ES News email The latest headlines in your inbox twice a day Monday - Friday plus breaking news updates Enter your email address Continue Please enter an email address Email address is invalid Fill out this field Email address is invalid You already have an account. Please log in Register with your social account or click here to log in I would like to receive lunchtime headlines Monday - Friday plus breaking news alerts, by email Update newsletter preferences

A tiny two bedroom home in South Kensington has become the first ex-council flat in London to be put up for sale for more than £1 million.

The third floor apartment in a Fifties block above Stella McCartney’s boutique in Fulham Road is being marketed for £1.15 million, smashing the previous record asking price of £999,950 for a property on the King’s Road.

The price tag for the “exquisitely refurbished” flat has shocked neighbours - many of whom are still tenants of the local authority - and comes at a time of acute affordable housing shortages in London.

Annette Greenwood, 60, a council tenant who has lived in the brick block with her son Jake, 36, since 1990, said: “Prices round here are crazy, sky-high, and beyond the means of ordinary working people. I used to know the people who lived in flats but not any more. There was a sense of community.”

The interiors of the 700 sq ft flat have been designed by luxury property company Ivar, which describes on its website how “we strive to design spaces that combine our signature elegant and eclectic look.”

The flat was bought by developer and former City lawyer Patrick Dougherty in June 2013 for £660,000 and overlooks Pelham Crescent, one of London’s most prized addresses where houses fetch over £10 million, and is next door to fashionable Bibendum restaurant.

It has since been completely revamped with handmade wooden floors, mood lighting and bespoke features installed by Mr Dougherty’s interior design firm Ivar.

It is being offered for sale through estate agents Maskells at more than four times the average £273,000 price of a UK home.

Maskells describes it as “a highly sought-after location which hosts an array of local amenities as well as upmarket shops, bars and restaurants. Ideally located for Walton Street, Harrods, King’s Road and the tube station at South Kensington, Sloane Square or Knightsbridge.”

Mr Dougherty, 37, also bought the flat next door in June 2014 for £720,000, which is being advertised for £1 million after being done up in a similar luxury style.

Vito Pisano, 45, who lives on the floor below, said: “None of the residents here - old people and young families - could afford that sort of money, or anywhere close.”

Another resident, who did not wish to be named, said: “I can’t believe it is being sold for that much money, because these are not large places.

“I don’t want to live in a building full of empty properties because people from abroad have bought them up.”

Property commentator Matthew Steeples said: “The old adage is ‘always buy the worst house in the best location’. But when that costs £1.15 million, you just know how mad London’s property market now truly is.”

Eileen Short, chairwoman of campaign group Defend Council Housing, said: “This exposes the real madness in the London housing market.”

The most expensive ex-council house - rather than flat - ever sold is thought to be 21 and 23 Park Street, Borough, which together fetched a combined £2.96m at auction in October 2013.