April 2021 Newsletter

Here is our latest round-up of the current talking points in the London property market. 

A busy market – The Financial Times noted last month that “more homes were bought and sold in February than in any February for 15 years”. For many there was a rush to meet the end of March stamp duty deadline, with this now extended there has been a big sigh of relief for those that need more time. Another end of March deadline for non-UK residents also contributed to the rush – from April 1, non-UK residents will need to pay an additional 2% stamp duty on any property purchase in England and Northern Ireland.

The indications are that this heat in the market will continue for at least the short term with Covid restrictions still causing pent-up demand – March was a record month for us in terms of new enquires. This demand is leading to price increases in some neighbourhoods. The good news is that prices for prime property are still way down on the 2014 peak, particularly if you are buying in $.

Leasehold reform – There are major reforms planned to English property law and it really does look as though there is going to be some big changes that will enable short leases to be extended to 990 years with zero ground rents . The details of how this will work are not yet available and it could be up to a year before they are known. What is sure is that if you have a shorter lease and you are looking to extend it or sell your property, it may be wise to hold off for the moment. The costs involved in extending the lease could be much lower in 12 months’ time. On the other hand, now could be a good time to buy a short lease property. http://ow.ly/c6cc50D36vz

Falls in rents – There were some interesting graphs in the Financial Times recently, showing the annual fall in rents across London, by borough. Kensington and Chelsea & Islington have been hit hardest, rents dropped by 10.2% and 9.4% respectively. If you are looking for a tenant, it makes sense to recognise these decreases and adjust your rental price and expectations accordingly. There is a steady supply of tenants looking to take advantage of these drops at the moment, void periods can be costly.http://ow.ly/L8JD50Ddcdk 

The future of Olympia – Who would have thought that a CGI of the future Olympia would lead an article in The Wall Street Journal http://ow.ly/GoTX50DxvxR. As we reported in our December 2017 newsletter, the iconic venue is undergoing as £1.3bn makeover. Hammersmith and Fulham council announced in December, that in addition to four-screen cinema, 1,500-seat theatre, 40 restaurants and cafes, there would also be a new music venue at the site with 4,400 seats – 1,000 seats more than the nearby Hammersmith Odeon http://ow.ly/p3M450Dxw5O. The development is due to be completed by Christmas 2024 and we are excited to see the positive impact it will have on the area. 

Update on cladding – The cladding crisis is far from over. As an affected seller you will be well aware that despite the government announcing a £5bn funding package to pay for the costs of removing dangerous cladding on buildings above 6 storeys (and low interest loans for those in lower buildings), the detail is far from being finalised. For buyers, it is imperative that you ask from the outset whether the building has an EWS1 from and if so whether it has passed the necessary criteria. Many mortgage lenders only request these forms at the very stage of the process and without one you will not secure funding, by leaving these checks to the lenders you can waste a lot of time and money.

The impact of electric vehicles – The government recently announced, that 2030 will see the last sales of new petrol and diesel cars. This reminded us of an item on our to do list – we have been eyeing up low value properties on busy main roads in London for some time. It strikes us that they may turn out to be a good long term investment as traffic noise reduces surely property prices will rise faster than on neighbouring quiet streets.http://ow.ly/eq6d50Cq0OI.

Stamp Duty holiday is partially extended to 30th September 21 – The stamp duty holiday that has been in place since last year was extended in last month’s  budget, until the end of June. This is good news for all our clients who were struggling to complete by the original 30 March deadline. It will hopefully give impetus to those still looking. The extension will mean an ongoing saving of £15,000 on all purchases over £500,000. There will still be a limited saving of £2,500 between 1 July and 30 September, as the nil rate band will reduce from £500,000 to £250,000. http://ow.ly/qX9C50DP2kA

Shared Ownership – For anyone considering using the government’s shared ownership scheme, do make sure you watch this BBC Panorama program first http://ow.ly/VtkH50CvVKO . Whilst the scheme no doubt helps buyers get onto the property ladder it highlights one of the key problems with buying a new build property – service charges. The service charges in a new block should always be taken with a pinch of salt, charges often increase substantially one or two years after completion. Under the shared ownership scheme you are liable to pay 100% of these charges even if you have only bought 20% of the property. They often become completely unaffordable for many owners.

We very much hope that you find this update concise and informative. Please do feel free to contact us if you would like to discuss any aspect of the London property market.  

Regards,

Jane Wood
Founding partner