Property: Small Holdings

"THE IMAGE that a lot of estate agents create is just silly. They employ snooty girls who all rent, but give the impression that they're living in five-bedroom houses, making the buyer feel small," says Tom Trudgian. "I've been looking for a pounds 400,000 house in Fulham, and have been made to feel like the poorest man the cat ever dragged in."

A cat could drag whatever it liked into Trudgian's office and nobody would bat an eyelid. If it were on the market, his premises, in a shabby block opposite Gloucester Road Tube station in central London, would be tactfully described as "in need of some modernisation", but as home to Stern Studios - the only estate agent in the capital that deals exclusively in studios and one- bedroom flats - presenting a glamorous facade is not really a priority.

"We deliberately have no shopfront," says Trudgian, whose office covers the whole of London. "All our dealings are done by e-mail and through Internet sites, saving us a huge amount of money." (Although Stern Studios will send out printed listings if required.)

Unusually, rather than the standard glossy photograph, Trudgian's flat- lists come with floor plans - essential for describing spaces where every square inch is important - and the notes to the properties are refreshingly frank and free of the normal coded waffle. This description of a flat in Hampstead, for example: "On the third floor (no lift), which will definitely keep you fit and is well worth the view once you get there" will save at least one overweight divorcee with a bad hip the journey to see it. "We always list a disadvantage in the details, because there always is one," admits Trudgian. "A flat I've just seen has very steep service charges and a lot of agents would just put 'services: to be assessed', which in English means they are jolly high."

Trudgian first cottoned on to the vacant bottom-of-the-market niche nearly 30 years ago, when studios were considered unmortgageable and so could only be bought for cash - these were the days before lenders fell over themselves to press 100 per cent mortgages on all and sundry. Having sold a garage business, he bought some flats of his own to rent out. An accountant by training, he'd done his sums: "You get a better return on a studio flat than a one-bedroom flat, and a better return on a one-bedroom flat than a two-," he says. "Any small flat in Kensington, for example, will be worth pounds 200 a week, but something that is five or 10 times more expensive to buy probably won't rent at pounds 2,000 a week."

Despite this good economic sense, he found that estate agents generally weren't interested in selling studios, so he set up Stern Studios, which he runs with his wife Sonya. Today, despite some doom and gloom further up the market, Trudgian says that business remains good. Dealing, as he does, with the bottom end of the market will always pay - in bad times people lower their expectations and trade down.

"Many local agents can't be bothered to take on cheap properties, which is crazy because the commission from the sale of a pounds 100,000 flat, pounds 2,000 to pounds 3,000, is jolly nice. Our staff don't work on percentage commission on what they sell, I think we're the only agent in London that doesn't, so whether a property costs pounds 200,000 or pounds 50,000, they still have the same incentive to sell it. That's crucial. The name of our game is high turnover," he says. "If we don't sell our flats quickly, then they are taken off the market and rented out. If a flat hasn't gone within two or three weeks, frankly it isn't going to sell. "

Trudgian is as free from estate agent smooth-talk as his flat details, and is in no doubt that honesty is the best policy. There's something rather sad about studio flats, so there seems no point in beating about the bush. As Trudgian says himself: "One has to remember that nobody wants to be in a studio; nobody wants to live and sleep in the same room."

Surprisingly, the typical buyer, far from being a bright young thing straight out of university, is more likely to be a middle-aged cash buyer. "Everyone gets the market wrong," he says. "A first-time buyer could get a three-bedroom flat in Croydon and is as likely to be 32, as 22 (the typical age 10 years ago). They may well have one or more children and be looking for a house rather than a flat." Stern Studio customers are more likely to be parents buying studios in safe, central areas for their children studying at London colleges, which they can later rent out. The soaring divorce rate has also brought business from (usually) men turfed out of the family home who need somewhere to rest their weary heads. Areas of London in which there are whole blocks of purpose-built flats, such as Bayswater and St John's Wood, must be stuffed full of lonely divorcees, eating alone in restaurants before shuffling back to their tiny bolt-holes.

Trudgian himself took the opposite route: having lived in a "rather unpleasant" basement flat a stone's throw from Harrods ("If you don't get back until 8pm, who cares if it's a basement flat or not," he says fondly of his bachelor pad), he married, had children and moved to the middle-class ghetto of Fulham. "I think Fulham is the pits compared to Knightsbridge, but probably anyone who lives in Wandsworth thinks Wandsworth is the pits compared to Fulham! You have to sort out your priorities: do you want to live in a box in a safe area, or have extra space in a pretty rough area. That's what it's all about. If you are buying a studio flat, you're saying, 'I'm not going to get married in the next three to five years.'"

Contact Stern Studios on 0171 244 7301, or find their website at www.sternstudios.co.uk

A CUPBOARD OF MY OWN

Try swinging the proverbial cat in what James McDonald describes as "the start of my London property empire", and you're in serious trouble. A former broom cupboard and maid's rest room in a downbeat 1930's block bang opposite Harrods in Knightsbridge, the main room measures just 11ft by 9ft, with a bathroom area partitioned off. "Stern's blurb did say this place wasn't ideal for oversized people," says the compact McDonald as he offers me the (folding) chair. "About two minutes after I'd put my head through the door I decided I would buy it." And two minutes would have given him ample time to clock every last detail in the place.

McDonald started looking for somewhere to live before he came down from Exeter in the summer. A computer science student, he had access to the Internet and found Stern Studios and his apartment while doing an on-line search. "I wanted to move to London and there was very little choice," he says. "I was financially limited as I knew I wouldn't get a mortgage, being a recent graduate. I viewed a ghastly, dingy, ground- floor place in Bayswater, which cost about the same, though it was slightly larger. But I thought I'd rather be in a decent area, and anyway, this is about the size of my student digs, so I'm used to it." The flat cost pounds 53,000 and he financed it through a combination of saved holiday earnings, building society windfalls and student loans. Service charges are about pounds 500 a year, and hot water is included. There is no heater, but he says cheerfully that when he's cold, he just opens the door to benefit from the warm corridor.

Luckily, McDonald is a bit of a handyman and has made himself a platform bed, under which sit his desk, television and computer. "It's going to be very minimalist," he says. "I'm not really into dusting, so there'll be no clutter. Just a wooden floor and a sofa-bed." After a "good" lunch in the West End, he fell out of bed a few times, but built a side-panel the next day to prevent further accidents. As cooking is a skill that has passed him by, he will carry on his student habit of living on tins and packets, and there is always Harrods' Food Hall, should he ever get round to entertaining.

"I'll probably only live here for a couple of years," says McDonald. "I was a bit worried about selling it on, but now I can't ever imagine doing that. I'll just keep it as a little nest in the centre of Knightsbridge. It's a 99-year lease, so I'll be dust by the time it runs out."