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Are Londoners really ditching London property market?

The London property market is the crown on top of the UK market and has been for many years. London itself has one of the most diversified cultural spreads and while Brexit has caused concerns, are things as bad as some people are suggesting? A report by Hamptons International highlighted the number of people selling their London properties and reinvesting in the Midlands and the North. While these figures may have increased significantly in recent years, are Londoners really ditching the London property market?

BASIC STATISTICS

The report by Hamptons International confirms that the number of people relocating to the Midlands or North of England has trebled since 2008. In 2008, one in 17 selling their London properties reinvested in the North or Midlands while the figure now stands at one in five. We also know that the first six months of 2018 saw 30,280 Londoners selling their property to locate outside of the capital – an increase of 16% on the previous year. However, when you consider the population of London is around 8.8 million this is only a tiny percentage of London property owners.

VALUE FOR MONEY

The price differential between London and the Midlands/North of England has been well documented over the years. Indeed figures suggest that those quitting London have spending power of over £420,000 when looking for a new home. Average spending for London leavers in the North and Midlands is as follows:

• North West (7% of London leavers) average spend £149,530
• East Midlands (6% of London leavers) average spend of £167,790
• West Midlands (5% of London leavers) average spend of £181,220

To give some balance, the North East of England only attracted 1% of London leavers with an average spend of £132,730. It is also worth noting that the South and East of England still attract the highest percentage of London leavers:

• South East (38% of London leavers) average spend of £575,010
• East of England (30% of London leavers) average spend of £394,480
• South West (9% of London leavers) average spend of £544,580

While there are various issues to take into consideration, such as employment prospects, these figures reflect the fact that London property owners would appear to be seeking better value for money. Evidence suggests that some of those moving to the South and East of England are commuting into London and even securing additional accommodation through the week.

NEVER UNDERESTIMATE LONDON

It is fair to say that Brexit is being used as a reason to “rebalance” London property market prices compared to the rest of the UK. The difference in property values between London and the rest of the UK is well documented as is the perceived value for money. However, this does not take into account the unique characteristics of London.

So far, the expected evacuation of London by some of the leading business lights has failed to materialise to forecast nightmare levels. Yes, Brexit does create a number of challenges but the London business market, and the financial markets in particular, have a history of adapting to change. It would be unfortunate if the previously tight Brexit deadlines are extended, causing further confusion, but those who write-off the London property market do so at their own risk. The number of people leaving the capital is increasing but considered against the overall population of London there is nothing to worry about, yet.

Source: Property Forum

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Over half of London properties to be priced out of stamp duty relief in 10 years

Over half of the 52,002 properties that currently qualify for a stamp duty relief for first-time buyers in London will be priced out of the tax cut in the next ten years, according to mortgage adviser L&C Mortgages.

The company looked at how many homes across England are and will be available for under £500,000 by 2028, and therefore qualify for the Government’s first-time home buyer’s relief.

The research shows that as many as 4m homes across England could move out of the stamp duty relief threshold in the next 10 years due to rising house prices.

In London, the total proportion of properties that would benefit from the stamp duty cut will drop from 57 per cent to 28 per cent by 2028.

The study also found that London has a relatively low proportion of properties within the band eligible for a cut, primarily because just over two fifths of sales are over £500,000 and therefore not applicable for the stamp duty cut.

In Brighton, almost a third (30 per cent) of properties that could currently be eligible to pay less stamp duty are forecast to move above the threshold in ten years.

However, homes in Nottingham are the most likely to remain within the price bracket for tax exemption over the next ten years.

The research also found that Southampton, Norwich, Bristol and Plymouth are currently the best places to buy to avoid stamp duty.

City Houses below £500,000
Southampton 88 per cent
Norwich 87 per cent
Bristol 87 per cent
Plymouth 80 per cent
London 57 per cent

According to the research, Nottingham will have the most houses within the price bracket for tax exemption over the next ten years.

David Hollingworth from L&C said: “It’s alarming that in cities in the South, so few properties will see any type of benefit from the stamp duty changes in 10 years’ time.

“Our research shows that many of the first-time buyers, especially those based in southern England, who are set to pay less or nothing will need to act fast before many of the properties currently eligible fall out of the price bracket that qualifies for the cut.”

The research also found that almost a third of first-time buyers don’t know if the stamp duty abolition will benefit them when they buy their first home.

However, a fifth of first-time buyers have changed the area in which they want to buy in order to pay less or no stamp duty, which rises to 37 per cent of Londoners.

James Hender, head of private wealth at Saffery Champness, said: “The research shows that people are aware of the stamp duty relief and are changing behaviour to benefit from the savings.

“House price inflation could render this relief meaningless. Although higher stamp duty receipts would be the result, a future Chancellor may wish to raise the thresholds to ensure that first time buyers continue to get a helping hand onto the property ladder.”

Source: City A.M.