Words by Hugh Wigzell, partner at Farrer & Co
The first branded residence in London that I recall was the launch of the somewhat unheralded, subjectively ersatz, Versace Tower by Damac in Vauxhall/Nine Elms, and I honestly can’t tell you what the fate of that building was, although the internet and Damac Tower website indicate that it’s still a thing with studios from £712,000 ranging to three beds for £2.3 million.
Doubtless prior to the launch of this scheme in circa 2015 there were other branded residences, however the intervening years have brought a sophistication and polish to London’s branded residences offering, and now some of our capital’s most extraordinary new homes fall within the branded bracket. The best of these hold cache amongst ultra-high net worth buyers, although they are not universally liked, and it is critical that a branded offering is done well in order for the brand and builder symbiosis to thrive.
When done well, what a branded residence offers that other luxury homes can’t is the specific appeal of the brand itself. Versace design does not speak to everyone, and indeed I venture so far to say that it may alienate as many or more than it appeals to. More successful are the hotel residences currently in vogue in London which offer all of the benefits, comforts and services of the five-star hotels that the wealthy frequent, seamlessly knit together with the comforts of a home or home from home. Hotel-style concierge services are made available to the owners and occupiers of apartments, with a dedicated hotel-employed and hotel-trained team in charge of resident services committed to delivering the same services to the same level within the residences as are enjoyed by the hotel guests in the other wing of the building.
Not many would compare The Dorchester Collection, Four Seasons, Six Senses or Raffles with McDonalds but I am going to go there; you know what they stand for and what they deliver. The McDonalds factor is consistency. This consistency is an important lever for a sales director; it is easier to distinguish your product when aligned with a known and trusted brand, especially one whose hallmarks are quality, service, luxury and comfort.
So, back to the law, do any common issues or problems arise when acting on the acquisition of branded residences? The truth is, from the lawyer’s perspective, there is not much difference between a residence that is branded and a residence that is not. In some of the higher end hotel tie-ups the option is sometimes made available for lucky purchasers to enter into sub-letting arrangements with the hotel provider who will use the residence as additional hotel space; taking responsibility for letting the apartment effectively as an additional hotel suite with the rates split between the residence owner and the hotel provider. One needs to be careful here with planning use designations (is it non-residential?), stamp duty land tax (is it non-residential?) and the number of days for which it can be let (90 nights is the maximum without becoming non-residential for planning use designations in London). You also need to make sure that the long residential lease your client is buying is drafted in such a way as to authorise short-term lets (routinely they do not).
It is also important to distinguish between branded residences that are fully connected to a hotel and its facilities, and those that are serviced by the brand. Residences that are serviced by the brand but not integrated essentially benefit from quite posh (and quite expensive) managing agents; it’s not quite the same thing.
On the note of “quite expensive”, there will also be an impact on your service charge; five-star service comes at a cost, but usually you get what you pay for.
Looking longer term, the branded residence that you purchase, again more specifically in respect of hotel brand tie ups than designer brand tie ups, has a lifespan. The hotel provider will have signed a hotel services agreement which will typically be between 20-30 years long. At the end of this agreement, they may not renew, and a different hotel provider may move in, possibly one which the owner does not feel so aligned to in terms of branding and the risk is there that it may not be so desirable a brand as that in which the purchaser purchased the property. Theoretically at least, if the hotel provider vacates, that space is up for grabs and a change of use could be on the cards.
In the round, however, I maintain that buying a branded residence is not so different from buying a non-branded residence: as with all purchases, buy something you like!
