Autumn prime property - post budget
It’s been a strange year, and with the autumn budget, things are not really set to change an awful lot!
While many sellers and buyers alike have been waiting to see what the budget would bring, as expected, there was nothing in it that will materially make a difference to the PCL market in foreseeable future.
What is general feeling in the market?
We have experienced a marked lack of urgency in the minds of buyers and sellers alike, and despite some great deals done recently, both sales and purchases, in general, the market is fairly stagnant, with action really only from those who need to move, or who have already found the perfect property.
What are the best sellers?
At the moment it’s very hard to say, as there is no clear winner! But the top end is always the least affected by world events and economic flux, and the £5m+ seems to hold its own for the most part.
Last month, Lonres reported that sales on prime properties were 30.1% more £5m+ properties for sale than a year earlier, but this was essentially because we saw a change in the non domestic rules earlier in the year, and there are fewer buyers looking at the moment.
That said, the PCL market is forever changing and when we lose a particular nationality or asset class due to world events, another typically sprouts up and replaces the leavers. There is always a market in PCL!
Advice for sellers
This sort of market is tricky for vendors and many will find a sale difficult if they don’t (re)act quickly enough. We have seen this with a few who need to recalibrate where they think the market is, and what their property is worth.
This is where you need to listen to the agents! We will always do our utmost to get you the best deal, but sometimes our advice may not be entirely what you want to hear!
On the rental side of things, Lonres recently reported 6.0% more homes on the market across prime London at the end of August than a year earlier. Stock is up because the market has cooled since the heady few years we saw post-Brexit/Covid.
Typically, the sale and rentals markets do different things, but at the moment both are relatively fat on stock and thin on buyers/renters.
Key budget takeouts for prime property for what it's worth - which probably isn't much!
Stamp duty - The additional stamp duty rate for second homes and landlords has increased from 3% to 5%. International purchasers will also face a 1% increase in SDLT, which could result in a maximum rate of 17%.
Capital Gains Tax - The Capital Gains Tax (CGT) has been kept at 18% for basic rate taxpayers and 24% for higher-rate taxpayers on BTL and second properties, so this will not make much difference to our market.
Overseas buyers - The increase in SDLT for international purchasers could be a deterrent for some but in our experience, with PCL being such a popular choice for overseas investors, it is likely not to have a huge effect.
Landlords - The increase in stamp duty for second homes and landlords could incentivise private landlords to sell. This is never good for the market, and private landlords have been finding it increasingly tough over the last 5-10 years with new regulations and lack of benefits dampening the desire to rent out properties.
So what's on the cards for the rest of the year?
The window is small post budget, with approximately 4-5 weeks before the market closes for Christmas.
There is likely to be a spike of interest over the festive period with a lot of people considering their future plans and we should see this translate into a strong Q1/Q2 ’25.
Happy Halloween!