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Why measuring a property’s value per square foot is a blunt tool.

Buying a home is far more than a numbers game — emotion and other factors come into play too, says Christian Warman

07 May 2024 | The Sunday Times

Price per square foot is often the go-to measure of a property’s value in central London, but many buyers are caught out by it.

It can be a useful benchmark when comparing properties of different types and sizes — and from street to street – because no two properties are exactly the same. It can also be misleading.

The most important thing to watch out for is the length of the lease; quite simply, a shorter lease isn’t worth as much as a longer lease.

It doesn’t matter how grand the property is, if it has a short lease it won’t achieve as good a rate per square foot as it would on a long lease — and a professional valuation would be required to ascertain the appropriate discount.

The condition of a property can also alter its value per square foot, particularly when the cost of materials is high and tradespeople are in scarce supply.

Condition is easy to improve in theory, but to increase its value requires a considerable amount of time and effort, plus there are regulations to comply with. As a

consequence, the price per square foot of a property needs to take the cost of works into account.

Another key factor is that the rate per square foot is calculated in a two-dimensional world. It doesn’t take into account the volume of a property. Many buyers would pay more for a property with higher ceilings.

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I recently had a sale where the buyer was insistent that a similar flat that had sold for £1,500 a sq ft should be the benchmark for the flat they were bidding on, whereas we were asking for £2,000 a sq ft. What the buyer didn’t seem to appreciate was that the ceilings were three feet higher than in the

one they were comparing it with. What’s more, because the lower-ceilinged property was on the top floor, most of the walls were sloping, which substantially decreased the usable space.

So much of a property’s appeal relates to location, aspect and outlook, all of which are very difficult to quantify. A house in Chelsea, west London, on a main road will be worth considerably less than a very similar house nearby on a quiet road; no amount of data concerning the rate per square foot would be able to take this into account. The same goes for aspect; flats overlooking garden squares are particularly sought-after and regularly achieve a higher rate per square foot.

Buying a property can be an emotional process with many factors determining the eventual sale price. Proximity to family, schools and green space may be more valuable to a prospective buyer than the size of the property.

No matter how detailed the analysis into comparable values per square foot, it is a blunt tool and not an exact science.

Ultimately, the value of a property still comes down to how much a buyer is willing to pay versus how much a seller is willing to accept.

Christian Warman, partner, Tedworth Property

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