Owners of luxury London properties are having to knock more than £1m off their house prices to sell them because super-rich overseas buyers are giving the UK a wide berth due to “eye-watering” stamp duty and uncertainty surrounding Brexit.
Mayfair-based property buying agent Garrington said homes in the capital’s most exclusive neighbourhoods have been reduced in price by an average of 9%. In Knightsbridge, the most expensive area, prices have been cut by an average of 12% – £927,000.
Jonathan Hopper, managing director of Garrington, said sellers are having to take drastic action to realise the value of their homes. “There is huge discounting of super prime properties above £5m at the moment,” he said. “A lot are being discounted by 10 or 20%.
“Acute price sensitivity among buyers continues to force sellers to reduce their expectations, and in the most expensive areas this is throwing up some striking discounts.”
Hopper said that in one example a Knightsbridge home first listed on the market for £20m in the summer of 2016 was in the process of being sold “very quietly” for £15m. “They are frustrated sellers who just want to move,” he said. “But this is not happening on the open market, it is all happening behind closed doors.”
The steepest discounts are currently to be found in St James’s and Victoria, where the average prime property price has been reduced by 14.1% (£766,000) and where more than three-quarters of homes have been on the market for more than six months. In Knightsbridge, prices have been reduced by 12.1% on average, followed by Mayfair (11.4%) and Temple and the City (10.5%).
Hopper said Brexit had dented overseas buyers enthusiasm for UK property, but that the main deterrent was stamp duty. The tax on properties selling for more than £1.5m is 12%, rising to 15% if it is a second home. “The slowing of the capital’s prime market predates Brexit – it was triggered instead by 2015’s punitive increases to the highest rates of stamp duty,” he said. “With the buyers of high value homes facing the prospect of paying hundreds of thousands in tax, vendors are frequently sharing the pain by offering corresponding discounts.”
Henry Pryor, an independent luxury property buying agent, said sales of high-end properties had all but dried up and he expected sales to slow further as the date for Brexit approaches. “It’s a Siberian winter out there, and there are still significant icebergs ahead for the top end of the market as Brexit looms closer,” he said.
Pryor said more than 65% of properties on the market in Belgravia, west London, had been on the market for more than a year, and many sellers were refusing to reduce their prices. “Players in the prime central market are discretionary,” he said. “Not many of them have to sell, and there are very few who must buy and if they do they’re helped by their companies. Everyone is just waiting.”
The overall property market is also suffering with the number of homes changing hands in December falling to 99,100, the lowest level since November 2016, according to data published by HM Revenues and Customs on Tuesday.
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