29th February 2024
10mins
Jeremey Hunt’s Spring Budget, unveiled on March 6, is the Government’s big chance to offer voters cash sweeteners in advance of the General Election later this year.
The big question is how much the chancellor can afford to give away in mooted cuts to income tax and national insurance, given the UK’s recessionary status.
Another possibility is inheritance tax reform, which could include cutting the rate of IHT or increasing tax free thresholds and would be popular with wealthy voters and those who own high value properties.
Black Brick’s view is that the Government has probably left it too late to shore up its waning electoral support. “I think that they are out of ideas, and out of room to manoeuvre,” said managing partner Camilla Dell.
If the Government was minded to give London’s property market a shot in the arm then in her opinion the answer lies with its treatment of overseas buyers, who have traditionally kept deals in key prime neighbourhoods moving.
“We need to be open to business for overseas purchasers,” said Dell. “Abolishing the Tier 1 (Investor) visa, which allowed overseas buyers to relocate to the UK in return for investment in UK companies and Government bonds in 2022 sent a bad message. And meanwhile in Dubai if you spend around £430,000 on a property you get a Golden Visa.”
Another fly in the ointment is Stamp Duty. An overseas buyer purchasing a £2m additional home in the UK currently faces a 251,250 tax bill, and the Labour Party has confirmed it is considering raising this liability if it comes to power this year.
“I would love to see Stamp Duty rates reduced to more sensible levels,” said Dell, pointing to a recent study by The Centre For Policy Studies think tank which calculated that transaction numbers would increase by around 20 per cent for every one per cent cut in Stamp Duty. Paul Johnson from the Institute of Fiscal Studies also argues that reducing stamp duty for downsizers would free up the market.
A new wave of vendors have decided that now is the time to sell their homes.
Research by property analyst LonRes found that, in prime London, the number of new instructions jumped by 2.4 per cent year on year, and stands 9.1 per cent above average levels seen in the pre-pandemic period between 2017 and 2019.
Across London as whole the jump is even more marked.
At exp UK, a chain of local estate agents, the number of homes for sale in the British capital are up by 24 per cent over the last quarter.
“Obviously we are mainly a buying agent but in the last week we have taken five enquiries from former clients who are considering selling,” said Dell. “They recognise the market is not in a particularly strong position, but perhaps they want to sell now, before the election, in case a Labour government makes things even worse.”
Caspar Harvard-Walls, a partner at Black Brick, believes these owners are also responding to an improvement in market sentiment since 2023. “Interest rates have got a bit better, inflation has fallen, and they see the possibility of rate cuts coming,” he said.
During the pandemic buyers were falling over themselves to get out of the city and find themselves a more spacious home in the suburbs or beyond.
But the race for space is, decisively, over. London house price growth outperformed the Home Counties last year according to research from investment bank Investec.
What is more it found that Home Counties homes valued at £1m or more have seen an average of £151,130 knocked off asking prices in the second half of 2022, representing ten per cent of the original asking price.
London homes also saw asking price reductions last year, but a more modest 8.6 per cent.
“I think the problem is that a lot of people who moved out of London took on a lot of debt,” said Harvard-Walls.
“The reality of running a much bigger house outside London means there is a lot of buyer remorse out there.”
It’s a bit of a tongue twister, but the number of house price reductions has reduced over the past year.
Research from estate agent Hamptons found that 48% of homes sold in January across England & Wales had been subject to a price reduction. In October that figure was 55 per cent. This, believes Hamptons, suggests that more homes coming onto the market are competitively priced.
Sensible pricing is the key to a swift sale. The average time homes languished on the market before having their prices cut is 80 days, representing almost three wasted months for vendors.
Separate research by Black Brick comes to the same conclusion.
We tracked the sale of three similar houses on Little Chester Street, Belgravia, last year.
Two houses were put on the market for around £1,900 per sq ft. The third was listed at £2,300 per sq ft.
Predictably, the two more competitively priced homes sold quickest, one spending ten weeks and the other five months on the market. Both ended up selling for around £1,700 per sq ft.
The more expensive property spent 21 months on the market, eventually selling for circa £1,900 per sq ft.
“If you get your price wrong, the amount of time you spend on the market increases dramatically,” said Harvard-Walls.
While prices in prime central London have ended the last decade in much the same place as they began it, with average growth of just over three per cent, owners of homes in more peripheral areas have reason to celebrate.
Research from LonRes found that while traditionally copper-bottomed neighbourhoods like Kensington and Knightsbridge have seen little in the way of price growth, there have been some big winners a little further from Hyde Park.
Fitzrovia, Bloomsbury, and Soho, with their relatively affordable prices, lively nightlife, and grand townhouses on garden squares, has seen prices jump almost 33 per cent in the same period, prices in leafy Hampstead, north London, are up 29 per cent, and Hammersmith & Brook Green, Chiswick, North Kensington increased by almost 22 per cent.
“I think this is covid related,” said Harvard-Walls. “These are all areas where you can find family houses with gardens, where prices exploded during the pandemic.”
The exception to this rule is the south London swathe of Nine Elms, Borough & Kennington, where prices jumped almost 29 per cent between 2013 and 2023. The explanation? Nine Elms and Kennington have been the focus of intensive house building over recent years and these luxury apartments, particularly those with a river view, have smashed local price ceilings and triggered significant on-paper price growth.
We were hired to help a client’s student daughter find a perfect first home in London.
She wanted a two bedroom, two bathroom property and both she and her father were keen to find a building with good security.
We guided her towards Chelsea, with its buzzy local bars, restaurants, and shops, and found her a smart 1,382 sq ft flat with three bedrooms in a building just moments from King’s Road and Sloane Square, with a 24-hour concierge service.
After a tough negotiation we were able to buy the flat at a £475,000 (20 per cent) discount on its original asking price.
Our clients were after their first home in the British capital and wanted a two bedroom flat in leafy north London. After a thorough search across several neighbourhoods, they fell in love with this newly renovated maisonette overlooking Primrose Hill.
Primrose Hill is one of London’s most fashionable neighbourhoods, thanks to its central location, open space, and great range of local pubs and restaurants. That means demand is high, and good quality turnkey flats like this one are hard to find.
At Black Brick, we are renowned for our expertise as a property buying agency, but our commitment to being trusted advisors goes beyond just the buying process. Recognizing the growing demand from our clients for a comprehensive solution to selling their properties led us to creating our Managed Sale Service.
Black Brick is delighted to have been exclusively appointed to manage the sale of this stunning five-bedroom apartment located on the 4th floor of Fountain House. Fountain House offers residents 24-hour security and concierge and is located at the eastern end of Mount Street overlooking Hyde Park and the world class amenities, boutique shops and fine dining restaurants of Mayfair. The apartment measures 2159 square feet (200.6 square metres) and has 5 bedrooms and 5 bathrooms, a balcony and is brand newly refurbished.
To book a viewing please contact: Camilla.Dell@black-brick.com or call +44 (0) 7887 827 176.
We are delighted to welcome two new team members to the Black Brick fold.
Tom Cope has spent 12 years working in London property, most recently working for Marsh & Parsons in Fulham. During that time, he has sold more than £150m-worth of property, and developed exceptional negotiation skills in the process. Tom, who lives in south west London, believes the key to being an effective buying agent is building lasting relationships with clients and getting to know their preferences and goals.
Luke Tye is a Mayfair specialist, who has spent a decade working in the super prime rental market, working with high profile tenants, and helping owners understand how to maximise rental yields. Luke’s CV includes working for a boutique developer in Oxfordshire, where he lives with his young family, and for Mayfair’s leading luxury estate agent Wetherell.
In episode 16, Dell delves into the maze of matrimonial law with Melissa Lesson, a barrister and partner at law firm Mishcon de Reya. Lesson is an expert in navigating property division during a divorce, and dispels some of the common myths about matrimonial law.
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We would be delighted to hear from you to discuss your own property requirements. For a non-obligatory consultation, please contact us.
