Will Central London Property Keep Its Resilience? A mini budget update..
Greater London Properties update you on the detail of the budget and how that may affect property in Central London..
There have been many opinions shared about the new mini budget but what does it mean for the Central London Property Market? A quick recap of the changes below.
Stamp Duty: scrapped on first £250,000 and for first time buyers under £425,000. The value of the property on which first time buyers can claim relief also increases from £500,000 to £625,000
Income tax: 45p top rate of income tax scrapped. Basic tax rate also decreases from 20p to 19p
Business Rates: No structural change but businesses in Investment Zones stand to benefit from 100% relief on newly occupied business premises, while certain existing businesses will also receive this if they expand in English Investment Zone tax sites
Corporation Tax and National Insurance: reversal of planned rise from 19% to 25% in April 2023.
Investment Zones: 38 potential new investment zones identified which may benefit from low regulation, low tax, business rates relief and more flexible planning
VAT: scrapped for overseas visitors to the UK to encourage spending.
Planning: Promise to make planning simpler and quicker to bring forward infrastructure projects, in a ‘liberalisation shake up’ of the planning system with details yet to be announced
Energy: Measures to cap household and business bills will cost £60 billion over the next six months but will help people for two years while the Government seeks to negotiate energy contracts in the long-run.
In essence the mini budget is attempting to encourage investment in the UK, whilst counterbalancing the increase in interest rates. It was always going to be a tough year with 2023 looking bleaker and alongside the global uncertainty trying something new and boosting spending may work.
For Central London, the stamp duty threshold will have little if any effect given the average house prices. Also, the neglect of enticing second home buyers back into the market with attractive stamp duty savings is surprising.
However, with the encouraging relief to business and potential investment from abroad to the UK, this in turn will create jobs and subsequent spending. Central London will always be a hub for commercial therefore we foresee properties to continue to be in demand for sales and rent.
Thoughts on the mini budget, Rob Hill, Director at Greater London Properties, says,
“Our market is particularly resilient and whereas we don’t take this for granted, most of our current Sales Applicants are cash buyers so the mortgage rates are irrelevant. In addition, with the rental prices as strong as they are in this area, property is a safe pair of hands with a guaranteed rate of return higher than most other current forms of investment.
A relaxation to planning will hopefully also ensure residential projects are completed sooner to help restore the disequilibrium in the rental market with many of our rental applicants living week by week in Airbnb’s desperate to find something longer term.
It is worth mentioning that as a country we are faring far better than most, with lower inflation than Germany and with a second lowest national debt of G7 countries. Everyone is experiencing turbulent times, so perhaps a brave change was necessary? Whether it works, like anything - only time will tell”
If you would like to speak to a member of our Greater London Properties Residential Team about investing in Central London Property please give our team a call today on 0207 734 4062.
More information can be found on our website glp.co.uk.
Warm Regards
Kate Hill