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Middle market set to benefit from new property tax rates for Scotland
Changes to the rate of property tax payable in Scotland from April have been confirmed with the middle sector of the market benefitting. From 01 April under the Land and Buildings Transaction Tax (LBTT) the zero threshold has been raised to £145,000 and other band adjusted. Some 2% will be paid between £145,000 and £250,000, a new band of 5% will apply to properties between £250,001 and £325,000. There is then a jump to 10% for those buying homes between £325,001 and £750,000 and high value properties over £750,001 will be taxed at 12% under the review by Finance Secretary John Swinney. It is disappointing news for buyers and sellers of Scottish homes, according to estate agency Strutt & Parker. It said that while the changes may well boost the market for first time buyers and the lower end of the sector, they are far from offering the hoped for stimulus to the middle of the property market. ‘While LBTT will help first time buyers, the average price of a house in Scotland is £170,000. It has been widely derided as an unfair attack on families and a punitive tax on aspiration, particularly in the affluent centres of Glasgow, Edinburgh and Aberdeen and the changes announced are no better,’ said Andrew Rettie, head of estate agency for Strutt & Parker in Scotland. ‘Strutt & Parker backed the Scottish Conservatives' proposals for the introduction of a mid-tier rate of 5% between £250,001 and £500,000 and we were hopeful that Swinney would introduce something along those lines but while this review offers a concession to the lower end of the market it is a blow to everyone else and a missed opportunity to provide a fillip to the property,’ he pointed out. ‘If families can't upsize because of the increase in tax, they will not sell, leading to a stalemate in the middle of the market, which is really the engine room of a thriving housing sector,’ he explained. The firm is currently very busy at present with buyers and sellers aiming to complete deals before the April deadline. ‘However, once LBTT comes into effect we anticipate buyers will be more cautious in their offers to take account of the heavier tax burden,’ added Rettie. CKD Galbraith, an independent property consultancy, said the changes may have significant implications for the Scottish housing market. ‘There are winners and losers amongst property buyers and sellers,’ said partner John Bound. ‘While there is good news for first time buyers and those at the lower end of the property market, transactions carried out at the mid to higher end will still trigger a significant tax bill. While there are savings for some on what was originally proposed by the Scottish Government there will be increases on what people have been paying to date,’ he explained. ‘This will affect a large section of houses in the Scottish market and overall we estimate that there… Continue reading
Demand for property in prime central London from overseas remains high
Demand for prime central London real estate remains high and Chinese interest continues to grow, according to a new analysis of the sector, despite stamp duty reform and the looming election. According to the report from independent property buying agency, Black Brick, a rise in the US dollar against the pound has boosted international demand, while record low mortgage rates are encouraging domestic demand. Black Brick has signed new clients from Hong Kong, Saudi Arabia, Russia, Cyprus and the UK so far in 2015, with budgets varying from below £1 million to above £10 million. ‘At first glance, the global backdrop hardly seems positive for the prime central London market. Renewed concerns about the Eurozone, heightened geopolitical risks, and plunging oil prices, add in the changes to stamp duty land tax and it is not hard to see why vendors are now having to be more realistic,’ said Camilla Dell, managing partner of Black Brick. ‘It is no co-incidence that the falls reported at the top end of the capital’s property market equate roughly to the additional 5% in stamp duty that buyers must now pay. Importantly, while price adjustments have been the order of the day for deals already in progress, there has been scant evidence of deals falling through due to the stamp duty changes. Though very early days, we believe this bodes well for the market’s ability to absorb the higher tax rates and adjust accordingly,’ she explained. The firm said it has seen continued interest in prime central London property from its client base across the world as stamp duty reform and the impending election have not deterred them. Shorter term supports include the sterling’s recent weakness, particularly against the US dollar. The 14% decline in the value of the pound against the US dollar since the summer is a significant boost to many overseas buyers with dollar assets. Meanwhile, the changes to stamp duty are providing a welcome fillip to potential property buyers at lower price bands. ‘Chinese interest in London property continues to grow apace. According to figures recently released by the government, the number of so-called investor visas granted to Chinese nationals doubled in the year to the end of September. Chinese nationals accounted for 43% of all investor visas, the highest proportion of any country. It’s no surprise that we have seen continued growth in interest from this market,’ explained Dell. To cope with the firm recently hired Grace Ding, a fluent Mandarin speaker who will focus on assisting Black Brick’s fast growing Chinese client base and on developing its business network across Asia. As far as other trends for 2015 go, the firm believes that home owners with existing large basement extensions will now be able to command a significant premium over neighbouring properties given the restrictions announced on future development by the London Borough of Kensington and Chelsea. ‘The… Continue reading
Demand for smaller units remains robust in Hong Kong property market
The new build residential real estate market in Hong Kong remained robust in December with small to medium sized units continuing to be sought after, the latest property market report shows. Overall during 2014 some 63,807 residential sales were recorded according to the Land Registry, an increase of 25.9% from 2013 and the first rebound since 2011 after cooling measures were implemented. The report from international real estate firm Knight Frank also shows that luxury residential sales over HK$10 million or above rebounded by almost 50% year on year, to reach a total of 7,778 sales in 2014. The firm points out that this robust trend has extended into 2015 when developers remained active in launching new projects, particularly small to medium sized units. The report also says that in order to tackle Hong Kong’s housing shortage, the government has proposed to increase private home supply to 19,000 units per year in the coming decade. ‘Despite this increase, we still expect to see mild growth of up to 5% in mass residential prices this year,’ the monthly report says. ‘Meanwhile, the potential interest rate rise in the United States and the continuing implementation of government cooling measures are expected to suppress the price growth of luxury flats,’ it explains. ‘More landlords will put their apartments up for lease instead of selling, resulting in an increase in rental supply which will drag down luxury residential rents,’ it adds. The report also records that the office leasing market was quiet in December, traditionally the slowest time for the market. Grade A office rents remained stable while year on year they are up 2% in major business districts in Hong Kong, up 5% on Hong Kong Island but down 6% in Kowloon. Sales were down 37% in 2014 compared with 2013, according to official figures but sentiment increased towards the end of the year driven by demand for large office space from end users motivated by cost savings. ‘In 2015 we expect we expect to see this trend continue with increased demand, not only from large banks and insurance companies looking to own their own offices in Hong Kong, but also from small to medium sized firms seeking to buy their own work space to reduce occupation costs,’ the report explains. ‘Looking forward we expect Grade A office rents in CBD areas to remain firm or experience a modest increase of up to 5% in 2015 given the limited supply and sustained demand,’ it continues. ‘Meanwhile, rents in non core districts should remain stable in 2015 with supply abundant, especially in Kowloon East where about three million square feet of new Grade A office space is scheduled for completion this year,’ it adds. Continue reading
