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Super-prime tenancies rebound in the second half of 2020

Super-prime tenancies, that’s tenancies with a £5k+ pw rent, have seen a resurgence during the COVID-19 pandemic with the period between July and December 2020 being the most active in the past seven years.

In total there were 137 such tenancies taken out in London during 2020 – this was down 11% on the 154 taken out in 2019. However, following the onset of the pandemic this changed with 87 tenancies agreed in the last six months of the year.

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It underlines how demand has not been dented by the pandemic, according to Tom Smith, head of super-prime lettings at Knight Frank.

He said: “A big driver in recent years has been the rates of stamp duty in the sales market and it is still a big motivation for tenants.

“That rationale is still there and will arguably grow with the extra 2% surcharge that overseas buyers will have to pay from April.”

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However the market is now being hit with a lack of supply in areas such as Chelsea, Notting Hill and St Johns Wood.

Smith said that this may improve in the coming weeks as lockdown restrictions continue to ease.

He added: “We are now having conversations with owners who say they would be open to either a sale or a letting and some strong offers are coming through in the sales market now.”

By Ryan Fowler

Source: Mortgage Introducer

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Prime property remains robust throughout pandemic

The UK’s prime property market is evolving rather than suffering through the pandemic according to new data from wealth manager and private bank Coutts.

The bank’s client-data demonstrated a rise in buying activity in main homes, second homes and investment properties when compared to previous years.

Outside of London, which remains the UK’s largest prime market, the south east was the most popular area for new mortgages for main homes, particularly Kingston upon Thames, Guildford and Oxford.

Coutts’ data also suggests a renewed interest in the staycation with more people looking to secure a ‘home away from home’ to provide a change of scenery during lockdown.

The biggest increase in purchases during 2020 was of holiday homes, which increased by 43% in 2020 compared with the year before.

The most popular locations being the south east and south west of England, with Guildford and Tunbridge Wells proving popular in as well as West Cornwall and Gloucester.

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Peter Flavel, chief executive at Coutts, said: “I know from my conversations with our clients over the last six to eight months that many are reassessing how they live and work.

“A lot of them are looking at their homes thinking about whether they match up to their lives today.

“Our clients have found that their homes have increasingly had to become school rooms, workplaces and social spaces. It’s not surprising that they’ve been looking for more space.”

“Schools will go back, and restaurant and pubs will re-open.

“But working from home could be here to stay, and the home cinema could be about to take the place of the multi-plex in many people’s lives.

“This could make smaller properties less attractive.”

The government plans to introduce a 2% stamp duty surcharge for foreign buyers of UK residential property from 1 April, which Coutts suggests will provide added impetus for overseas investors to transact in Q1.

The stamp duty holiday deadline will also prompt strong demand in Q1 as investors rush to beat the deadline, according to the bank.

Across prime London, there are 16.2% more properties under offer now compared to a year ago, and Coutts believes a lot of this demand is being driven by buyers looking to transact before the SDLT holiday ends.

Alan Higgins, chief investment officer at Coutts, added: “The market will need time to adjust to these changes and we could see a softening in demand in the second quarter as a result.”

But long-term, the bank believes the momentum seen towards the end of 2020 continue throughout the year ahead, largely down to social changes and a favourable macroeconomic environment.

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Higgins added: “Firstly, the uncertainty with respect to Brexit is largely in the past.

“Secondly, we expect a V-shaped economic recovery as the vaccine distribution progresses.

“And thirdly, we should the release of pent-up demand from buyers and sellers who put plans aside during lockdown.

“In the meantime, low interest rates make financing cheap, and returns attractive compared to other assets for investors.

“We expect close to zero rates in the UK for the next few years at least.

“The Bank of England’s Monetary Policy Committee is likely to ignore any rise in inflation and focus on reflation, and this is the main positive factor for residential property.”

By Jessica Nangle

Source: Mortgage Introducer

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Brexit uncertainty putting brakes on prime property market, report finds

There is a build-up of buyer demand in the prime property market which could trigger increased sales when there is more certainty over Brexit, according to a report.

The prime housing market, which includes homes in the top 5% price bracket, held up “better than expected” in the first quarter of 2019, given heightened political uncertainty and fragile consumer sentiment, according to real estate adviser Savills.

There is a growing pool of demand developing among buyers who are taking “a wait and see approach”, it said.

Prime property values in London are 2.5% down annually, but on a quarterly basis they slipped by just 0.3% in the three months to the end of March.

Savills said this was the smallest quarterly fall in London since the Brexit vote.

Brexit uncertainty means many would-be buyers and sellers continue to sit on their hands, Savills said.

In the first three months of the year, new buyer registrations for properties over £1 million were up 36% in central London and 11% across the rest of the capital, but this has not yet translated into increased market activity, it said.

Lucian Cook, head of UK residential research at Savills, said some buyers, particularly those in the most expensive central postcodes, “are sensing a market that could be at or close to its bottom”.

He continued: “There is a sizeable, growing pool of demand developing amongst buyers adopting a wait and see approach until the outcome of Brexit negotiations becomes clearer.

“Whichever way the Brexit pendulum swings and whatever the fundamentals of demand that underpin the prime housing markets, it could be some time before we have a clear understanding of what lies ahead – both politically and economically.

“This demand could translate into an uptick in transactions once there’s clarity, but that is unlikely to be matched by price growth in the short term.”

Savills said that among prime markets across Britain, Scotland is doing particularly well, with Edinburgh being the “star performer” with prices up by 7.4% annually, helping push prime house prices in Scotland up by 2.3% annually overall.

By contrast, prime property values in cities in southern England which have previously performed strongly have softened over the past year.

Oxford, Cambridge, Bristol and Bath have all seen prime property prices fall annually, Savills said.

Mr Cook said: “Brexit remains the biggest single constraint on the market, contributing to a lack of urgency among buyers who will only commit when they perceive real value.”

By Vicky Shaw

Source: Yahoo Finance UK