broken-heart
Getting on London’s property ladder today is, for most people, an absolute nightmare. On paper, mortgages are readily available, even up to 100% of a property’s value, but actually getting a bank to lend requires most people to have attained a level of monetary perfection way beyond those of the financial institutions they’re trying to borrow from.

On top of that, the UK’s stamp duty structure has moved from the previously simple-yet-unfair system that attacked people buying just over the £250k threshold (where purchases up to £250,000 were taxed at 1%, with those at and above £250,001 taxed at 3% on the entire amount) to an extraordinarily complicated system that has people reaching for Google and online calculators, and then for the whiskey when they see what it’s going to cost.

Effectively we’re in a place where first-time buyers are priced out of the bottom of the market; where second time buyers are shut out of the middle by failing to meet banks’ criteria to borrow again; and where buyers towards the top are put off moving altogether (or prevented from doing so) by the prospect of a stamp duty bill in the hundreds of thousands of pounds.

Many people in London have become property millionaires through the rise in house prices, but this doesn’t necessarily mean they’ve got untold riches. Nor does it make buying their next home necessarily easier. Unless someone is going to cash in and leave London, their princely equity will disappear straight into the next purchase before we even talk about moving costs.

Take a typical 4-bedroom family house in Islington, now selling for an eye-watering £2.5million. Anyone wanting to buy one of those can look forward to a stamp duty bill exceeding £200,000. That rises to an astronomical £288,000 if that buyer also happened to own a second property (hardly out of the question in a couple where each may have bought their own home before getting together).

We’re now quite regularly meeting people who, rather than give a few hundred grand to the taxman, are simply staying put and modifying their existing home, often for less than the stamp duty on the next one. Not a bad move for them, but it does upset the natural run of things, takes more property out of the market, puts more pressure on supply and further increases prices and costs.

There is a point where enough is enough. London’s young people are dismayed at the prospect of purchasing a property; thirty-somethings are only just thinking about moving out of their childhood bedroom; and people elsewhere are losing interest in buying because of exorbitant taxes. Hardly the proud nation of homeowners we’re all told we’re supposed to be.

Prosperity shouldn’t be primarily based on property, and it’s a good thing for people to stop obsessing about the price of their home and instead to concentrate on enjoying it, but we can’t help thinking the only option we’re ever given with stamp duty legislation is one that makes life difficult.

How long before someone in power wakes up?

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UMM-JULY-2015
Brexit is beginning to take a seriously frustrating hold on the marketplace. As estate agents we’re not really supposed to talk about anything other than positive news, but perhaps it’s time to break the silence.

It’s as though someone has pressed the mother of all hold buttons across every price range in the sales and rental markets in London. A few people are putting their property on the market, a few (but not many) are viewing, but hardly anyone is actually committing to anything.

Around any general election, this isn’t particularly unusual, but the referendum over Britain’s future in or out of the EU is having a greater effect than any other voting time we’ve experienced.

So why do people put their lives on hold when these things happen? Is there a tangible security in buying a property when there isn’t an election? Does the absence of voting ensure your property price will rise and that no recession will come along and stuff things up for you? Not really. And let’s be honest, there is so such thing as actual certainty in the property market; only hunches, feelings and hopes.

Whatever side of the debate you find yourself on, one thing is for sure; neither you nor anyone else has any idea what will actually happen after the referendum. That is why our esteemed leaders can speak so confidently about their own point of view; nothing that hasn’t happened yet can be proven wrong. So it’s simply fear tactics on both sides. Fear that we stay, or fear that we go. But mainly fear about property prices. It’s a shame it’s so hard to get a reasoned commentary out of either side.

If things go well then property prices may not rise, but if things go bad it’s quite possible they will fall. Our view is that, whatever happens, the aftermath in terms of economics and trade will be far less dramatic than anyone is threatening. Deals will be done, agreements will be reached, and it’ll all take years to know whether the right decision was made, by which time a whole series of as yet unimagined world events will have likely taken place. A cynic might say the whole thing is a total waste of time.

So we have a beautiful distraction that comes on top of new tax rules for landlords, increased stamp duty for buyers, the London mayoral elections and, if that wasn’t enough, Peggy Mitchell’s impending funeral.

No wonder London feels upside down.

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