Prime London property absorbs stamp duty reform

on Jan 22, 2015
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New research just published by Savills, shows that the new stamp duty reform has indeed affected prices of London’s property market. With property prices in London falling 4.2%, in the last 3 months of 2014. Property buying agents, Black Brick, argue that this decrease is neither coincidental nor insignificant.

Given that property buyers in London’s top end market are now required to pay about 5% in Stamp Duty, Savills research shows that the 4.2% reduction in prices in late 2014 is a healthy absorption of the tax, particularly when combined with the very low level of unsuccessful deals occurring in light of the autumn statement by the Chancellor in which he outlined his intention to reform stamp duty.
While Black Brick are optimistic about 2015 with regard to the London property market, they stress that the current market is one that favours buyers as prospective sellers may yet be subject to new or adjusted taxes following the general election. However, with short term uncertainties aside, the long term outlook for those wishing to invest in high end London property remains positive, Black Brick maintains.

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The increased proportion of Chinese property investment activity in the capital marks an interesting development in terms of foreign demand for London property. Black Brick notes that 5 years ago, investor visas for Chinese nationals amounted to only 10% of all visas granted. This year however the investor landscape shows a huge change that has taken place over the last 5 year with Chinese nationals accounting for 43% of UK investor visas in 2014.
Jill Turner, Senior Associate at Pinsent Masons, says:
“A lot of Chinese HNWs have had almost all their wealth linked to the fortunes of the Chinese economy. That has served them very well but with Chinese economic growth slowing after a tremendous run some HNWs are rebalancing their portfolios away from China.”

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