Richard Barber, partner in residential sales at W A Ellis, comments on sales:
“March has been dominated by the impact of the Budget – the Chancellor’s announcement to increase stamp duty to 7% on properties priced £2 million and above prompted a wave of activity within our sales department - £13 million worth of sales exchanged during the afternoon and early evening, as purchasers rushed through contracts to avoid paying the further 2%.
“This announcement coincided with the Rightmove statistic showing that the average asking price in Kensington and Chelsea has tipped over the £2 million level, but my interest, as an agent, is drawn to HM’s Land Registry turnover figures, which reveal a 17% decrease in the number of properties sold at £2m or above in December 2010 compared to December 2011.
“It will be interesting to see how this December’s ‘transactional figures’ above £2 million will look in the light of the stamp duty increase. We predict a further decline, as well as the average asking price to fall slightly as vendors adjust their expectations.”
Lucy Morton, senior partner and head of lettings at Prime Central London estate agency, W A Ellis, comments on lettings:
“Rents continue to plateau rather than increase as we enter spring and, as I reported in our February market comment, the main reason for this is because the City is not bringing in the normal annual influx of expats. Rental allowances are being reduced by the corporates, and tenants are feeling the squeeze.
"Current tenants are considering moving for more space with the possibility of finding a bargain too. Increases on renewals are averaging around 5% but prime properties in good locations continue to attract bidding wars. Those properties not presented in perfect condition are the ones suffering longer voids and achieving reduced rents.
“The most damaging effect of the Budget on the lettings market is the uncertainty surrounding the possibility of an annual charge from 2013 on residential property worth in excess of £2million and owned by ‘non-natural persons’. How will this be managed and who will set the value of the property?
"Foreign investors who until now have been flocking to London need to know all their outgoings and yields when purchasing a property and they will not be happy with this uncertainty hanging over their investment. I personally don’t believe that the Government has thought this through properly or wisely.
“This Budget has had more of a negative impact on landlords than tenants. The Government should be encouraging overseas investors into London, not putting them off and encouraging them to invest their money elsewhere. The lettings industry is huge and is more lucrative to the UK than the car industry and, while I believe foreign investors would absorb an increase in SDLT, such an enormous hike in one fell swoop plus the possibility of the annual levy is a bitter pill to swallow.
“We will all have to wait for the dust to settle and hope that the uncertainties will be banished, the annual tax will not be levied and that our foreign landlords will not be put off investing by the sharp increase in SDLT.”
