Budget tax concerns dampening mortgage rate cuts

property taxes

In the more discretionary £10 million-plus market, there was a 22% drop in the number of deals done in the year to July, Knight Frank data shows

The number of offers made in the three months to September by prime buyers in London was 10% below the five-year average, according to Knight Frank data.

It comes amid uncertainty about tax rises in the Autumn Budget this month.

In the more discretionary £10 million-plus market, there was a 22% drop in the number of deals done in the year to July, Knight Frank data shows.

Tom Bill, head of UK residential research for Knight Frank, said the uncertainty means lower mortgage rates are not triggering the sort of increase in demand and transactions that might be expected.

He said there may be some better news on the horizon though amid rumours that the Government may soften its Budget proposals for non doms.

Recent media reports suggest the government may rethink or widen its plans, presumably to capitalise on the fact many non doms would willingly pay more tax to remain in the UK provided their worldwide income was protected.

Bill said: We do not know what the government will eventually do in this month’s Budget, but it seems to be asking the right questions.

Any reversal of the recent decline in investor confidence would certainly help drive activity in prime London property markets, he added.

With average prices down by 18% in prime central London (PCL) since the last peak in mid-2015, as per Knight Frank, a period of price growth is overdue, Bill said, adding:  There will no doubt be buyers who will be watching the Budget closely for a sign of how quickly it may materialise.

Prices dropped by 2.1% in the year to September, which was the 17th month in a row that they have dropped on an annual basis, according to the agent’s data.

The performance has been better in Prime outer London (POL), which is driven by domestic and needs-based buyers to a greater degree. Prices are 7.3% below their mid-2016 high, having risen by 0.5% in the 12 months to September.

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