You are here: Home - Mortgages - Buy To Let - News -

Lettings plunge as prime London homeowners opt to sell after tax changes

0
Written by:
05/04/2018
Homeowners in wealthy areas of London are opting to sell rather than let out properties, following buy-to-let tax and stamp duty changes in a trend that could spread to the wider market.

The number of properties listed for sale in so-called prime central London (areas such as Chelsea, Belgravia, Marylebone and Knightsbridge) jumped by 5.4% in the year to February, while in the lettings market this was down 21.2%, according to analysis by estate agent Knight Frank. (See graph below.)

The change in part reflected additional tax burdens for landlords, the agency said.

Wider house price indices have shown London to be the worst performer in recent months.

 

knight frank london lettings sales tax

Andrew Montlake, director at London-based broker Coreco, said the firm had seen a drop in let-to-buy across the market– where people hold on to their homes when moving in with a new partner.

The additional stamp duty surcharge for buying a second home and removal of buy-to-let mortgage interest tax relief are the main reasons for this change, according to Montlake. He said: “Now there is an extra cost of let-to-buy, so people are putting properties on the market rather than keeping.”

However, this trend is not as evident among wealthier clients, who are prepared to hold on to properties for 15-20 years in order to benefit from capital appreciation, Montlake added. Political uncertainty and the threat of rising interest rates do not appear to be driving behaviour as much. He said: “Brexit has no effect whatsoever – we haven’t noticed a change where Brexit is concerned.”

Transactions rising

Knight Frank’s data showed trading volumes have picked up by around 2% over the past year, which is a trend that Montlake has also witnessed. Mark Harris, chief executive of mortgage broker SPF Private Clients agreed that there has been a pick-up in activity.

He said: “More people are selling rather than letting, which is certainly something we are seeing. This year has seen an increase in the number of sales as the market has settled down, transactions are picking up and people have come to terms with higher stamp duty being here to stay and Brexit negotiations are progressing well. Life has to carry on and is doing so.

“SPF Private Clients has seen a 45% increase in £1m-plus mortgage enquiries in the first quarter of this year compared with the same quarter last year, which backs up this data.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Flight cancelled or delayed? Your rights explained

With no sign of the problems in UK aviation easing over the peak summer period, many will worry whether holida...

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

How your monthly bills could rise as the base rate reaches 1.25%

The Bank of England has raised the base rate to 1.25% as predicted – the fifth consecutive rise in just six ...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week