Report Says Sales of Luxury London Properties Dropped in Volume

On 18 September 2012, Construction News wrote that according to a report sent to the UK government, the sales of luxury London properties have dropped by almost a quarter since the last budget.

Construction News quotes data compiled by the residential investment company London Central Portfolio (LCP), which showed a 23 percent decline in high-end central London property. The quoted data refers to property sales worth more than £2 million. In addition, according to the LCP, 50 percent of London residential property was bought for rental investment rather than for owner occupation.

Among the reasons for the observed trend are the changes in the Stamp Duty Land Tax, which rose from five to as much as 15 percent for companies buying properties valued at more than £2 million.
And yet, according to the LCP, the implemented tax changes are costing the UK economy £120 million each year, while reducing the tax take by £1 billion, and bringing only £270 billion to the budget. Yet, it remains to be seen whether the report’s results, which are also sent to the government, will induce any subsequent property tax changes.

The figures in the LCP report are also backed by findings by Knight Frank Prime Central London Index which indicates that a 29 percent decrease in property transactions worth between £2 million and £10 million has been sustained in the three months ending in July.
In addition, the LCP findings are yet another sign that the slowdown observed in the UK real estate market has also spread to the capital. At the end of July, Construction News reported that the UK house prices had slipped for the first time in 2012, led by deteriorating conditions particularly in South-east London.