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Sellers of U.K. Luxury Homes Forced to Bargain Amid Brexit Woes

The report published Thursday found heightened Brexit uncertainty weighing on the property market as a whole.

Sellers of U.K. Luxury Homes Forced to Bargain Amid Brexit Woes
Homes at the Woodford Garden Village residential property in Manchester, U.K. (Photographer: Matthew Lloyd/Bloomberg)

(Bloomberg) --

Britain’s luxury property market remained under pressure in July as more million-pound-plus homes sold for under the asking price.

Almost 70% of agents said the prices paid for homes marketed at over 1 million pounds ($1.2 million) fell short, according to the Royal Institution of Chartered Surveyors.

The report published Thursday found heightened Brexit uncertainty weighing on the property market as a whole, with new Prime Minister Boris Johnson threatening to let Britain crash out of the European Union on Oct. 31 unless a new deal can be negotiated.

RICS Chief Economist Simon Rubinsohn said the findings contain “little comfort” for the housing market. “Some support may be provided by an easing in the cost of money which could feed through into lower mortgage finance costs, but this may be insufficient to provide a spur to lift activity given the clouds hanging over the economy,” he said.

RICS said an index of prices returned to clear negative territory. Weakness was felt most in London, East Anglia and the Southeast, where values are expected to continue declining over the next year -- despite a falling pound making it cheaper for foreigners to buy U.K. assets. Elsewhere, the outlook is brighter, with agents anticipating healthy prices gains in Scotland, Northern Ireland and Wales.

Rental prices are also expected to rise amid growing demand and diminishing supply. RICS said that many landlords starting to sell up because of higher taxes, a ban on charging tenants one-time fees and proposals to abolish section 21 notices, which allows them to evict tenants at the end of their contracts without reason.

Christopher Ames, Ames Belgravia agency in London

“There remains a motivation from owner-occupiers to sell/relocate by end of the year even if they have to conclude below their anticipated price.”

John Frost, The Frost Partnership agency in the southeast

“Sales prices are lower than clients’ expectations.”

Ryan Williams, McCartneys LLP agency in the west midlands

“Meddling in stamp duty and abolition of upfront fees hasn’t helped in this sector. Abolition of Section 21 notices will be a further disincentivise landlords.”

Richard Tozer, Eden Lettings & Management agency in northwest

“Changes to taxation of revenue and proposals to remove s.21 notices are causing landlords to consider selling.”

To contact the reporter on this story: Eddie Spence in London at espence11@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Andrew Atkinson, Brian Swint

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