There is some reported evidence that the anticipated ‘Boris Bounce’ is beginning to be bear fruit, with the London property market in particular showing increased optimism from a year ago.
Knight Frank is upbeat in its London Report, saying that nearly £50 billion of global capital is ‘waiting to deploy’ in London commercial property and that 92% of those surveyed in the 2020 Landlord and Investor Survey planned to buy commercial property.
The residential property market also looks economically promising, with the Nationwide Building Society reporting a 14-month high in UK house price growth, which increased by 1.4% in January from December and 1.9% since January 2019. The Halifax Building Society said annual house price growth reached 4.1% in January.
Property website, Zoopla, said in its December cities report that property prices in the UK’s top 20 cities rose around 3.9% in December, with Edinburgh showing the highest growth at 6.1% year on year, and London house prices gaining 1.9%.
The Royal Institution of Chartered Surveyors reported in its monthly survey of Chartered Surveyors that the number of people looking to purchase property had risen in January, as had the number of properties for sale.
The new optimism is despite the government’s reported recent musings over a ‘mansion tax’ to appease Labour voters and reduce the perceived economic inequality that exists between the South East and the former Labour strongholds. The recurring tax would apply to owners of high-value homes, that are mainly located in London and the South East.
Boris Johnson criticised a similar idea when he was mayor of London, describing it as a ‘tax on London’ when it was mooted by Labour (who stole it from the Lib Dems). Thankfully, introduction of the tax does appear to have been scuppered with the departure of Sajid Javid.
Critics have said it would have burst the current Brexit-bubble, and the talk could well have been tactical and unlikely to be put into practice. However, if it had been implemented it would have been unlikely to help anyone at the bottom of the housing ladder and most likely strike the UK’s sixth biggest lender – the Bank of Mum and Dad who might be able to help them.
Analysis of proposals for a similar tax in the past has shown that owners of family houses in the more affluent areas would in time pay more than the value of their properties.
Indeed, there is evidence that house prices would likely be detrimentally affected by such a change. In July 2019, a new one-off property tax was introduced in New York on $1 million plus homes that has already caused home sales and transaction volumes to plummet. In addition, the proposed new UK tax would have been charged annually and have a massively detrimental effect on house prices and homes would soon depreciate in value.
First Homes Scheme
Poised first-time buyers will be looking forward to more details of the First Homes scheme which was mentioned in the Queen’s Speech and will offer a new discount of 30% for groups including key workers and first-time buyers purchasing in their local area. The savings will be passed on to future buyers so they too can benefit from reduced prices and the scheme could initially result in savings on new-build property of over £90,000.
There are few details over how the scheme will work and it is unclear whether the discount will apply to the private market, housing associations properties or council houses. The definition of a local buyer is also yet to be made clear.
The First Homes scheme could eventually replace Help to Buy, which is currently scheduled to end in 2023.
Ask a Property Surveying Independent Chartered Surveyor for survey advice when buying property.