30th November 2017
Compared with Phillip Hammond’s disastrous first budget – when he was forced into a rapid u-turn on National Insurance – the Chancellor of the Exchequer has, this time, avoided any land-mines in a ‘safety first’ Budget that also contained few fireworks.
For the property market in particular, there was some support and, fortunately, little in the way of the tax-raising raids favoured by his predecessor George Osborne. But while he swerved from some of the more negative proposals leaked before November 22, there was also no relief from punitive Stamp Duty rates on more expensive properties.
The headline move was the abolition of Stamp Duty for first time buyers of properties worth up to £300,000, and for the first £300,000 of properties in London priced at £500,000 or less. The Chancellor also announced a package of measures that he said included £44 billion in capital funding to increase the number of new homes built to 300,000 per year.
In other developments, the payment by non-residents of capital gains, which already applies to disposals of residential property, will be extended to commercial property disposals from April 2019.
But the Stamp Duty pledge drew fire, with the Office for Budgetary Responsibility estimating that in would only lead to 3,500 more homes being sold, while experts predict that the savings would likely be swallowed by higher prices as a result of increased demand.
“The move will have limited benefit for home buyers in London, where the average property price is already £481,556 (according to the house price index) and the availability of properties priced at £500,000 or less in Central London is limited,” says Camilla Dell, Black Brick Managing Partner. “In London, affordability is the real issue facing first time buyers, not Stamp Duty. I can see increased competition for properties priced at £500,000 as a result of this change, which may inflate the lower end of the market more and totally counteract the stamp duty saving.”
Dell noted that reports that the Chancellor was set to increase Stamp Duty on buy-to-let investors proved to be unfounded, which she welcomed – although she noted that they still face the previously announced reduction in higher-rate tax relief for mortgage interest, which comes into effect from next April.
More broadly, she added that Stamp Duty needs to be reformed to unblock the London market. “It has stalled in terms of transactional volumes – people are not moving up or down the property ladder anywhere near as often as they once did, causing a dysfunctional market across all price points. More needs to be done to help people to get onto the property ladder and Stamp Duty needs to be reformed across the board in order for this to happen,” she said.
It’s been an interesting year in London’s property market – bringing to mind the Chinese curse. But while the market is certainly challenging, with flat or falling prices in many market segments, limited stock, and high transaction costs dampening activity, it’s also a true buyer’s market.
For committed, well-connected – and well-advised – purchasers, it’s a great time to be buying. That’s particularly the case for overseas buyers who can take advantage of sterling’s weakness. But with limited stock on the market, it’s taken hard work, perseverance, and a well-thumbed contacts book to unearth opportunities.
Over 2017 to the end of November, we helped acquire a total of £90,000,000 of properties for our clients across London. These ranged from £1,222,500 to £37,000,000.
Of these, 27% were sourced entirely off market. This compares with 33% in 2016, illustrating the trend towards discretion rather than risk tainting a property with a price reduction.
This development places a greater premium on market intelligence and connections. We also delivered this year against a more traditional metric: saving money for our clients. Over the year to date, we managed to save our clients an average of £257,258 off asking prices, representing 5.9% of the total transaction value.
We put in the groundwork. We spent considerable time introducing our overseas client to different neighbourhoods, and then found the perfect off-market detached home, for £37m, saving £2m on the asking price.
Meeting our clients’ needs. Highly specific requirements posed a challenge, but we sourced this ideal 3-bed apartment in a boutique scheme for £21.15m – £2.35m below the asking price.
We’re connected. Despite this development selling out, we managed to secure an off-market re-sale of this 2-bed apartment for £1.325m – saving our client £100,000.
We get priority access. We managed to reserve the 2-bed unit offplan, for £1.375m, weeks before the development’s official launch date.
We can spot a deal. We secured this spacious 2-bed apartment, on one of the best garden squares in London, for £1.7m, or just £1,600 per square foot.
We know how to cherry-pick. We sourced this rare third-floor flat, overlooking communal gardens, for £2.985m – £255,000 below the asking price.
No challenge is too big. Despite a small search radius and the need for a garden suitable for pets, we managed to secure the ideal rental property for our client, and negotiated 7% off the asking price.
Knowledge is power. We found the perfect 2-bed apartment, meeting exacting requirements for location and security, and secured a 6% discount on the rent.
We know how to hold a deal together. Despite a 9-month conveyancing process during a turbulent market, we kept the deal on track, and the price at the agreed £6.5m.
Our network is unrivalled. Overcoming a tough sales market in Knightsbridge, we worked our contacts to find a cash buyer for this £2.5m apartment.
We plan to return after Christmas with an in-depth look ahead to 2018, including a review of analysts’ price forecasts, and our predictions for trends in the market for the year ahead. But for the time being, we’d like to wish all our readers a Merry Christmas and a Happy New Year – and, of course, we look forward to helping our clients achieve their property ambitions in the year ahead.
We would be delighted to hear from you to discuss your own property requirements. For a non-obligatory consultation, please contact us.