Central London Property Boom Continues
In stark contrast to the high number of people looking at buying property in central London, there is a major lack of residential properties available in the heart of the capital, helping to push property prices higher in the process, according to Knight Frank.
Central London estate agents report that the average price of a property in prime central London increased by 0.9 per cent in January, compared to an average of just 0.2 per cent across the UK as a whole, taking the annual rise in the heart of the capital to 8.4 per cent.
Demand for residential properties in central London has been boosted in recent months by the daft Finance Bill which gave some clarification on the Annual Residential Property Tax (ARPT), which helped offset the downturn in sales witnessed for much of last year.
A spokesperson at leading Marylebone property consultants Napier Watt said: "The new property taxes affecting high value residential dwellings have been in the pipeline for 12 months – but became a reality from the beginning of April 2013. The new taxes affect properties worth over £2 million which are owned by UK or non-UK resident companies [as well as certain other kinds of entities].
"First, the annual residential property tax [ARPT] will be payable each year. It applies to valuable properties which on 1st April 2013 are owned by companies."
"Second, there is a new capital gains tax charge payable at the rate of 28% on the post-6th April 2013 element of any gain realised on the sale from 6th April 2013 onwards by companies of high value residential properties."
Solid rental returns and good prospect for capital growth have also played a part in attracting many investors, further boosting demand for properties in central London.
According to fresh data by estate agent Ludlow Thompson, average monthly rents in central London have now soared past £5,000 per calendar month.
Rents in SW1, which includes the elite enclaves of Belgravia and Knightsbridge, are the highest, averaging £6,171 a month. Next is W1, covering Mayfair, Marylebone and Soho, where rents are £5,493, and Chelsea in SW3 on £5,442. Ludlow Thompson director Stephen Ludlow said: "Rents have been pushed to astronomical levels in the West End and areas such as Sloane Square, Kensington and Knightsbridge by oligarchs and other global jet set members competing to live in a very limited area of London."
International cash buyers benefitting from the weak sterling advantage are also contributing to greater demand for homes in prime Central London, reports Cluttons.
Compared to the price peak in the third quarter of 2007, buyers from the Far East are now benefitting from price discounts of as much as 60 per cent and buyers from the Middle East as much as 30 per cent, as a result of the weakened sterling currency. This advantage looks set to continue, with no immediate appreciation in the value of sterling predicted.
Sue Foxley, head of research at Cluttons, said: "International buyers have long bolstered demand for property in the capital, pushing up prices as the supply shortage continues."
A growing mortgaged domestic home buyer market means that international purchasers are likely to see increased competition for properties in central London, helping to push property prices even higher in the process.
