Top-bracket estate agents attack curb on bonuses

Upmarket estate agents today warned that Alistair Darling's curb on bankers' bonuses could knock the property market's fragile recovery in desirable London postcodes.

Knight Frank and Savills, the two best-known major agents catering for the capital's rich, said the attack on City payouts would hamper potential buyers' ability to obtain big mortgages.

Their warning comes just as prices in Belgravia, Chelsea and Knightsbridge have been bouncing back after a year of price declines started petering out in the spring.

"If you take bonuses out of the equation, prices can't rise as quickly and they will take much longer to return to peak levels," said Liam Bailey, head of residential research at Knight Frank.

Savills research director Lucian Cook agreed, telling Bloomberg: "Going forward, the bonus equation will be pretty important. It might take some of the heat out of the top of the market."

Bankers and financial services workers already count for a smaller proportion of buyers than at the peak of the market.

Britain's biggest five banks agreed earlier this week to limit bonuses and imposed clawbacks, whereby bonuses paid for investments which go sour in subsequent years must be paid back by the employee.

Agents say such curbs on pay will compound the impact on the £1 million-plus property market, which is already being badly affected by the redundancies that have swept through the financial sector.