A leading London estate agency is reporting a surge in overseas buyers sealing deals ahead of the government’s new stamp duty surcharge on foreign purchases.
Prime Minister Theresa May announced the new surcharge at the Conservative party conference, saying it would be between one and three per cent and would be implemented following a yet-to-be-announced consultation period. The measure has drawn a hostile response from the agency industry.
Now Guy Bradshaw, head of London residential at UK Sotheby’s International Realty, says the threat has prompted buyers to get off the fence.
“We’re expecting transaction levels to peak considerably across the prime central London market in the coming months following the government's announcement. International buyers will be looking to get deals over the line before this comes into effect” he says.
“We’ve already seen a rise in activity with a number of international clients which have previously been slow burners now transacting. This has been particularly evident in US buyers, with our team receiving constant referrals from across the pond this summer, especially from our Miami and New York affiliates.”
The double whammy of the weak pound - down around 15 per cent since the 2016 EU Referendum - and falling London house prices may also have contributed to the surge in activity from overseas purchasers.
Addressing the latest Office of National Statistics and Land Registry house price data, which showed an average 0.2 per cent fall in London prices in August, Bradshaw says: “On the ground we are seeing vendors adopting a more pragmatic position on the price point they are willing to accept. However, there is no generic amount that sellers need to drop their asking prices by to secure a sale.
“Every price band across the London market is sensitive in its own way and this is reflected in the discrepancy in price changes across London's boroughs which range from price drops of 10.1 per cent up to price increases of 7.3 per cent.”
The ONS/Land Registry data show house prices across the UK as a whole climbed 3.2 per cent in the year to August, the weakest growth rate since August 2013.
Average UK house prices hit £233,000 in August, rising £7,000 higher than the same month last year and £1,000 higher than in July this year. Average house prices in London are now £486,000.
“While the annual growth rates of the Midlands and the north of England have remained broadly stable over the past two years, the south and east of England has witnessed a sustained slowdown” says the report accompanying the statistics.
Across England, house prices increased by 2.9 per cent in the year to August, slowing down from 3.3 per cent in July.
Annual house price growth of 6.2 per cent was recorded in Wales; in Scotland it was 4.1 per cent and in Northern Ireland 4.4 per cent annually.