British purchasers now make up over 40% of Black Brick’s client base, up from 25% last year.
British domestic buyers are making the most of some unprecedented conditions in London’s prime property market, according to Black Brick.
The high-profile buying agency has reported a notable shift in its client base this year, with the proportion of UK domestic purchasers rising to 41%, compared to 25% in the previous year.
This is unsurprising, said the firm, given the recent increases in stamp duty rates for overseas purchasers and changes to the non-dom regime: on a £3mn purchase, a foreign buyer of an additional property now pays £210k more in stamp duty than a UK buyer.
Traditional prime markets are “suffering hugely” as a result of these changes, according to the team, citing LonRes data showing achieved prices in Belgravia and Knightsbridge sank by 8.9% in Q1, with buyers achieving an average 12.8% discount on asking prices.
Overall, Prime London transaction volumes in May were down by 35.8% compared to the same month a year ago.
At the same time, there’s lots of choice: the data shows stock levels are now 22.4% higher in the £5mn-plus range.
These conditions are creating buying opportunities “that have never been seen before”, said the firm, offering up a recent acquisition in Marylebone as an example.
Acting on behalf of a UK domestic client who was looking for a second home in London to add to their primary residence in the country, the agency secured an 18th century freehold townhouse – recently renovated and in a prime spot on Manchester Street – at £250k below the asking price.
It’s a different story in more domestic markets like Chiswick and Tufnell Park, however, where demand for family houses is outstripping supply. The team is on the hunt for a number of family houses up to £3mn, and said the comparison with super-prime is “like night and day” with good houses attracting multiple bids and selling within a few days of coming to the market.
Camilla Dell, Managing Partner at Black Brick: “With stamp duty rates having risen significantly for overseas buyers, combined with the abolishment of the UK Res Non-Dom tax regime it is unsurprising to see that British are back. Overseas buyers of a UK property who are also buying an additional property face stamp duty rates of 19% on the portion of the price above £1.5 million compared to 12% for a British buyer moving home.”
The firm also reports a rise in the number of US buyers, who now make up 23% of its client base, up from 15% last year.
Dell: “Many US buyers are looking to diversify, and some are unhappy with both the political and social situation. In other areas, like California, high property tax and climate change are also causing buyers to look abroad. Having a bolt hole in London makes a lot of sense for US buyers, even if they are not relocating permanently to the UK. Remaining buyers we are advising are from Middle East and continue to show strong interest in London, followed by European buyers. Recent volatility in the Middle East may drive more buyers from these regions to diversify and buy London property which is looking cheaper by the day.”
Another key trend flagged by the firm is a rise in the number of new developments catering to short term stay buyers in areas like Knightsbridge: “Developers such as Finchatton are creating two and three-bedroom luxury new build apartments to cater for a new breed of super prime buyer. Those who do not wish to rent or become tax resident in the UK but still want a luxury pad in the capital,” said the update.
Dell added: “These new boutique developments often have smaller sized apartments priced below £10 million and do not have all the luxury amenities of the traditional super prime new build but that’s the advantage. Buyers who are here for 90 nights or less don’t need or want to spend tens of millions or pay ridiculous levels of high service charges for facilities they will barely use. As long as there is a lift and some kind of porter then it’s enough for this new kind of buyer. We have been to a series of development launches recently which appeal to this trend, one was situated in Knightsbridge, and we recently acquired a property just like this in Mayfair for a client.”
