Osborne’s Spring Budget this week included changes to property taxes in the high end of the market and further measures to encourage house-building. Here are some reactions from key players in the UK property market.
“It is unlikely that reducing the threshold for 15 per cent stamp duty and ATED [Annual Tax on Enveloped Dwellings] from £2million to £500,000 will have a material impact on the market,” said Liam Bailey, global head of residential research at Knight Frank. “Our estimate is that potentially only 10,000 properties out of the total 1 million private dwellings which are valued between £500,000 and £2million are likely to be held in non-natural structures. Since the changes to £2million-plus rules in 2012, the limited number of buyers using this purchase route have begun to favour purchase in their personal capacity. There will be increased administration and costs for those affected, but a limited impact on demand or pricing in the market.”
Meanwhile, Adam Challis, head of Residential Research at Jones Lang LaSalle commented: “We welcome the announcement of a new Development Investment Bank for small house builders and self-builders. The barriers to entry are too high for this group, which has weakened competition, innovation and importantly the ability to deliver higher volumes of new supply across the UK. This investment bank is exactly the sort of strategic intervention needed to expand housing supply and this Government deserves credit for acting so decisively to drive a step-change in house-building.”
Simon Rubinsohn, chief economist at RICS, said: “Yet again, the Chancellor has failed to overhaul the stamp duty system, with wages well below inflation and rents rising rapidly for years, many have been struggling to save for a deposit, let alone meet a huge tax bill. Helping more buyers to enter at the lower end of the market would have resulted in more movement and transactions, freeing up stagnant property chains and bringing badly-needed housing onto the market. While plans for regeneration and new homes in Barking, Brent Cross and the new garden ‘city’ at Ebbsfleet – which is really just a garden village – will contribute a little housing in the South East. These numbers are a drop in the ocean and do nothing to help others in the UK. More importantly, they don’t deliver the mix of homes we need across society, from the private rented sector to affordable and social housing.”
London’s Southbank district is the rising star of the capital’s property market, recording record rises in rental take-up and investment, according to a leading global property consultancy.
New research by Knight Frank – which labels the Southbank London’s third City, comparable to the City of London and City of Westminster – take-up of commercial space doubled in 2013 to 1.3 million square feet, which is the highest level since 2007.
Prime rents have risen 17 per cent in the last year to £52.50 per square foot in 2013, and are forecast to grow another 19 per cent in the next five years to £62.50 per square foot added the consultancy. This is a record for the Southbank market – in 1993 Southbank prime rents were just £15 per square foot.
The district has seen record investment of £2.6billion, with future growth to follow thanks to new transport infrastructure and a wave of upcoming mixed-use schemes. Stephen Clifton, Head of Central London Offices at Knight Frank, commented: “Back in the 1990s, Southbank was considered to be a ‘fringe’ or ‘back office’ district, but with firms like News UK, Al-Jazeera, and Ogilvy & Mather moving their HQs there, I would say it is firmly established as a core business district. Across the world we are seeing former industrial areas transforming as media creative firms open up city-centre office locations. We are seeing this in New York, in places like the Meat Packing district and Brooklyn, and the same is happening in Southbank, which is a similar former-industrial, up-and-coming district.
“What has transformed Southbank’s fortunes is that high quality office buildings have been developed in recent years, and new transport infrastructure built, which has opened up the market to tenants seeking new headquarters buildings. Southbank has future waves of office development to come around London Bridge, Waterloo, and Battersea, and new infrastructure projects – like the Northern Line extension, and the London Bridge station upgrade. So I would say the foundations are being laid for another burst of growth.”
London has the fifth most expensive high-end rental property in the world and comes second in Europe after Moscow, according to the a leading global consultancy for the management and assignment of expat employees.
Rents for an unfurnished, three-bedroom apartment in a sought after area of the UK’s capital have gone up two per cent over the year and now average around £5,000 per month, reported the consultancy ECA International in March.
Hong Kong remains the most expensive location in the world to rent a high-end three bedroom apartment, with the average cost in a sought-after area of the city now £7,350 per month. Moscow is the second most expensive city, followed by Caracas (Venezuela), New York and then London.
A considerable part of London’s rental market comprises foreigners relocating for work who require somewhere desirable to live. For large blue chip companies or international financial institutions, providing their employees with high end accommodation is typically part of the relocation package.
“Housing provision for expatriate staff is an expensive, important and often emotive element of the overall remuneration package,” said Rebecca Darling, Head of Production, ECA International. “A fair and competitive yet cost-effective approach can best be achieved by being consistent across locations. This can be facilitated by establishing budget tables based on family size and, in some cases, seniority, all of which should be factored into a well-considered housing policy. Companies also need to manage the expectations of their global staff: someone from the United States, for example, may well be used to a more spacious property than they are likely to find if they are assigned to Hong Kong or London.”