Pay less for a posh address

Aspirations to living in a smart area? A budget that won't stretch? One option is to play the location card and invest in a far cheaper ex- council home, says Robert Liebman

Some two decades after the right-to-buy scheme placed thousands of local authority flats and houses on the open market, these properties are still stigmatised. But this persistently bad reputation is no bad thing for bargain hunters in London's priciest precincts. Ex-council properties sell at a discount, enabling people to get into areas they otherwise couldn't afford, as well as getting more space for their money.

Discounts can be as little as five per cent, rising to a massive 50 per cent but, as we usually get what we pay for, the higher the discount, the more reason there is to exercise caution. In Holland Park, Ash Ponsonby are selling a one-bedroomed flat with a small terrace for pounds 140,000 - "If fully private, the place would command as much as pounds 250,000," says Tristan Ponsonby. Though the relatively low price reflects the flat's location in a tower block surrounded by other tower blocks, it's all got to be weighed up against what the area has to offer as a whole.

Price usually matches the status and location of an ex-council property. In Pimlico, Douglas & Gordon are selling two flats, each with about 600 square feet. The ex-council flat is on pounds 255,000 (pounds 425 per square foot), whereas its private counterpart in a period conversion is pounds 395,000 (pounds 658 per sq ft).

In Chelsea, however, the same agents are selling a property with a much narrower differential. "This property, at pounds 315,000, would sell for about pounds 350,000 to pounds 365,000 if private," says agent Ed Mead. "The block does have a local authority feel to it, which will put some people off, but it's about 80 per cent owner-occupied, and over the medium to long term it should hold its value very well. It's also located on `The Beach,' a particularly desirable stretch of the Fulham Road. The better located the property, the better hedged it is against the vagaries of the market." Mead advises buyers particularly of ex-council flats to ensure that their surveyor looks into potential future maintenance costs - high-rise tower blocks can sometimes be problematic.

The ex-council offerings are larger, greener and more plentiful in the capital's prime outer suburbs. In Wimbledon Village, Winkworth are selling a six-bed (a converted loft accounts for two of them) three-reception semi with conservatory for pounds 1.25m, a nosebleed price tag except that nearby period properties of a similar size hover around pounds 2m. The comparables are not exact. Inevitably, a plain-fronted council house built last century radically differs from a Victorian or Georgian house replete with high ceilings, ornate mouldings and other attractive period features. On the other hand, council houses are generally sturdily built, and this particular council house has ample car parking - many period homes in this area lack this valuable asset.

More down to earth pricewise in similarly prestigious Chiswick, Tyser Greenwood are selling a two-double-bed flat with large rear garden in Dukes Meadow for pounds 219,950, and a four-bed end-terrace house with 42-foot west-facing garden for pounds 425,000. Surrounded by playing fields, and convenient for the M4 and M3 and the Chiswick-Waterloo overland rail line, these properties are in walking distance of the Thames.

Many council houses in these outer suburbs harbour enormous scope for improvement. When Tsvia Vorley's marriage collapsed 15 years ago, she wanted to remain in Kew so that her daughter could remain near her school and her father. But her equity was worth half a house.

"My budget was pounds 120,000, and I spent about a year looking at properties throughout Kew," says Vorley, who is sales and marketing manager for Danubius hotels group. "They were pokey, horrible, small terraces with no potential. One maisonette was only pounds 86,000, but it was a very small property with two very small bedrooms, no rear garden, a front garden I never would have used, and no potential."

Ultimately, she bought a three-bed ex-council semi on an estate that was gradually being privatised. "The trend was for council owners to sell, many homes here were already privately owned, and I could see that slowly the whole estate would alter for the better," she says. "Nice people lived here, including my daughter's childminder, who bought her house from the council. I knew this house would go up in value, and it was nicer than anything else I could afford." Vorley was fortunate in already being familiar with the area and its inhabitants. Newcomers may want to do some detective work before signing on the dotted line.

A price considerably below her maximum gave Vorley the financial wherewithal for wholesale improvements. "The house was in a dreadful state and took two months to renovate. I had pounds 20,000, which was a lot of money 15 years ago. I turned it in to a fabulous roomy house. I moved the bathroom upstairs, which I could do because it had three bedrooms. With the downstairs bathroom gone, I enlarged the kitchen. I also installed central heating and also bought furniture. Recently, I put in a new floor. Even now I am thinking of adding an extension or a conservatory to the kitchen. I can do it and still have a large garden."

Ash Ponsonby, 020 7792 4411; Douglas & Gordon 020 7225 1225; Tyser Greenwood, 020 8994 7022;Winkworth, 020 8946 2930.