The Pocket apartments may help, but so far the numbers are small. The company has built 276 homes, with another 326 under way and about 600 in the pipeline, said Lucian Smithers, Pocket’s director of sales and marketing. Some have been shoehorned in prime central London areas, such as Westminster and Camden, but those opportunities are shrinking.
“Increasingly we can’t buy land and make our scheme viable,” Smithers said. “There is a huge, huge pent-up demand for one-bedroom apartments.”
Under the terms of sale, buyers can’t earn more than £90,000, and the apartments are sold at a 20% discount to similar one-bedroom units within half a mile. The comparable properties might be larger, but Smithers says the extra space is usually wasted: a hallway nobody needs, for example.
Buyers must live or work in the area, and they can’t pay cash—with limited exceptions for people who, for example, can’t get a mortgage for religious reasons.
Once in, buyers can’t flip them for a quick profit, either. The same income and price constraints apply when the units are sold. No sublets or Airbnbs allowed. “We do fairly regular checks,” Smithers said. “If someone’s not playing by the rules, [another resident] normally gives us a call.”
Surveys show that people will go for a tiny apartment—if it’s in the right location with the right amenities, said Adam Challis, head of residential research at estate agents JLL.
After all, Challis said, the country will need more smaller units: People are buying later in life, and household sizes are shrinking.
“The big concern that, actually, many in the private market have in this space is the perception of delivering small units is, it must be crap,” Challis said.
This article was provided by Bloomberg News.