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People buying the most expensive properties in the London are increasingly seeking the highest quality and amenities such as concierge services, secure parking and leisure facilities, new research has found, and price still matters. Also, after exceptionally strong price growth in the so-called golden postcodes such as Kensington and Chelsea, buyers are looking further afield for value in the super prime London real estate market. Indeed, according to the latest research from international real estate firm Knight Frank, the market is still sensitive to the Stamp Duty changes introduced at the end of last year and price and amenities matter. Richard Cutt, of Knight Frank’s prime residential team, pointed out that while the idea of a mansion tax has fallen from the political agenda, December’s increase in stamp duty for properties worth more than £1.1 million means the transaction tax on a £10 million property has risen to £1.1 million from £700,000, a difference equivalent to 4% of the sale price. Despite this increase, the election of a majority Conservative government caused some sellers to anticipate a short term spike in prices, which failed to materialise. ‘Nobody assimilated the stamp duty changes while the election was on the agenda. Meanwhile, those who expected the market to strengthen after the election are realising that it is still finely balanced, sensible pricing being the key,’ said Cutt. He explained that while reality has begun to set in with some vendors, it will be telling to see what impact the changes have on overall stamp duty revenues when the figures are released later this year. Despite this Knight Frank super prime sales rose by a quarter in the year to the end of June 2015 even although a series of factors, including political uncertainty and the new stamp duty rates meant volumes across the whole super prime market shrank by a fifth. Furthermore, price growth at the £10 million plus level has underperformed the prime central London average, growing 4% in the two years to June versus 10.3% in prime central London. Further changes in July’s Budget ended the permanent status for non-dom residents and widened the inheritance tax net to property held offshore. It comes on top of a succession of tax changes in recent years that make it increasingly difficult to argue that high value residential property is under taxed. ‘It’s too early to detect a discernible impact on sentiment at this stage, though there may be a marginal effect further down the line,’ said Tim Wright, also from the prime property team, in relation to the non-dom change. The research shows that the area covered by £10 million plus sales in London in the year to 30 June 2015 is wider than three years ago and now encompasses areas like the Southbank. ‘A number of best in class developments are coming through and, crucially, achieving critical mass in areas perhaps not considered super prime in the past,’ said Cutt. As well as casting the net further, the… Continue reading →
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