Well we must retract one of our former statements, in that the prospect of a Mansion Tax and the surrounding uncertainty over how much it might be, how it might work and when it might start – in the event of a Labour win in next month’s election – has had quite an effect on the market for £1m+ properties. Although none of the figures that have been floating around would necessarily put that much of a dent in high-income earners’ pockets, it’s the ambiguity of the mechanics that has caused the fallout.
Seeing as the market moved almost relentlessly upwards during the last Labour administration, for about 13 years in fact, our view is that any initial gasps in reaction to whatever the Mansion Tax may or may not be will soon be surpassed by the British appetite to buy the home they want, when they want and where they want. The worst-case scenario we can see would be a mild correction in prices over the £1million mark to cater for the extra expenditure of the Mansion Tax. After that, and once the tax is simply part of the system, it’ll no longer be a talking point and more a case of simply what is so.
In 2003, when stamp duty for properties over £250,000 went up to 3%, everyone thought that section of the market was doomed. In the event, vendors either paid that back to their buyer or reduced their price to just below the threshold; the market – and, moreover, people – always find a way to make it work. It’s very unlikely that families will no longer expand or need larger houses, or that all those with enough cash to afford an expensive unique property in London would unanimously decide to live somewhere less fantastic than they could, simply to avoid the tax.
In the 1990s and early 2000s people routinely paid 7 or 8% interest on their mortgages for many years without thinking it was excessive, and we certainly can’t imagine the Mansion Tax being workable if any government attempted to bring it in at an equivalent or higher level. None of the mooted figures have come anywhere close to that and so, as with everything, it will simply work itself out. Doubtless even less dramatically than a media storm or election frenzy would suggest.
Dropping below the £1m mark it’s an entirely different story. With spring having finally sprung, people are coming out of their winter hibernation and we’ve experienced a massive upturn in the number of buyers registering. At this price level it seems people can’t move fast enough and if we had 5 times as much property as we have in this price range, we’d simply have 5 times as many sales. It really is that cooking.
Off-market sales are also strong, with this scaled-down, tailored approach to marketing proving extremely popular with buyers and sellers. They’ve all experienced a far more relaxed process than the usual franticness, and that has generated a feeling of camaraderie on each side of pretty much all the transactions we’ve arranged: an unseen benefit, but certainly a welcome one.
More next month!