Greater Optimism in Home Counties amid Prime London Market Uncertainty

on Dec 10, 2012
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**Chancellor Rules Out “Mansion Tax”, But Overseas Buyers Remain Uncertain**

Wealthy international buyers expecting Chancellor George Osborne’s latest decision on UK property taxes were left none the wiser by his Autumn Statement, The Times reported on 7 December 2012. Last week, in his long-awaited speech, Mr Osborne ruled out a “mansion tax” on properties whose value exceeds £2 million, describing the necessary revaluations as “expensive” and “intrusive.” Yet there was no hint of the legislative changes expected on British property held in offshore structures, including foreign companies, partnerships or trusts. The proposed measures will affect property valued at over £2 million held in corporate structure and include the introduction of an annual levy and capital gains tax on profits when the property, or shares in the company holding the property, are sold. The draft legislation is expected to be announced on Tuesday, with the proposed changes coming into effect from April and adding to the hike in stamp duty introduced earlier this year.

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**Fiscal Fog Remains Damaging Demand in Central London Market**
While the UK property market has given Chancellor Osborne a relieved thumbs-up for his Autumn Statement, lingering uncertainty about what the future may hold for overseas property investors remained. According to market participants, this uncertainty is damaging demand in the prime London property market. Sue Foxley, head of research at property consultancy firm Cluttons, said: “It’s good news that there is no change to Stamp Duty or indeed the introduction of the much maligned ‘mansion tax’. However, the lack of political consensus in the coalition Government on this issue creates a question mark over future intentions.”

The Times quoted Nick Candy, chief executive of luxury property developer Candy & Candy, as saying: “We are looking forward to some clarity on the situation. There has been less investment in the London property market than last year and it is essential that London remains competitive and does not lose its position to other cities as the number one place to buy property in the world.” According to real estate services provider Savills (LON:SVS), however, sales in the prime Central London market have already been affected, with deals in the £2 million to £5 million bracket down around a quarter year-on-year, while price growth slowed to just 1.2 per cent in the six months to the end of September.

**Candy Goes Rural**
!m[Investors Cast Their Interest Away from Prime Central London and Boost Demand for Homes in Shires](/uploads/story/1000/thumbs/pic_1_inline.png)While fiscal uncertainty pushes prime London property investors away, there is greater optimism in the Home Counties, where demand has remained strong with buyers, particularly from the Middle East and Russia. According to real estate agents, future demand in the shires is also expected to be fuelled by wealthy Asian investors casting their eyes away from Central London.

Asian buyers were amongst the first to invest in One Hyde Park, the Candy’s luxury Knightsbridge property development. Now the company, like its clientele, is looking farther afield, with the refurbishment of Windsor Park Hall — a £37-million mansion in Englefield Green, Surrey.
**Home Counties Prices Expected to Rise Slightly in 2013**
Brendan Cox, managing director of Waterfords estate agents, who operate within the Surrey, Berkshire and Hampshirhe regions believes that real estate market in the year ahead will follow in a similar vein to 2012, but in the Home Counties, is predicting modest price increases of between 1.5 and 2 per cent. He said: “In our area we can report that prices did climb up slightly when compared to 2011, or they did at least remain stable in a couple of selective postcodes. Taking into consideration inflation levels and the ongoing banking situation where lenders are reluctant to lend, the year ahead is going to be very alike to the one we have just had.”

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