Boris Johnson was homeless before taking residence at 10 Downing Street last month, so as expected, Britain’s new prime minister has promised that home-ownership will be high up on his administration’s agenda.
Prices in Central London have dropped by an average of 4.7% and up to 20% in the fanciest neighbourhoods. LonRes, a property data service, reports that since 2014 the price premium of South Kensington over Earls Court has dropped from 40% to 20%, and St John’s Wood over Islington from 53% to 36%.
Johnson is believed to want to cut stamp duty on homes worth more than £1.5 million from 12% to 7%. He is also considering halving this tax on properties worth more than £500,000 and scrapping it entirely below £500,000. (At present, only homes under £125,000 are exempt; £300,000 for first-time buyers.)
It has also been mooted that Johnson may also seek to introduce a much broader reform, which could move the payment of stamp duty from buyers to sellers. This would mean that those climbing the property ladder would pay less tax, but potential downsizers might choose to stay put if suddenly faced with the prospect of having to pay a hefty tax to move.
Many in the property industry are cautiously optimistic about the impact of the new prime minister—an avowed enemy of red tape and finicky regulations—on the London property market. “Boris Johnson can change the market for the better,” says Quintessentially Estates CEO Penny Mosgrove. “There are various bottlenecks—not just stamp duty but landlord tax and the simple issue of supply and demand—and these need to be unclogged for the market to flow.”
For the potential buyers and sellers now weighing up the impact of stamp duty liabilities being switched against current geopolitical events, renting has become an attractive short-term option. As David Leek, Quintessentially Estates’ lettings negotiator, points out: “Rents are now lower than they have been in almost two years, so there are plenty of deals to be done—especially in prime central London.” This strategy is also appealing for many young couples and families who want to move out of city centres to coastal or rural hot spots. Says Leek, “Renting gives you the flexibility to try new areas and often more beautiful properties.”