31 Aug 2012 Back

W.A.Ellis' overview of this week's property market - 31/08/2012

There is no doubt that the excitement and focus of the Olympics has increased interest in London from overseas investors most notably properties up to £2,000,000.  These are classic investment buyers who are consciously purchasing below £2,000,000 to avoid the higher SDLT threshold. 
The consultation period with regard to the impending annual ‘mansion tax’ and capital gains tax charges on company held properties has now finished and we await draft legislation which is due the autumn.  It is obvious that many of our clients are reconsidering the structure in which their properties are held. 
Whilst we have already seen some company held properties coming to the market as a direct result of the impending changes, we do not expect a ‘glut’ and we believe that many will simply be transferred into individuals’ names rather than be sold.  It certainly seems to be the government’s wish that London property investment should not remain a ‘tax free zone’, particularly with regard to gains made during a continually buoyant market. 
The appetite for investment within central London, in spite of the above, is still apparent as evidenced by two recent sales during August, one being an unmodernised family house with a double garage in Knightsbridge and the other a charming double fronted corner property in the heart of Belgravia, both of which required full modernisation.  
Both our Sales and Development & Investment departments have remained busy with enquiries for unmodernised property and the rates per foot attributed to such properties, once developed, remain ever increasing.  Sentiment remains positive which bodes well for a strong market during the autumn period.
We are still being inundated with high net worth student enquiries from those wanting to get settled prior to the start of the new academic year.  They are coming from all around the world and their tenancies are generally being guaranteed and paid for by their parents who are paying up to circa £1000 per week.  We have had two properties where three students were bidding against each other.
Although there is a strong demand for rental properties in all levels of the market, it is essential that they are priced correctly and not too bullishly so that available stock lets in September rather than suffering extended voids.  The prime central London lettings market has been affected by the Eurozone crisis, not least because there are now 40% less jobs in the City than in 2007 and rents have fallen marginally as a result.
With the holiday season now over and term time starting, we are excited by the prospect of active and buoyant Sales and Lettings markets as we enter September.
Lucy Morton Senior Partner

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