June Newsletter
Election Season
It’s looking like the UK will have a labour government after the election on July 4th, which would be the first change in government in 14 years. This election was supposed to be in November, however Rishi Sunak called for an early election. I believe the industry welcomed the news of an early election in order to get the uncertainty out of the way, but what does all this mean for the London property market?
Arguably, the main change that the labour government will bring is an increase in stamp duty for foreign buyers. According to The Independent, “The Labour manifesto’s only reference to stamp duty is that the party would use revenue from increasing stamp duty on purchases of residential property by non-UK residents by 1% to appoint 300 new planning officers”. Currently, foreign buyers pay an additional 2% stamp duty on purchases. Naturally, this will not be welcomed news to foreign buyers.
I believe some buyers will want to wait until the Labour party produce their manifesto’s before making a purchase, so there could be a slowdown in the prime central London market. However, there will be buyers who have a long-term approach for their purchase and will just want to carry on. It could prove to be a good buying opportunity if there is less competition, especially in the areas popular with foreign buyers.
On a more positive note, the Labour party have promised to reform the leasehold system. They have pledged to get rid of the system in the first 100 days if they are elected. While that might sound rather optimistic, it could be a good step in finally reforming what is an outdated system.
How has this been affecting the market?
According to Rightmove, “The average asking price for a house in London is currently £695,079, down 0.3 per cent from May but up 1.4 per cent annually.” The report continued to say that there are fewer properties coming on at the top end of the market, as would-be sellers are choosing to hold off selling until there is more political clarity. These sellers have the financial ability to hold of selling until the time is right for them, however the lower end of the market is business as usual.
While the demand has remained relatively high despite the nearing general election, mortgage rates are limiting the affordability of potential buyers. 5 year mortgaged rates currently stand at 5.04% in comparison to 4.94% in January.
Rightmove reported on monthly and annual changes by borough, here are a few of the highlights;
- Camden: 1% monthly change, 9.7% annual change
- Hammersmith and Fulham: 0.8% monthly change, 5.3% annual change
- Kensington and Chelsea: 1.1% monthly change, 1.5% annual change
Thinking of buying?
Where does this leave potential buyers who are currently considering whether to buy or hold off purchasing a property in London? My advice regarding when is the perfect time to buy remains the same – if you are buying for the long term, you should buy when is right for you. It is impossible to time the market, however history has proven that London is a very stable market to invest in and has experienced capital appreciation over time.
It’s safe to assume there will be fewer buyers over the next few months until the political scene settles, therefore there should be less competition. There might be fewer properties to choose from as sellers might wait for the market to strengthen, however that is another reason why working with a buying agent is key. As a buying agent, I have access to properties that never reach the open market. More importantly, it ensures you buy right – the right property in the right location at the right price. I have a track record of sourcing best in class homes for my clients at every segment of the market - from one bedrooms rental flats to five bedroom family homes.
If you are interested in purchasing a property in London please email iyad@iyadgrahne.com.