Outer Metro Area seeing rise in home price
London’s housing market surged in the early months of 2016; an increase directly related to the upcoming Buy-to-Let stamp duty surcharges. The average UK home price rose by 5.3% – with the Outer Metropolitan Area around London seeing the most staggering raises.
The rise in London’s real estate prices can be attributed to a few key factors. Most prominent among these is the strong surge of immigration and population growth. Additionally, the city’s financial centre continues to boom, while construction activity remains weak. Foreign residential property investors in are facing critique from the British public for what they regard as exorbitant housing prices in and around London. In response to this discord, legislature is being developed to hold foreign buyers liable for capital gains taxes when they sell their UK properties.
In April of last year, a 3% increase in stamp duty came into effect. This rise applies to all Buy-To-Rent residential properties and exists in addition to the already existing Stamp Duty rates. In the wake of the Panama Papers scandal, which revealed the role of the London property market in laundering dirty money, precautionary anti-laundering steps have been taken against foreign property owners. These measures are a concern for the market as many foreign investors buying through or on behalf of companies will recoil at the additional scrutiny.
On the lower end of the market, an extension of the right-to-buy program is planned for 1.5 million Housing Association tenants. Despite these challenges and according to the RICS survey, price expectations for the following year are positive, and price growth is predicted for London and all other parts of the UK.
Ultimately, with regard to policy changes, the new wave of population growth and the rising cost of rent, there exists a gap and an opportunity for advancement in the London market for affordable,sustainable, amenity driven real estate.