Property pain? Don’t blame Brexit

Brexit and the Stamp Duty surcharge arrived within a month of each other in 2016. It is indisputable that the 12%- 15% Stamp Duty bracket has driven the volume of sales down to 75% lower than during the Financial Crises. Politicians and other pundits may blame Brexit for property market falls, but significantly no-one has told us they are not transacting because of Brexit.

The true effects of Brexit, if any, will only be clear after 29th March 2019 once it has happened, although we will of course know more come October. During this two-year ‘Phoney Brexit’ the FTSE 100 has risen from 6000, at the Referendum, to over 7000 now and we have the lowest unemployment since the early 1970’s so it is hard to understand why Brexit is being blamed for this collapse when it has had virtually no perceptible effect on anything else.

Here’s a snapshot of how current market conditions are affecting buyers, vendors and landlords

Property Buyers

Our buyers are mostly second homers, investors, returning ex-pats and Europeans taking advantage of the weak pound. Prices have fallen back to 2015 levels so it’s an interesting time to buy. However, chain buyers, are still preferring to spend the potential cost of moving on extending their own houses rather than giving it to the Chancellor in Stamp Duty.

Property Vendors

It is simple maths for sellers to see that selling at a discounted price plus having to pay the 12% stamp duty on a forward purchase, could realise a loss of 30% of the value of their sale. Most Londoners are aware that London property, on average, doubles in value every ten years. This growth zigzags across the line however property inflation always looks after the owner so if they can afford to wait for their price they wait, and that’s exactly what they are doing now.

Landlords

With the loss of mortgage tax relief, and the implementation of over 145 individual laws and over 400 regulations to follow, many landlords are opting to get out of the buy-to-let market. These instructions are making up a good percentage of the available properties on the market.

It is crystal clear from this graph, except apparently to our government, that the London market has been taxed to a virtual standstill, so it begs the question: Qui prodest?”

Enjoyed the insights shared by our property experts? This article first appeared in Mews News: click here to read the full magazine