New research has indicated that as a result of changes to stamp duty rates, restrictions on borrowing and the rising value of the pound, property sales across the capital have cooled.
According to Benham and Reeves Residential Lettings, the much-expected post election surge in sales has not happened and as a result has led to stale prices and a dip in transaction numbers.
Rental rise
On the other hand, the lettings market in the capital was found to be growing, with values increasing sharply across the majority of London postcodes. Data from the report shows that rental values rose by between 2%-4% in London during the last quarter, with particularly strong growth recorded in the centre of the capital.[1]
Kensington saw rents rise by just over 7% in the period, with Chelsea almost matching this substantial growth rate. However, even better rises were recorded in parts of East London with growth of 11% in both Bethnal Green and Bow.[1]
Lettings Director of Benham and Reeves Residential Lettings Marc von Grundherr, commented, ‘George Osborne reformed the stamp duty system in his Autumn Statement last December, it had a huge impact on the property market in London. Most homebuyers in London are paying considerably more in stamp duty with the top rate now standing at a staggering 12%.[1]
‘Inevitably, people are choosing to rent rather than buy and even those who are hoping to buy will end up renting for longer to save for this additional cost. The stamp duty changes have been a gift horse for many landlords who have seen rents stagnate over the last few quarters,’ von Grundherr added.[1]
[1] http://www.propertyreporter.co.uk/landlords/rents-rocket-as-londons-sales-market-finally-cools.html