Date Published 02 May 2012
Here Richard Barber and Lucy Morton of London estate agency W A Ellis comment on the state of the Prime Central London property market for sales and lettings:
Richard Barber, partner in residential sales: `April has proved to be a month of conflicting information and mixed messages.
"According to Findaproperty.com, London has experienced a 5.4% rise in asking prices over the last quarter, and data from Lloyds has suggested a 5% rise in the number of transactions in houses over £2m in 2011 to 1,518. Savills, however, has predicted that the market for the rest of 2012 and the first quarter of 2013 will be flat, rising again in 2014 and 2015.
`In our experience, the market in general seems to have retained its impetus – we have had at least three instances of properties going to best bids over the last three weeks, although it would seem that there is a little more supply coming to the market. The busiest price level is, of course, beneath the £2m watershed whilst we contend with the speculation and fallout from the Chancellor’s budget which is still fresh in all property owners’ minds. Although we have heard of several schemes to mitigate exposure to the increased level of stamp duty and potential 0.7% annual charge, it would appear that many potential purchasers previously using these vehicles are now electing to purchase in their own names or that of a family member. It will undoubtedly be some months before the government’s consultation paper has been fully digested and there is some clarity on the potential impact of the Chancellor’s new measures.`
Lucy Morton, senior partner and head of lettings: `The Prime Central London lettings market is seeing the impact of the recession (announced last week), as the city is not employing the normal influx of expats, so we have less tenants coming into London. Prime Central London rents reportedly dropped for the 6th consecutive month in March, but it is interesting to note that they are still higher than this time last year, and certain types of property are still commanding a premium. In particular, family houses, due to the tremendous shortage of stock on both the sales and lettings market. Unless current tenants give notice to vacate in the summer, we believe new families arriving to London will struggle to find suitable homes. Indeed, we have recently acted for one family who have rented two flats in Lennox Gardens as they were unable to find a suitable house. We have agreed a letting this month on a substantial family house at £20,000 per week and we are noticing that some houses which have been sticking on the market due to impediments such as adjacent building works, are now letting.
`Since the Budget, I have been inundated with calls from our overseas clients questioning the impact of the increased Stamp Duty on their investment as many own their properties in off-shore companies or as ‘non-natural persons’. We are all eagerly awaiting further news on this from the Government as the uncertainty is causing concern and some foreign investors are putting further investment into property on hold until they receive clarity on this levy.
`That said, we may well see an influx of French investors and tenants if Francois Hollande is elected President on 6th May. He plans to raise upper income tax to 45%, bring more people under the annual wealth levy, and introduce a hotly contested 75% super tax band for anyone whose annual income exceeds £1million. London is already a favourite destination for the French with the Lycées brimming full, so it will be interesting to see the result of the election.
`This month sees the end of our financial year, and I’m very pleased to report that our lettings income has increased by more than 25%, year on year. This is due to our increased market share, the efficient systems we have in place, and the quality of our instructions and tenant base.`