Winkworth says speculation over the general election next May is already causing ripples that could affect the housing market, whatever the result of the vote.
It says overseas investors - which make up a substantial proportion of the central London market in which many Winkworth franchisees are active - could face a double whammy.
The first is that changes are already underway from the current government to bring Capital Gains Tax liabilities for overseas owners in line with UK nationals. If new plans currently under consultation are introduced, overseas owners of UK property would become liable for CGT from April 2015.
The extension of this tax to overseas buyers will inevitably impact investor returns. says a statement from Winkworth.
It says Land Registry data shows that the average price of a property in Kensington & Chelsea rose 159 per cent to £1.3 million in the 10 year period to June 2014. Creating a hypothetical scenario where CGT at a rate of 28% has been assumed - that's the rate currently levied on higher UK tax payers - Winkworth says the return on the initial investment will be reduced to 115 per cent.
The second whammy' is the possibility of a mansion tax. While details surrounding this proposed tax on £2m-plus properties remain vague, Winkworth says it is likely if there is a change of government.
Now the agency fears that in the period leading to the election, which is only eight months from now, there may be limited trading from high-end purchasers.
However, the agency sees a silver lining. It says that in the relatively recent years when a May election was held (1997, 2005 and 2007) the number of sales in the three months post-election (June to August) increased by between 20.0 per cent and 24.8 per cent compared with the previous three months. These figures exceed the usual increase of 15.9 per cent experienced over the same period in non-election years.
Comments
I don't see a reason why the Capital Gains Tax liabilities are not the same for both overseas owners and UK nationals! Maybe the introduction of this equality would prevent the overseas investors merely buying property to gain the value and possibly leave a bigger market for British investors.
'The average price of a property in Kensington & Chelsea rose 159 per cent to 1.3 million in the 10 year period to June 2014.'
This is just ludicrous. An average price of 1.3 million, [i]average[/i]. It's madness. Whichever government comes into power, they are going to have a job sorting out the mess that has been made of housing in the UK.
Would that be such a bad thing, though Russian and Chinese investors buying up property and then leaving it empty is one of the biggest issues facing the housing sector. I appreciate the money coming in from overseas is needed, but people buying up stock and then sitting on it until it rises in value, especially in London and the South East, is something that needs to be brought to an abrupt halt.