Shifts in the Property Market
Over the last few months we have noticed and reported upon a shifting of feeling in the market. Capital values have risen strongly since 2008. In the central London zone they are now some 50% or so above where we were at the 2007 peak. Sterling has rallied strongly over the last few years taking the edge off overseas buyers’ currency advantage. There are now aggressively stepped stamp duty levels and there will be the introduction of capital gains tax from next year for overseas owners. Several of our overseas owners have been making noises about cashing in their portfolios and looking elsewhere. Not everyone will liquidate, but there is an undercurrent of opinion. We also have the looming spectre of the mansion tax. The Mansion Tax will affect the market around the £2m level. It is currently quite difficult to sell a property at 2.1 to 2.3 million. Buyers may also be reluctant to buy properties in the 1.5 to 1.75 region for fear of moving into the tax web if a future government moves the bar. It will turn them towards looking at smaller units or even draw them towards looking a little further out. Our Far East Client Desk had confirmed that this is already happening. The worry is that once any tax is in place the handle can be cranked or the bar moved as it has done with inheritance tax. It was originally set at a high entry level but now brings a Granny with a semi in zone 5 into the net. All this will raise the level of debate about the inequality of property taxes; it seems likely that council tax may be totally revised to reflect values at the upper end of the market. London is a constantly evolving and dynamic city. The reasons to be here are not just down to economics or the tax system. I feel that as long as the system here is no more punishing than they are in other parts of the world then we will not lose a great deal of the demand. These changes if they are not punitive will be absorbed into the costs of transaction. The conversations I have had with overseas clients who are not pure investment clients confirm this view. Longer term, buyers from overseas look at the big picture and will continue to come to London as long as the tax regime, economic outlook and political stability compare well with the alternatives. The domestic market has less choice, but the majority of this market exists far below the upper stamp duty levels, especially outside the capital. If you’d like to get in touch, regarding the central London property market and its future, please call us on0207 240 3322.
Over the last few months we have noticed and reported upon a shifting of feeling in the market. Capital values have risen strongly since 2008. In the central London zone they are now some 50% or so above where we were at the 2007 peak. Sterling has rallied strongly over the last few years taking the edge off overseas buyers’ currency advantage.
There are now aggressively stepped stamp duty levels and there will be the introduction of capital gains tax from next year for overseas owners. Several of our overseas owners have been making noises about cashing in their portfolios and looking elsewhere. Not everyone will liquidate, but there is an undercurrent of opinion. We also have the looming spectre of the mansion tax.
The Mansion Tax will affect the market around the £2m level. It is currently quite difficult to sell a property at 2.1 to 2.3 million. Buyers may also be reluctant to buy properties in the 1.5 to 1.75 region for fear of moving into the tax web if a future government moves the bar. It will turn them towards looking at smaller units or even draw them towards looking a little further out. Our Far East Client Desk had confirmed that this is already happening.
The worry is that once any tax is in place the handle can be cranked or the bar moved as it has done with inheritance tax.
It was originally set at a high entry level but now brings a Granny with a semi in zone 5 into the net. All this will raise the level of debate about the inequality of property taxes; it seems likely that council tax may be totally revised to reflect values at the upper end of the market.
London is a constantly evolving and dynamic city. The reasons to be here are not just down to economics or the tax system. I feel that as long as the system here is no more punishing than they are in other parts of the world then we will not lose a great deal of the demand. These changes if they are not punitive will be absorbed into the costs of transaction. The conversations I have had with overseas clients who are not pure investment clients confirm this view.
Longer term, buyers from overseas look at the big picture and will continue to come to London as long as the tax regime, economic outlook and political stability compare well with the alternatives. The domestic market has less choice, but the majority of this market exists far below the upper stamp duty levels, especially outside the capital.
If you’d like to get in touch, regarding the central London property market and its future, please call us on0207 240 3322.
