September 2020 Newsletter
In our last newsletter there was much uncertainty in the market given the Covid shut down in March. Few would have predicted how quickly the London property market would restart. Figures released last week show that sales agreed in the four weeks to 16 August vs the same period in 2019 were up across all London boroughs . Interest in the London property market continues, with good properties attracting multiple offers. This interest is a result of several factors including: post Brexit pent-up demand; the desire to adapt living conditions given many of us are now spending more time at home; the recent stamp duty holiday; political uncertainty overseas; and new stamp duty levies due in Spring next year.
As well as an increase in buyers we are also seeing a lot more property coming to market, this is good news for buyers as we have been struggling with a lack of good stock for many months. Prices are still robust for good properties but with the economic impact of Covid still unknown, this may not be the case next Spring. It will be interesting to see whether supply and demand are matched over the coming months, the feeling at the moment is that, in a few areas supply is now starting to exceed demand and prices are starting to fall. If you are buying at present it is important to watch this balance carefully and adjust offers accordingly. It is important to ensure that you do not squander any stamp duty saving by overpaying in the rush to secure a property in the current “mini boom”. Do feel free to get in touch if you want any advice.
Here is our latest round-up of the current talking points in the London property market.
In case you haven’t heard – the Chancellor announced at the beginning of July that there would be a stamp duty holiday for all buyers. The holiday applies to the standard rate of stamp duty on amounts up to £500,000, irrespective of the cost of the property. This represents a maximum saving of £15,000 if you spend £500,000 and more. For those buying a second residence you will benefit from the £15,000 but you will still have to pay the 3% higher rate that applies on top of revised standard rates. The holiday applies until 30 March 2021. This temporary cut together with the additional 2% rate proposed for non-residents from next April (raised in March 20 Budget) means there is a big incentive for non-UK residents to buy before next April.
Crossrail delayed yet again – It was announced last week that the opening of the new Elizabeth Line (Crossrail) will now be delayed from summer 2021 to the first half of 2022. This is frustrating for many. With 41 Crossrail stations over 21 London boroughs, it is one of London’s most highly anticipated infrastructure schemes. Since construction started in 2009, there has been much talk of the Crossrail effect on property prices. Many of those who have bought along the route over the last 11 years are waiting to realise a capital gain, wondering whether they should sell now or wait. Already in 2017 there were articles stating that along the Eastern leg of the line prices were up between 32% and 55% since 2012. An article early this year stated that around the central area of Bond Street, property prices had risen 166% to an average of £3.1m, in the seven years to November 2017. There is no one piece of advice to those now looking to sell, it really does vary from area to area. The good news for those that haven’t yet bought along the route, it that there is still value to found and we do anticipate further increases at several central points along the line.
Cladding follow up – Following on from comments on cladding in our last newsletter, it is clear that it is becoming quite a big issue for many of our clients looking to sell their properties in purpose-built blocks. We therefore thought we would share this very useful RICS link. It details how apartment owners (and those looking to buy) can ensure that the right steps are being taken to ensure their building is safe and compliant, and that an EWS form is completed asap.
The North-South divide – with Hammersmith Bridge suddenly closing to pedestrians a couple of weeks ago, locals on either side of the Bridge are understandably anxious about what the future holds. The Bridge has been closed to traffic since April 2019, however the recent sudden development will cause severe problems to the daily work and school commute of local residents. The initial closure was always more positively received by those on the south side of the river – congestion in Barnes plummeted and its village charm grew even more attractive. In addition, residents could much more quickly reach the various tube lines at Hammersmith – the bus ride along Castlenau (now a no-through route) became a mere 5-minute journey. If anything, it had a positive impact on property prices. The closure to pedestrians is a different affair. There is now a feeling that the residents of Barnes are stranded and cut off and we have clients who now feel that it is not quite as attractive as before. Property prices will be in flux until Hammersmith and Fulham Council issue an update on what the future holds.
Top-up – A change in legislation means that from July, two additional storeys can be built without planning permission, on the top of detached purpose-built residential blocks (> than 3 storeys), under a new permitted development right (PDR). To apply, buildings need to have been built between 1948 & 2018. It was an unexpected announcement earlier this year, but one which gives landlords a cost-effective way to upgrade a whole building, especially when extensive roof works are required. There are of course additional factors that need to be met which means that the PDR won’t apply to many blocks. However, it is important to be aware of the new legislation if you live in such a block, if you are about to buy into one, or if you live or plan to live in the vicinity of one.
Off-market properties – We are often asked by our clients if we can access off-market properties, the answer is – Yes we can! – 75% of the properties we showed to one of our clients this month were off-market. The last two deals we agreed were also off-market properties. This is not always the case but it would appear that post lockdown, many vendors are choosing not to list their homes on the open market and internet portals. In part, this is because vendors don’t want to run the risk of their property sitting on the internet for weeks, thereby devaluing it. However, in certain areas where the market is brisk, we very much welcome these off-market opportunities, our clients are getting to see some prime property and agree sales, in some cases, with no competition.
New CGT rules – If you are thinking of selling your property and it has not been your main residence for the period of ownership, do plan for any Capital Gains Tax that may be due. New rules introduced in April relating to Capital Gains Tax mean that you now have only 30 days post sale to declare and pay any gains.
Odeon Kensington – Season 2: As local residents know, the iconic Odeon cinema building at 263 Kensington High Street (built in 1926) has been a topic of discussion for many many years. The cinema actually closed in September 2015, although the first planning application was made 13 years ago! Last week Kensington & Chelsea Council finally approved the Lodha Group redevelopment scheme. There will be a new Picturehouse cinema with six screens together with 67,000 sq ft of commercial space and 106 flats. The application revises the old 2016 application, increasing the number of homes by the addition of more floors. This development is directly opposite Holland Park and with new builds rare in the area, we look forward to sharing details of the residential units as they become available.
Searching for an interesting read? – There are worse places to start than the Land Registry monthly house price index! Section 3.2 of the report breaks down, borough by borough, the annual price changes in London. The latest figures show that prices increased the most in Islington and Hackney. It is important to understand market trends before you start the buying process.
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.