London Luxury House Sales Rebound as Buyers Race to Beat New Tax
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London’s luxury property market saw a surge in sales last quarter as buyers rushed to snap up houses before Prime Minister Boris Johnson follows through on a campaign promise to slap a new tax on purchases by foreign investors.
Deals for the capital’s most expensive properties -- those going for 5 million pounds ($6.5 million) and above -- soared by 78% in the last three months of 2019 from the year-earlier period, according to LonRes. The number of sales was the highest in three years, the property research firm said in a report on Monday.
The buying spree wasn’t limited to the very top of the market. Across London’s priciest neighborhoods, such as Mayfair and Chelsea, home sales increased by 34%, the biggest gain since mid-2017.
A 3% levy on foreign buyers of homes in England was included in the Conservative Party’s manifesto before the December election in which Johnson won a commanding majority in Parliament, allowing him to deliver on his Brexit plans. It’s possible Chancellor of the Exchequer Sajid Javid could announce it in March as part of the budget. The tax is intended to cool prices and help locals get a foot on the housing ladder.
“There are early indications that the relative political certainty provided by last month’s general election result is starting to boost activity in prime London markets,” Tom Bill, head of London residential research at broker Knight Frank, said in a separate statement. “In the 10 working days following the election, Knight Frank transacted more exchanges in prime central London than any equivalent period since December 2016.”
Another factor driving the fourth-quarter sales surge was confusion surrounding the government’s plans for changes to the sales tax, called a stamp duty, which had depressed the market in the preceding months, according to LonRes. That issue dropped off the political agenda as the Brexit-dominated election approached, emboldening buyers to go ahead with purchases in the year’s final three months.
Some activity has even returned recently to the pinnacle of the market, with Chinese property magnate Cheung Chung Kiu closing in on breaking London’s price record with the purchase of a 45-room mansion in Knightsbridge for more than 210 million pounds.
©2020 Bloomberg L.P.