Inheritance tax (IHT) changes could penalise older homeowners and create a form of “social engineering” for downsizers, a buying agent has warned.
Chancellor Rachel Reeves is expected to raise taxes in her Autumn Budget this month, with expectations of IHT reforms.
She could increase the IHT rate or reduce the tax-free threshold when valuing an estate.
West Country agent Rupert Stephenson, of Black Brick’s Country & Coast Department, warns that older homeowners have been particularly spooked by the prospect of paying more
He suggested this could be reflected in an increase in larger homes being listed on Rightmove.
Stephenson said: “I definitely saw this trend emerging in the last year of people who probably should have moved in their late 70s and early 80s but had put it off because of the pandemic starting to downsize.
“They wanted to quickly pass on their wealth to their children.”
He suggests Stamp Duty would be a better way of supporting and encouraging downsizers, adding: “It would be good for the economy as a whole – house builders, white goods, you name it. Downsizers need to be encouraged, but punishing them with IHT is social engineering.
“People want stability, not loads of changes all the time.”
Prime buying agency Black Brick has seen cash buyers double this year.
Data from the buying agent shows 66% of clients have bought with cash this year, compared with 34% in 2022.
Most clients are from the UK, US and West Africa.
Its best off-market deal was for York House, Kensington, for £9.5m, while its top managed sale was worth £3.45m in Queensberry Mews West, South Kensington.
Camilla Dell, managing partner and founder of Black Brick said: “It has been an interesting year for the prime central London (PCL) property market. The increase in the volume of clients we are looking after this year compared to last year demonstrates the value that buyers are placing on having a professional to represent their interests in a challenging market.
“We have seen a dramatic increase in cash buyers, with the number of cash buyers doubling year on year. This demonstrates that for many high-net-worth buyers, the use of finance is discretionary. The pivot to cash was inspired by interest rates, which jumped from 0% in 2021 to 5.25 per cent today. When interest rates were low even some very wealthy high net worth buyers used mortgage finance, mainly because it was a simple way of protecting themselves from inheritance tax which is only charged on the equity you own in a property.
“Now clients, particularly younger people, are rethinking that strategy. Older clients who are more concerned about legacy planning are also reverting to cash deals and using jumbo life insurance policies to help protect their heirs from massive future tax bills.
“The rise in investment buyers is also an interesting trend. For cash buyers, the buy to let market is still compelling as a long-term hold and with rents having risen significantly and forecast to rise a further 18% over the next five years, this sector continues to attract investment, particularly from corporate buyers.”
Dell has also noticed a lack of appetite from clients wanting to do any work to a property with most preferring to buy a property that is turn-key or in excellent condition due to the high costs of renovation.
She added: “Looking to ahead next year, the market is likely to stay subdued because of continued higher interest rates and the looming general election, however PCL remains a desirable, safe place to buy, particularly for those seeking long term capital growth.
“As a global city it is not surprising that Black Brick’s client list represents buyers from every continent on earth.”
If there’s one thing that received a boost as a result of Covid and lockdowns, it’s podcasts – which reached whole new audiences as people sought to while away the extra hours at their disposal.
They were nothing new – first receiving real prominence with the podcasts featuring Ricky Gervais, Stephen Merchant and Karl Pilkington – but received a major boost as anyone who’s anyone, from Louis Theroux to Peter Crouch, got involved with the podcast boom.
There are a huge range of podcasts out there covering pretty much every topic, from cooking, crime, sport and music to politics, science and history. Popular platforms for podcasts include BBC Sounds, Spotify, Audible, Google and Apple.
Some of the most popular podcasts include Off Menu with comedians Ed Gamble and James Acaster, My Dad Wrote a Porno, Diary of a CEO with Steven Bartlett, The Adam Buxton Podcast, That Peter Crouch Podcast, Newscast, Rob Beckett and Josh Widdicombe’s Parenting Hell and No Such Thing as a Fish.
Well-known TV shows frequently have podcast spin-offs nowadays, while sites like the Guardian and the Telegraph have popular weekly pods discussing football, business and politics.
Most podcasts are either half an hour or an hour in length, although this varies, and typically have a clear structure, format and tone that is utilised in each episode. People often listen to them while they’re commuting, out on a walk or run, while driving in the car or during their lunch hour.
Many have built loyal and large followings who eagerly wait to tune in each week, and are often encouraged to get involved in the podcast itself via various means. Some have even turned successful podcasts into live shows to physical audiences.
And now, it seems, property is keen to get in on the podcast act. Just in the last few weeks, OnTheMarket, buying agency Black Brick, The Guild and Just Move In (featuring former Propertymark CEO Mark Hayward) have launched podcasts.
There are also longer-running property podcasts such as The World Class Agency podcast with Homesearch’s Sam Hunter and love2move’s Mark Worrall, and the two Robs (Rob Dix and Rob Bence) who focus on everything to do with property investment in their podcasts over at Property Hub. Plus, of course, property royalty and EAT columnist, Phil Spencer, has a regular property podcast through his Move iQ platform.
Whisper it for now, but the Today sites hopefully has a podcast offering in the offing, too – watch this space! This comes as news sites increasingly tap into the power and reach of the humble pod.
Why are they becoming more popular?
Podcasts have become a trend that is hard to ignore – and have fully established themselves alongside radio, TV and audio books in the nation’s psyche. Their popularity, as mentioned before, was given a massive boost by the pandemic.
With more spare time on their hands, and more hours spent walking, cycling and running, people turned to podcasts to accompany them on these pursuits, to distract their minds, to allow them to escape to somewhere else.
The very best podcasts captivate you for 30 or 60 minutes and leave you constantly wanting more. They can be used to entertain, inform and educate, making them perfect platforms for major property discussions.
But they also thrive on personal or funny stories, or getting to know someone or something you previously had little knowledge of.
They can be longer-form, more spontaneous and more conversational than video interviews or traditional Q&As. They can help to go in-depth on a particular topic or offer pithy bite-sized summaries of a major topical discussion point.
From a property person’s point of view, they allow more exposure – on social media and elsewhere – the chance to build brand awareness, the chance to be seen as an authority on a given subject, and also the chance to entertain, inform and educate listeners, offering a human side to the property market that is too often overlooked.
Will they be a short-term fad or something more long-term?
This will largely depend on the success of the new podcasts that have recently hit the market. For all the joy, escapism, information and educational content they can provide listeners with, they do also take a lot of time, effort and organising.
If this isn’t reflected in strong listener numbers, enthusiasm for making them could start to wane. There are a few property podcasts that have already established themselves, including the aforementioned World Class Agency Podcast with Sam Hunter and Mark Worrall, and the team at Property Hub, but property podcasts do remain niche for now.
That is starting to change with more and more now offering podcasts, ranging from agencies and trade bodies to portals.
It will be interesting to see how these go down with audiences as the property market continues to become more multi-media than ever.
Here at the Today sites, we’re always looking for ways to make the content we provide as engaging and interactive as possible, and podcasts could be the next stage of that evolution.
It’s certainly something to keep an eye on over the next months to see if the post-pandemic podcast boom continues.
Award-winning editor
For the Today sites, we’ve always been keen to have the very best in the business penning our daily breaking news stories. For years, multi-awarding winning journalist Graham Norwood has been doing fantastic work across a number of our publications. When he stepped down from Estate Agent Today earlier this year, we hired Marc Shoffman to take over.
We knew we were getting a respected and award-winning journalist when we signed him up, but it’s excellent to have that reaffirmed by fresh awards success.
“With so many freelancers plying their trade in the financial space this is always a competitive category to win. As it turned out, one name had already emerged from the shortlist after the first round of judging. When the panellists convened to make their final decision, it was a relatively straightforward task to go on and name Marc Shoffman as the winner for the second year in a row.
“Marc is a top-notch freelancer with an eye for an exclusive and the journalist nous to dig into tough topics, get results and convey that well in his writing,” one judge commented. “A clear stand-out with excellent investigations into issues that are likely to impact many readers, with evidence of enacting real change,” said another.
An outstanding achievement and we’re very glad to have Marc and the consistently excellent, and equally award-winning, Mr Norwood on board. Keep up the great work, chaps!
One of the most respected buying agents in London says buy to let in the capital is losing its appeal for many investors.
Camilla Dell, founder and managing partner of Black Brick Property Solutions, says in a review of 2021 that while she is seeing an upturn in demand for apartments, buyers are far more discerning than before the pandemic.
“Outside space and proximity to a good local high street are top of buyers wish lists. We are seeing a very tough market for sellers of ex-rental stock located in older new builds, some with cladding issues and which are poorly located and without outside space. There is no market for them, no matter how cheap they become.”
Dell continues: “Unfortunately, not all apartments will make the London-wide comeback a lot of sellers are hoping for. Buy To Let has lost its attraction for many private landlords, meaning ex-rentals are flooding the market with an added surge in apartment listings; supply is at an all-time high, while demand is selective and lacking.
“So unfortunately, unless apartment listings are located near green space, and a great high street they are likely to be difficult to shift.”
Looking ahead to the rest of 2022 Dell believes prime central London will see an influx of interest gravitating back towards the city, as the race for space loses momentum.
And she says there is one area of London at the forefront of interest – Bayswater.
“It is a unique part of London offering inner-city living, with competitive pricing and proximity to green space, reassuring buyers that they can enjoy the outdoors, when some apartments do not have their own outside space.”
And she concludes: “Bayswater is the one to watch. Having previously been considered a less desirable area, compared to its more swanky neighbours, it is becoming increasingly desirable. Buyers are comfortable returning to apartment living, as Hyde Park and Kensington Palace Gardens offer the reassurance of nearby public outside space for those buying a property without a private garden, patio or balcony. Although restrictions have eased, it is likely the pandemic will have a lasting effect on buyers, leading them to permanently consider outside space in their criteria when purchasing in London.”
A leading buying agency says that while prime central London’s property market shows clear signs of recovery, a weak area remains apartments without outside space.
Camilla Dell, founder and managing partner of Black Brick Property Solutions, says: “Not all apartments are equal. We are seeing an upturn in demand for apartments, but buyers are far more discerning than before the pandemic. Outside space and proximity to a good local high street are top of buyers wish lists. We are seeing a very tough market for sellers of ex-rental stock located in older new builds, some with cladding issues and which are poorly located and without outside space. There is no market for them, no matter how cheap they become.”
Dell continues “Unfortunately, not all apartments will make the London-wide comeback a lot of sellers are hoping for. Buy to let has lost its attraction for many private Landlords, meaning ex-rentals are flooding the market with an added surge in apartment listings; supply is at an all-time high, while demand is selective and lacking.
“So unfortunately, unless apartment listings are located near green space, and a great high street they are likely to be difficult to shift.”
In other sectors of the prime London niche, the outlook is much brighter.
Dell says proximity to public space remains high on the ‘must have’ list for buyers.
She says: “With the majority of buyers on the lookout for properties with the same criteria, is it becoming the norm to engage in bidding wars, leading to paying over the asking price.
“To combat this issue, an increasing number of properties are being sold off-market. Our role as a buying agent has therefore become key, ensuring prospective buyers can navigate the complicated property market. 2021 saw a record percentage of ‘off-market’ sales for our clients.”
The agency says that notwithstanding the frenzied buying climate in 2021, Black Brick secured an average 3.6 per cent off asking price, a figure which it says it hopes to exceed in 2022.
Dell believes prime central London will see an influx of interest, with buyers gravitating back towards the city, as the race for space loses momentum.
And she says there is one area of London at the forefront of buyers’ minds – Bayswater.
“It is a unique part of London offering inner-city living, with competitive pricing and proximity to green space, reassuring buyers that they can enjoy the outdoors, when some apartments do not have their own outside space.”
And she concludes: “Bayswater is the one to watch. Having previously been considered a less desirable area, compared to its more swanky neighbours, it is becoming increasingly desirable. Buyers are comfortable returning to apartment living, as Hyde Park and Kensington Palace Gardens offer the reassurance of nearby public outside space for those buying a property without a private garden, patio or balcony. Although restrictions have eased, it is likely the pandemic will have a lasting effect on buyers, leading them to permanently consider outside space in their criteria when purchasing in London.”
The sense of gathering momentum for the Leave campaign ahead of the upcoming EU referendum is causing high levels of uncertainty in the UK housing market, as many ‘nervous’ buyers and sellers adopt a wait and see policy, causing activity in the market to slow and property price growth to cool.
Both buyers and sellers are clearly anxious, as reflected by a noteworthy drop in sales market activity, while landlords, much like the rest of the British public, are evenly divided on how they will vote in the EU referendum, according to research from the National Landlords Association (NLA).
Jo Eccles, managing director at Sourcing Property, reports that the prospect of a Brexit has caused divided reaction amongst buyers, with UK-based buyers falling into two camps.
“Our family clients are buying as normal, whether it’s that they have to move to upsize, or be closer to certain schools. We call these ‘necessity purchases’ and the upcoming referendum has had very little impact on this part of the market,” she said.
“With our other UK buyers, who don’t necessarily need to buy now, they’re also holding off to see what the outcome is,” Eccles (left) added.
According to estate agency Haart, new buyer demand fell by 5% in May, while the volume of agreed transactions dropped by 3.9% as prices rose by just 0.8% month-on-month, down from the 1% rise reported in April.
Haart’s findings are supported by the latest study by the National Association of Estate Agents (NAEA) which shows that demand for residential property across the UK has fallen to one of the lowest levels on record as prospective buyers and sellers postpone investment ahead of the EU referendum.
The latest examining of housing market activity revealed a sharp slowdown in demand for homes across the UK, owed largely to the looming referendum as well as the recent buy-to-let stamp duty changes.
“Should we vote to leave, then this will create ongoing uncertainty as the UK seeks to agree a way forwards with the EU,” said Camilla Dell (right), managing partner at Black Brick.
Even in the new homes market, activity has slowed, with the Berkeley Group the latest housebuilder to report that home reservations have plummeted – down by 20% in the first five months of this year amid Brexit vote uncertainty.
“The upcoming EU referendum means we’ve entered a period of uncertainty, as buyers put off their hunt in anticipation of the result,” said Mark Hayward, managing director, NAEA.
Almost a quarter (24%) of estate agents expect house prices to decrease and a further one in four (23%) expect demand to decrease if Britain votes to leave the EU in June. This view is shared by many homeowners.
Long road to recovery
The majority of Britons who fear that the price of their property will fall if Britain leaves the EU believe that the road to recovery will not always be easy.
A YouGov survey of 1,735 UK adults revealed that 61% of Britons who think that their house price will decrease if Britain exits the EU believe that it will take at least five years for UK house prices to recover from the impact that the change will have on the UK property market and wider economy.
Graham Wellesley, founder and chief executive of Wellesley Finance, said: “These figures show that people across the UK are deeply worried about how their properties will be affected if Britain votes to leave the EU later this month.”
Brexit would put investments at risk
It has been suggested that up to £900bn worth of property investment in this country could be at risk of harm if the UK votes to leave the EU, according to a separate survey of more than 3,000 individual investors.
The study by online equity crowdfunding platform SyndicateRoom assessed how the upcoming EU referendum will affect individual investors and found that almost half of the investments at risk in the event of a Brexit are believed to be in the property market.
“At SyndicateRoom, we want to help individuals increase their net wealth through equity investment – and based on this research, it appears that is more likely and more achievable if the UK remains part of the EU,” said Goncalo de Vasconcelos, CEO and co-founder of SyndicateRoom.
Jamie Lester (pictured), head of Haus Properties, also thinks that a vote to remain should see the property market return to normal fairly quickly, while “it remains to be seen what exactly the impact will be if Britain leaves the EU”.
Either way, he thinks that the market will “stabilise” once the general public is able to “understand and adapt” to the changes.
Room for growth
Regardless of whether or not the UK opts to remain in the EU, Paul Smith, CEO of Haart, believes that the UK, particularly London, will remain a safe haven for property investment, once the uncertainty is over.
“It is the uncertainty around our status in the EU that is causing the market to stagnate, once we know the outcome, regardless of what it is, the property market will become reinvigorated,” he said.
“In the long term, house prices will bounce back once more as the age-old problem of a disparity between the amount of stock available and the number of buyers competing rears its head,” added Smith (right).
His views are supported by the latest survey by the Royal Institution of Chartered Surveyors (RICS), which shows that house prices in the UK are expected to rise further regardless of whether Britain opts to remain or leave.
Despite growing uncertainty ahead of the looming EU vote, many experts still expect to see house prices end the year higher.
Residential property prices are set to increase faster than UK inflation and outstrip average pay gains, making the homeownership dream even harder for the average first-time buyer, a recent Reuters poll found.
But the research does show that the decision to remain a part of the EU or exit the 28-member bloc will impact on the level of capital growth.
If Britain stays in, house prices are expected to rise by 5% this year, the poll of 17 experts taken in the past few weeks found, far outstripping the 0.7% inflation forecast by economists in a separate recent Reuters poll.
Next year and the year after, prices are forecast to increase about 4%, compared with corresponding inflation forecasts of 1.7% and 2%.
In the event Britain votes to leave the EU, prices will almost certainly still rise, albeit at a slower rate of 3.8% this year, but stay flat in 2017 before picking up 2% in 2018, the Reuters poll found.
The poll of experts pours scorn on the Chancellor George Osborne’s claim that a vote to leave the EU would have a ‘major hit’ on residential property prices across the UK.
Doomsday predictions
The scare tactics being adopted by the government to keep Britain in the EU has seen the Chancellor warn about the short-term impact of Brexit, insisting that property prices could drop significantly if voters opt to leave the EU on 23 June.
He recently insisted that a UK exit from the European Union could cause house prices to nosedive.
Property prices have been at the forefront of the EU debate in recent weeks, with the Chancellor claiming that the value of homes in the UK could fall by as much as 18% following a Brexit vote.
Based on the average price of a home in the UK, Osborne’s forecast suggests that the average residential property could fall in value by more than £50,000 within two years of the vote in comparison with what it would be if the UK stayed in the EU.
But some say that Osborne’s predictions are rather bold, given that there is a severe housing shortage in this country.
Nevertheless, the reality is that there is nothing that spooks markets more than uncertainty, as was evident in the run-up to the Scottish referendum in 2014, when the housing market north of the border ground to a virtual halt.
“These have been turbulent times and uncertainty is the very thing that the property market hates,” said Saul Empson from Haringtons UK.
Empson (left) believes that if Britain votes to stay in Europe, “we are likely to get more of the same property market that we have had – more people coming into London than leaving, fewer properties for sale thanks to George Osborne having raised the transaction costs to punitive levels”.
“If we leave, this is unknown territory, and the only certainty is that Nigel Farage, Boris Johnson or George Galloway don’t know the answer.”
“So from a purely property point of view, we’re swapping Donald Rumsfeld’s ‘known, unknowns’ for ‘unknown, unknowns’. And that is without asking the question as to what effect President Trump might have on the world.”
Last month, the chief executive of Virgin Money, Jayne-Anne Gadhia, also warned that a Brexit could place downward pressure on property prices in the UK, especially in the capital, not to mention push up interest rates.
She told the press that a vote to leave the 28-member bloc in the looming referendum could lead to a sharp drop in the amount of foreign investment into London’s property market from abroad.
“My personal view is that property prices would be likely to come down, as inward investment, particularly in London, is less available,” she said. “The risk on a Brexit is I think that property prices come down and interest rates go up.”
Britain will survive outside the EU
Despite concerns that a Brexit will have an adverse impact on the housing market, many property experts, such as Trevor Abrahmsohn at Glentree Estates, believe that the UK housing market will do well outside of Europe.
“I think that the chancellor must believe that the British electorate have all just ‘come off the onion boat’ and that we are too stupid to make sense of what is going on,” he said.
“The government is blaming every element of bad economic news on the Brexit campaign.”
While accepting that trying to second guess which path the property market will take off the back of the political landscape is “purely speculative”, Brendan Cox, managing director of Waterfords, does “not foresee any immediate change in the market” in the event of a Brexit.
“A British exit from the EU could take a decade to negotiate and research suggests that the process will be long and uncertain,” he said.
However, if the UK were no longer tied to EU regulations and attracted more local investment, “the property market could also benefit”, added Cox (right).
He continued: “Forecasters warn that house prices could fall by up to 25% if we exit the EU, but others argue this would bring prices to a more ‘sustainable’ level in relation to disposable income, which would also provide greater opportunity for first-time buyers.
New housing supply
While a Brexit may present would-be purchasers with fresh opportunities, especially those seeking a first foot on the housing ladder, some experts fear that an ‘out’ vote will have a devastating impact on the UK economy and reduce the level of new housing supply, as many housebuilders will be less willing to commit to new projects due to the uncertain economic climate.
Andy Hill, chief executive at housebuilder Hill, commented: “A Brexit would have severe consequences for the British property industry and economy in general. As Europe’s largest powerhouse, our economy is very much strengthened by our position within the EU, which brings numerous benefits that largely outweigh the costs. Exiting this arrangement will likely result in a largescale slowdown that I believe will take many years to recover from.”
The government’s target of building 1m new homes over this parliament will also become an unrealistic one, according to Hill.
“It is widely acknowledged that we need to build more homes more quickly, with more than 1m required by 2020. Without investment coming into the UK at current levels however and demand diminishing significantly, developers would likely pull away from building more homes and this figure will be incredibly difficult to meet.”
Chris Nelson, co-founder and partner of Cumbria- based developer egg Homes is also of the opinion that the UK shouldn’t leave the EU, “ because our economy is not strong enough to handle all of the implications that could come with the decision”.
“There will, without doubt, be an immediate financial impact following an exit, across all sectors of the construction industry,” he added. “Perhaps long-term, once new trade deals and agreements are put in place with individual European countries, and this could take years, things should go back to normal and we could even be in a stronger position, but the immediate impact is too big a gamble in my opinion.”
Skills shortages
The single biggest challenge for housebuilders is the lack of skilled workers in the UK, and Bob Weston (right), chairman of housebuilder Weston Homes, fears that that an exit from the EU will “exasperate the problem”, if it restricts free movement of people across Europe.
He commented: “Some 80% of the people working on our sites inside the M25 are not of British decent and 60% outside the M25. Who is going to build the extra 100,000 new homes a year that the Government says we need?”
Tony Pidgley, chairman of the Berkelely Group, has also offered his support to the pro-European campaign.
“The outcome of the referendum on Britain’s membership of the European Union is significant for the UK’s housebuilding and property sector,” he said.
“Berkeley supports a vote to remain in the EU. London’s status as the world’s best big city is underpinned by labour mobility, cultural diversity and a constant influx of talent and investment from around the world, and the UK economy in turn is powered by the success of our capital city.”
Summary
While uncertainty has certainly suppressed activity in the housing over the last few weeks, the good news is that the EU referendum has been a relatively short campaign, compared to say the Scottish referendum two years ago.
In the longer term, solid arguments can be made on each side, but regardless of whether the UK votes to stay in or out of the 28-member bloc, the fact is that there is a severe housing shortage that will almost certainly drive home price up further in the medium to long term, but the rate of growth may very well hinge on the outcome of the vote.
Within 12 hours of Greece defaulting on repayment of part of a loan to the International Monetary Fund, a prime central London buying agency issued a press release claiming it was seeing a rise in Greek clients.
“As we have seen time and again, economic and political instability brings buyers to London’s prime property market. In recent weeks, we have been advising a number of Greek clients on potential investments in the UK, as the risk of Greece crashing out of the Eurozone looms over the continent and, especially, over Greek savers, who could see their wealth slashed by the effect of any devaluation on domestically held assets” says Camilla Dell of buying agency Black Brick.
She says Greece’s super-rich have long been a feature of the top end of London’s property market but the country’s current crisis has seen clients further down the social scale.
“Middle-class Greeks are looking to acquire London property as a hedge against the effects that a return to the drachma would have on pensions and similar investments held in Greece. They are typically looking for investment properties up to the £1m mark that can provide stable income and hold their value” says Dell.
She also says that on the other hand demand from Singapore has fallen in the last six months because the authorities in the Far East were imposing restrictions on mortgage borrowing to prevent a domestic property bubble, with knock-on effects on Singaporeans’ ability to fund international real estate purchases.
“The (likely temporary) departure of Singaporean buyers is being offset by growing interest from elsewhere. As well as increased inquiry from Greece, we continue to see growth in demand from China and, to a lesser extent, from Thailand” claims Dell.
