The potential impact of a new prime minister on top-end property prices
Monday, 2 September 2019 | Admin
As a lengthy slump in prime property prices in London appears to be ending, will the appointment of a new prime minister further encourage the market?
Since George Osborne’s 2014 increases in Stamp Duty payable on properties costing in excess of £925,000, the prime property market has been sluggish. With top tax rates of 10 and 12 percent, sales have dropped substantially since the peak five years ago, with prices falling in response.
Recent figures suggest that sellers are now faring better, due in part to fewer properties coming on to the market because of continuing Brexit uncertainty.
While prime central London property prices are 20.2 percent down from their 2014 peak according to estate agent Savills, Knight Frank are now reporting the highest number of offers in over ten years for prime London property in the second quarter of 2019.
New Stamp Duty proposals
Before coming the Prime Minister of the UK, Boris Johnson had plans to completely overhaul the current Stamp Duty system.
It is suggested that he intends to raise the tax payment threshold from £125,000 to £500,000 as well as lowering the top rate from 12 percent to 7 percent.
Effect of new proposals on prime London homes
Leading prime and super-prime London property portal Vyomm has analysed the suggested reductions and believes that prices at the top end of the market could increase by up to £700,000.
A property costing £3m (the average cost of a home in the £1.5m-plus range) could increase by 3.41 percent, ie. £102,911. A £16.8m property (the average cost of a home in the £10m-plus range) could have the potential to sell for £17.6m, a 4.66 percent increase.
Founder and CEO of Vyomm, Utsav Goenka, said, “Although the market has adjusted and price growth has stabilised since these changes [the 2014 increases in Stamp Duty] and the resulting price decline, there is currently an air of hesitation across all levels of the market due to the political landscape.
“However, a reversal of these stamp duty changes could provide the adrenaline shot that is needed to entice more buyers back to the prime and super-prime markets and this will see prices increase notably when it happens.”