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Central London prime property market set to be subdued into the autumn
Subdued activity levels in the prime central London property market are likely to continue until the autumn as buyers and sellers digest recent tax changes, a new analysis suggests. Annual growth was flat at 2%, down from 7.9% in July 2014, according to the latest prime central London sales index from real estate firm Knight Frank. Furthermore, while total sales volumes in England and Wales fell 11%, the number of £2 million plus deals in London was down by 25% in the first quarter of 2015. A breakdown of the figures for price growth in the year to July 2015 shows the biggest rise was seen in the City and Fringe with growth of 6.6%, followed by Islington at 5.8%, Mayfair at 3.6%, Southbank at 3.4% and Marylebone at 3.2%. South Kensington saw prices rise by 1.9%, St Johns Wood saw growth of 1.5%, Hyde Park 1.2% and Belgravia 1%. Price growth fell by 3.8% in Notting Hill, was down by 1.2% in both Knightsbridge and Chelsea and down 1.8% in Kensington. ‘In the period between the general election and the summer holiday, buyers in London have taken stock of new market conditions and appear less inclined to rush into making decisions,’ said Tom Bill, head of London residential research at Knight Frank. ‘A succession of tax changes has contributed towards low single digit annual growth, meaning buyers and sellers are more prepared to sit on the side lines until later this year, unafraid of missing out on the imminent return of stronger growth,’ he explained. ‘More discretionary buyers are waiting to see how readily recent policy changes will be absorbed. While there seems to be some short-term hesitation around recent alterations to non-dom legislation, it is December’s rise in stamp duty which appears to have had the single biggest dampening effect on demand as buyers digest the reforms,’ he pointed out. ‘Despite the strong underlying economy, the number of tax changes, which have a particularly strong impact on London, means the market is undergoing a period of readjustment,’ he added. The report explains that last December’s rise in stamp duty for properties worth more than £1.1 million appears to have contributed to more subdued activity. Indeed, London accounted for 13% of transactions across England and Wales in the first quarter of this year, but contributed 46.9% of stamp duty revenue, up from 43.4% in the same period in 2014 under the old stamp duty system. Meanwhile, properties worth in excess of £1 million in London accounted for 1% of deals in England and Wales but the revenue contribution increased to 25.8% from 19.8% last year. Overall stamp duty in England and Wales is down in the first quarter, as the government predicted, though it expects house price inflation to help make up any short fall in coming years. Continue reading
Property title fraud costing millions in England and Wales
Property title fraud is costing the Land Registry in England and Wales millions a year despite diligent efforts to combat fraud in real estate transactions, new research shows. Almost £10 million worth of compensation claims, at an average value of £168,900 per claim, were received by the Land Registry last year alone because of fraud or forgery, according to new data Obtained through a series of Freedom of Information. The data, requested on behalf of title insurance and property risk solutions provider Titlesolv, also shows that an overall total of £23.3 million worth of claims were received in 2014 and since the start of 2012, the Land Registry Indemnity Fund has received more than £59 million in claims and paid out more than £31 million against them. According to the data, the Land Registry has settled or paid an increasing number of the claims it receives, rising from some 78% of the claims lodged in 2012 to more than 86% in 2014. However, the actual proportion of the value of claims granted has dropped considerably over the same time period, from an average of about 80% in 2012 to just under 36% in 2014. In England and Wales, it is the responsibility of the Land Registry to check the veracity of an owners’ claim to a property when a title is registered, with mortgage lenders then using its records as one of the criteria for approving mortgage applications to check a criminal has not stolen an owner’s identity and is attempting to raise an unenforceable mortgage against a property. In recent years, the Land Registry has made progress in bolstering its governance, processes and records to defend against claims, however the number of claims remains stubbornly stagnant, the costs of which have to be shouldered by its Indemnity Fund. ‘Despite best efforts, significant amounts of money continue to be lost each and every year due to fraud and forgery of property title deeds, with the Land Registry bearing the brunt of these costs. This is not likely to change anytime soon as many of the issues created pre-recession still lie dormant,’ said Chris Taylor, chief executive of Titlesolv. ‘If interest rates go up, and more mortgages fall into arrears, the registry is likely to face another wave of claims as defaults tend to reveal or highlight allegations of fraud. If those mortgages become unenforceable, the registry and the public purse, are vulnerable to claims of negligence,’ he explained. He also pointed out that fraud is not something that can be easily detected, so ultimately the responsibility falls on all parties, the Land Registry, solicitors and mortgage lenders alike , to be as vigilant as possible and to collaborate even more to detect the signs earlier. ‘Ultimately, however, the principle of a State Guarantee on property titles places liability for title fraud squarely with the Land Registry, so it is clearly in its own… Continue reading
New residential rent controls take effect in Paris
The rental market in Paris is now subject to new rent control regulations covering all new residential leases and those that are up for renewal. The law seeks to cap rent increases from one lease to the next in the country’s largest cities as part of sweeping housing reforms promised by French President Francois Hollande during his election campaign. The policy is likely to be popular among tenants in the city who have seen home rents rise by 42% in the last 10 years, although it has been criticised by estate agents and landlords. Paris is the first city to see the law being enforced and it is likely to be rolled out in Lyon, Bordeaux, Marseille, Lille, Grenoble and other big cities in the coming months. The law allows the prefecture of each city to establish a maximum rents measured in euros per square meter based on when the property was built and where it is located. The levels must be no more than 20% above or 30% below the median rental price for the area. There is likely to be winners and losers. It is estimated that rents on around 60,000 properties are likely to come down and those of 25,000 to go up. The biggest decreases are likely to be for studios and one bedroom apartments, according to agents. The National Federation of Estate Professionals (FNAIM) said the law will hold back the rental housing market and put off buy to let investors. It is considering legal action and already agents in Lille have blocked the law being implemented by withholding housing and rent data. Continue reading
