Tag Archives: london
Prime London property prices up 1.6% in second quarter of 2015
Values across London’s prime housing market grew by an average of 1.6% in the three months to the end of June, but remain 0.7% below where they were a year ago. Increased stamp duty rates and unsold stock levels restricted a bounce in property values after May’s general election, according to the latest analysis from real estate firm Savills. The report also says that buyer caution has been most evident at the top end of the market, with prices in the prime central London market barely showing any net house price growth over the quarter with a rise of just 0.3%. This means that house prices in this market are down by an average of 4.3% year on year. According to Lucian Cook, head of UK residential research at Savills, there was a feeling prior to the autumn statement last year that the prime markets of London were looking fully priced following a sustained period of growth. ‘The stamp duty increases introduced in December 2014 mean they now also looked fully taxed, despite mansion tax fears being confined to history,’ he explained, adding that this effect has not been confined to prime central London. Indeed, across the remainder of the prime London market homes worth over £2 million saw values fall by an average of 0.9% over the past year, despite rising by an average of 2.4% in the quarter. Across London, the market below £1 million, where buyers benefitted modestly from the stamp duty reform, recorded annual price growth, albeit of just 2.4%, as the mortgage market review continues to restrict the amount people can borrow, whether because of the stress testing of affordability or the income upon which this is judged. ‘In the early part of the year we could put buyer reluctance to commit down to political uncertainty pre-election. Only now is the dual effect of taxation at the top end of the prime market and mortgage regulation at entry level becoming clear,’ said Cook. ‘These constraints are keenly felt by buyers, while some sellers are clinging to expectations that values can keep on rising. That has created a gap in price expectations in parts of the market which is likely to hold back any recovery in transaction levels,’ he pointed out. ‘With those transactions having been suppressed prior to the election, it seems inevitable that high value sales will have peaked, at least in the short term, in 2014. That means current constraints on the market could have a negative on impact on stamp duty receipts from most expensive housing upon which the Treasury has become increasing reliant,’ he concluded. Continue reading
Tax change could result in higher residential rents in the UK
Landlords in the UK’s private rented sector could be forced to put up rents if their buy to let mortgage interest payments are made non tax deductible, it is claimed. The National Landlords Association (NLA) is warning that costs in the UK private rented sector (PRS) could rise by up to £2.6 billion if tax changes are made, as has been hinted. In a letter to the Chancellor ahead of Wednesday’s Budget, the NLA’s chief executive officer Richard Lambert says that making mortgage interest payments non tax deductible would be the last thing the UK economy needs and would only put greater pressure on the cost of housing. The letter also outlines the contributions that landlords make to the UK economy by means of their support for the housing industry and through direct contributions in the form of tax. ‘It has been suggested that private landlords receive too many perks or reliefs which give them an unfair advantage compared to owner occupiers, but this ignores the fact that letting residential property for profit is a business,’ said Lambert. ‘No business pays tax on their gross turnover alone so why should landlords be treated any differently. Removing their ability to deduct legitimate costs before declaring their taxable profit would essentially force them to suck up one of the most significant expenses they face in being able to provide homes for others,’ he added. Using figures from the Council of Mortgage Lenders reported at the end of 2014, the NLA estimates that costs in the PRS could rise by as much as £2.6 billion if mortgage interest payments were to be reclassified as non-deductible, a move it warns would leave landlords with no other option than to raise rents. Lambert concluded the letter by seeking ‘an unequivocal reassurance that the Government will continue to regard buy to let mortgage interest payments as a legitimate business cost, and give landlords the confidence and certainty to invest for the future’. Continue reading
Fringe of prime emerging property markets in London expected to lead growth
Prime property prices in emerging locations in London showed a small rise of 1.3% in the second quarter of 2015 and are down slightly by 0.84% compared to the same period in 2014, new data shows. Demand in South West London continued to be driven by sales, mainly flats, below the £937,500 threshold, following changes to stamp duty at the end of 2014, according to the latest quarterly report from real estate firm Douglas and Gordon. In contrast, larger houses priced above £1.3 million in emerging prime were muted, compounded by the stamp duty issues and mortgage market concerns. In some areas, such as Battersea and Battersea Park, some prices were down 10% year on year. Clapham and Southfields led price increases in the sector, up 3.5% and 3.9% respectively. A weaker second half in 2014 means that for these areas prices have caught up to where they were 12 months ago. Rental growth was also strong, up 1.7% in the quarter, continuing the areas robust performance during a difficult year in the sales market. However, this growth is expected to slow once the sales market picks up. Overall total returns, capital and rental growth, remain attractive for professional investors in emerging prime and capital values are expected to climb 10% in the next 12 months. ‘Whereas there is some evidence of a post-election bounce, unsurprisingly many are taking their time to make decisions and a continuation of the anticipated bounce needs to be tempered with a dose of realism,’ said Ed Mead, the firm’s executive director. He expects the market for more expensive family homes to remain firm in the next 12 months due to the prospect of a mansion tax that affecting the market before the election now no longer there. But he pointed out that volumes are still very thin and the firm’s emerging prime index is only back to where it was 12 months ago. His prediction is for fringe areas to perform best as buyers search for new up and coming areas to buy in. Continue reading
