London property market pinata
At Lurot Brand we often find ourselves laughing out loud when a clever political cartoon gets passed around the office. The portraits may be unflattering, and the situations are invariably ridiculous, but these brilliant satirists nevertheless manage to use their comic skills to make a serious point about UK politics.
We salute the skill of cartoonists who are able to conjure up a brilliant visual joke, using just a few strokes of the brush or pen. For the cover of this summer’s Mews News magazine, we commissioned a cartoonist to sum up the way many London property owners, landlords and investors are feeling right now; but unfortunately, it’s no laughing matter.
It’s no exaggeration to say that Lurot Brand would like to take a hefty baton to the hikes in Stamp Duty, the tenant fee ban, capital gains taxed as income and other property taxes. Like other businesses and estate agents, we are not immune to the effects of recent political decisions. Lurot Brand is, however, fortunate to be involved in a niche business – mews properties in London, with clients who return to us again and again because they love living in a mews house. But we’re aware that many property owners and landlords have been severely challenged by the recent changes.
So, to the facts….
The Stamp Duty Doldrums – Under the new Stamp Duty rates imposed in April 2016, property over £925,000 and up to £1.5m is now taxed at a rate of 10% compared with 5% in 2014. While we all crossed our fingers and hoped that the Chancellor might use the March 2017 budget to remove the Stamp Duty rises of April 2016, our wish wasn’t granted.
Tenant Fee Ban Blues – The Tenant Fee Bill prevents landlords and agents from asking tenants to make any payments as a condition of their tenancy – with the exception of rent, a security deposit, a holding deposit and tenant default fees. It’s a lose-lose situation for both landlords and tenants, as rents will inevitably rise to cover the fees lost and it will become harder to rent out more expensive properties.
Capital Gains Grief – The government has changed capital gains rules so profits gained on the sale of buy-to-let property can now be regarded as taxable income, payable at income tax rates. The Office for Budget Responsibility has projected tax take-up figures from 2012 up to the year 2021/22: if their figures are correct, capital gains tax will have more than trebled over a decade of Tory government, from £3.8bn to £12.8bn per year.
Incredibly, the property market – battered and weary though it may be – is still fighting back. In London, Westminster has established a new peak, with prices up 19.7 per cent annually to reach £1,865,843. Lurot Brand remains undeterred and remarkably optimistic.
Have you been affected by this new legislation? We’d love to hear from you, so drop us a line to tell us about your experience and book a viewing to some of the remarkable mews properties for sale, which we have on our books.