Demand for property in prime areas of central London continues to outstrip the availability of homes on the sales or rental market.
The rental market in Belgravia, for example, remains strong and is likely to offset the extra 3% levy now being applied to standard stamp duty rates on all purchases of property that is not intended to be the buyer’s main home.
While the UK government has also ruled that residential property is excluded from a tax cut that will see investors in other types of asset benefit from the higher rate of Capital Gains Tax being reduced from 28% to 20%, property in exclusive areas of central London remains a wise investment.
Belgravia-based estate agent Best Gapp reports that all the time the Bank of England’s base rate remains at 1% or below, London experiences economic growth and demand for property in central areas of the capital outstrips its supply, homes in prime central London and beyond will hold their value at the very least and in all likelihood rise in price.
Doubts about the property market in Mayfair, for example, have been raised because of the possibility of the UK voting to leave the EU.
Sabre-rattlers have claimed the value of homes could drop by up to 18% over the next two years if the UK leaves the EU, but Best Gapp points out that the small number of property sales in Mayfair can lead to extraordinary statistics.
Median property values in the SW1X postcode, which covers Belgravia, Knightsbridge, Westminster, jumped 176% in 2015 from £2.1m to £5.8m thanks to the £17m sale of a flat at One Hyde Park.
This was 162.1% higher than the annual growth rate of property values in the rest of London, which the Land Registry house price index puts at 13.9%.
A better barometer is rental prices, says Best Gapp. In Belgravia, the average rental value is currently £1,358 per week. But that figure takes into account a wide range, from £335 per week to £5950.
This compares with sale prices ranging from £1.2m to £9.5m.
Best Gapp comments that while values may not rise to the extent they have done over the past five years, demand for the most desirable homes in central London will remain strong and it is difficult to see them losing value in the long term.