- Chestertons latest London Residential Property Market Report reveals an increase in sales in the UK capital’s property market
- A weak pound, property prices down by 0.7% in higher value London locations, and the stamp duty holiday, piquing the interest of overseas investors
Dubai, United Arab Emirates, 9 November 2020: According to the latest research from Chestertons’ London Residential Property Market Report Autumn 2020, lower property prices, the current stamp duty holiday, and the weak pound are motivating Middle East investors to purchase property in the capital.
Overall, during the period July to September, the London property market gathered considerable momentum, with a 21% increase in the total number of properties available for sale at the end of September compared to the end of June and 30% higher than September 2019. Sales have also increased, a direct result of overseas investors from the Middle East, Hong Kong, China, and France.
Dennis Chan, Chestertons’ Global Head of International Sales, said: “Sales and enquiries from overseas buyers witnessed a surge in the last quarter, a direct result of the weak pound, lower prices in many sought after areas, and savvy investors looking to take advantage of the current stamp duty holiday which is scheduled to end at the start of April 2021.
“This has been buoyed by forecasts of recovery within the UK economy with economic growth in 2021 of 6.4% compared to a projected fall of 10.1% for 2020 as a whole. However, the ongoing impact of the COVID-19 crisis remains to be seen.”
The report revealed the number of sellers opting to reduce the asking price of their properties between July and September rose by 129% compared to the preceding three months, and 76% higher than the same period last year.
Chestertons’ price index showed that average prices for properties in London’s higher value locations, such as Chelsea, Knightsbridge, and Mayfair, were 1.4% lower than at the end of June and were 0.7% lower than in September 2019.
Investors are also able to take advantage of the UK Government stamp duty tax holiday initiative, either as a homeowner, by purchasing second homes or buy-to-let properties.
A homebuyer purchasing their first property will be exempt from paying any stamp duty tax, up to GBP 500,000 (AED 2.36 million), resulting in a potential saving of up to GBP 15,000 (AED 70,000). The zero percent rate was only previously applicable to properties valued up to GBP 125,000 (AED 587,500), with the rate increasing to 2% up to GBP 250,000 (AED 1.175 million) and then 5% up to GBP 925,000 (AED 4.347 million).
“This would mean Middle East investors purchasing second homes or buy-to-let properties up to GBP 500,000 (AED 2.36 million) will be subject to a 3% surcharge. From the 1st April 2021, this will increase to 5%, therefore an investor from Dubai purchasing a buy-to-let property in London worth GBP 300,000 (AED 1.14 million) between now and the 31st March would have the potential to save GBP 6,000 (AED28,200),” said Chan.
In the London leasing market, although rents fell by 7.5% from January to September, demand remains incredibly high with Chestertons recording a 170% increase in the number of tenancies it agreed compared to the previous three months and a 42% increase compared to the same period last year.
“From a property price perspective, we expect prices to grow by up to 2% in 2021, and believe there is potential for rents to recover more quickly if corporate demand picks up and foreign students are confident of returning to the UK. This underscores the strength of the market and could provide further impetus for Middle East investors,” concluded Chan.
Chestertons MENA offers a full range of property services, including residential and commercial sales and leasing, investment agency services together with property management, strategic consulting and valuation services. In addition, Chestertons MENA has a very active international sales division, specialising in the sale of prime, off-plan and completed, central London apartments and houses to investors from across the entire MENA region with 34 offices across the UK capital.
With over 200 years of experience, Chestertons is one of the leading international property consultancy firms, in addition to one of the biggest networks of branches in London, Chestertons also has offices throughout Europe, reaching Australia and Singapore and a burgeoning Middle East network with offices in Abu Dhabi, Bahrain, and Dubai.