The latest Land Registry data suggests transactions in the capital are the lowest ever recorded. There were just 55 transactions in the whole of the Westminster borough, which is the lowest ever number recorded by the registry’s open data – 60% lower even than in February 2009, immediately after the banking crisis broke. In Wandsworth, the amount of properties sold has fallen by 72% compared to the same period last year. Stamp duty rises have exaggerated this decline but the underlying issue is that there are simply too few homes to go around. However, the mechanics of the market are such that it is driven by demand and that remains high at the moment, for properties correctly priced. We need the economy to continue to grow strongly, increasing confidence and providing stability. The International Monetary Fund have just increased their latest growth forcast from 1.5% to 2%. This increase is bigger than any of the UK’s other major economic rivals including Japan, France, Germany, the US and is double the predicted figure after the Brexit referendum. UK unemployment is at its lowest level for a decade – at 4.7% and with the ultra-low interest rates, the fundementals for the UK property market are strong.
Last year, Theresa May stood on the steps of Number 10 Downing Street and pledged to help those ‘just about managing’ families and build ‘a country that works for everyone’. After a divisive referendum campaign and a period of political turmoil, it was a reassuring message. One of the government’s priorities was to tackle Britain’s housing crisis and the Housing White Paper earlier this year, gave some welcome measures to stimulate more house building. The rhetoric has been strong but so far, we have seen little positive action. Indeed, many of the policies introduced have had a negative impact to the sales and lettings market. Developers are reluctant to build, if sufficient profits aren’t there and private landlords (many own a property as part of their retirement plans) have been hit by the reductions in mortgage interest tax relief, which took effect in April 2017. This removed the landlords’ ability to deduct their residential property finance cost from taxable income, replacing this relief with a tax “deduction” equivalent to the basic rate of income tax. We have seen Landlords increasing rents to compensate for this ‘loss’. The Royal Institution of Chartered Surveyors (RICS) have even gone as far as to predict that rents are set to rise by a quarter, over the next few years. Increasing rents were not the governments intention and penalises some of the most vulnerable people in society – the young and the low earners.
Over recent years, the private rental market has been hit by tax hikes, benefit cuts, and growing regulations all of which have made it harder for tenants to access and afford a place to live. The same changes have made it more difficult for good landlords to provide the quality accommodation that tenants have a right to expect and have discouraged further investment in new housing. Attacking the private rented sector won’t solve the UK’s housing crisis, it will make it worse. If the government wants to fix what it calls the ‘broken housing market’, it has to get on and build more homes and encourage developers to build the type of properties most needed.
At our office in St James’s, potential purchasers are able to discuss their requirements with professional qualified staff, who can answer questions about prices, market conditions, commuting times and schools. We are in a unique position to harness these potential buyers with prominent street level offices with large window displays.