Purchase

Activity in the prime London sales market was subdued over the first quarter of the year although there was an improvement compared to the last three months of last year. Applicant numbers rose and new instructions were higher. The slow down in late 2014 and early 2015 was ascribed to the change in Stamp Duty tax, which generally made transactions more expensive in the London market, and the political uncertainty around the mid year election.

Since then the decisive Conservative party victory in the General Election has provided a significant confidence boost for owners of properties and investors many of whom were concerned about the prospect of a Mansion Tax and rent control. Non-domiciles will be similarly relieved that their tax status will remain in place, albeit they will have to pay more as announced in the 2015 budget. In addition the market is slowly adjusting to the changes in Stamp Duty and buyers are accepting it as part of the transaction cost.

We are already aware of an increase in foreign investors preparing to acquire suitable assets in London. This should, in turn, be expected to trigger a steady rise in property values estimated by some forecasters to be in the order of 3.5% for the full year, rising to 5% in 2016.

Rental

London2Rental prices were at their highest in mid 2014 and have at best been steady since then. The private rental market has become an important part of the UK housing market over the last two decades. In 2004 in London approximately 19% of the population rented privately and by 2014 this had risen to just under 30% and this trend is expected to continue in coming years. Post the election there was no immediate change in this market but in the past couple of months the activity level has increased and there is no shortage of people looking to rent although we have yet to see this being translated into rental price increases.

(The contents of this market update are intended for the purpose of general information and should not be relied upon as the basis of decision making on the part of the reader. Whilst every effort has been made to ensure its accuracy, Angela Silverman & Associates accepts no liability for any loss or damage resulting from its use. )