - 'dead space'. This is not the case in the residential market, there is no agreed practice and in fact every attribute of a property contributes to 'amenity' or ambience even if it is unuseable. Be aware that Sq fottage resi. valuation began in London where there are loads of near identical properties side-by-side. I live in the country and haven't yet seen a consistent £ psf valuation across residences in the same area.
Property Developer, Guildford, UK
Obviously both number of rooms and square footage are important measures. One looks at both and then at the actual property. Furthermore, the final price is determined by supply and demand and the overall character of the house, location, noise, view etc. not by the measured square footage which can only ever indicative. Lastly, even if you don't sleep or sit in a room it still has relevance, try to live without bathrooms or closets.
Ian, Frederick, USA MD
Square Footage is a measurement, not the only measurment.
Its not like you dont view the thing.
I took a tape measure with me, got my own measurements.
Dominic, Manchester, UK
I suppose a lot depends on whether one's buying or selling! However, the fairest form of measurement has to be the square footage(meterage) method despite its lack of accuracy, sometimes. Surely, in this day and age there has to be some sort of electronic 'thing-a-me' that can do the job and perhaps with legislated principles of measurement.
Thank you also Mr.Spencer for the use of the proper abbreviation 'maths', rather than that hideous 'math'!
E.W.Scharenguivel, Colombo, Sri Lanka
Needs yet another Act of Parliament, or otherwise keep asking Estate Agents to specify in writing the basis of their measurements which would eventually have the same effect, probably..
John G, Bromley, England
Phil,
measuring square-footage (or metrage, as done all over "the continent") is like democracy; not perfect but definitely the best system we have. Of course discrepancies will emerge, until we standardise the definition of what constitutes net internal living space, and what does not.
However square-feet definitely makes a better measure than no. of bedrooms. My friend wanted to sell his house and meanwhile stuck in a couple of thin dividing walls. Do you really think many people were fooled into believing he was thus selling a 4-bedroom property, and not a 2-bedroom?
PS: enjoy vm the TV stuff you do.
Roger, Luxembourg,
Some of the measures mentioned are simply fraudulent and I would hope that at some stage an irate purchaser would sue. And yes, square footage does matter, as we all know. One reason why realtors don't like it is that it makes it clear how ridiculous prices have become in London.
Ian, Frederick, USA MD