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Since first opening our doors in 1896, we have become the world’s largest privately-owned global property agency and consultancy. Such longevity is testament to the experience, knowledge and relationships we have developed over the years with our clients, ensuring all their property needs are met.
At Knight Frank we build long-term relationships, which allow us to provide personalised, clear and considered advice on all areas of property in all key markets. We believe personal interaction is a crucial part of ensuring every client is matched to the property that suits their needs best – be it residential or commercial. Operating in locations where our clients need us to be, we provide a worldwide service that’s locally expert and globally connected. We believe that inspired teams naturally provide excellent and dedicated client service. Therefore we’ve created a workplace where opinions are respected, where everyone is invited to contribute to the success of our business and where they’re rewarded for excellence.
The result is that our people are more motivated, ensuring your experience with us is the best that it can be.
One beneficiary of recent changes to stamp duty has been the luxury lettings sector. Both supply and demand have risen as higher purchase costs at the top-end of the sales market make buyers increasingly price sensitive.
Knight Frank analysis of the super-prime (£15,000-plus/month) market across the Home Counties shows that the number of properties available for rent has increased by 56% so far in 2016 compared with last year. The number of viewings conducted above this level by Knight Frank offices has more than doubled year-on-year, while the number of tenancies agreed in 2016 is comfortably higher than in both 2015 and 2014. The recent increase in stock levels has also resulted in greater negotiations on the part of tenants which, in some cases, has led landlords to be more flexible in terms of rents.
Home Counties: Sales and Lettings
Property prices in the Home Counties have fallen by 0.9% over the year to September 2016, according to the latest figures from Knight Frank.
This compares to a 2.3% dip in the prime central London market and is notably slower than the peak of 5% across the Home Counties back in mid-2014.
Similarly to the market in the capital, this moderation in price growth is largely a result of recent stamp duty changes which increased purchase costs for properties valued above £1.1 million and, more recently, for those buying second homes or buy-to-let property. As a result, both buyers and vendors are factoring the higher costs into asking prices and offers. But while the headline figures may suggest that the market has been relatively subdued, activity has actually remained resilient. Our data shows that both the volume of new buyer registrations and viewings for property in the Home Counties has risen in 2016 compared with the previous year. Demand has been strongest for sub-£1.5 million properties, where the bulk of deals have been completed this year.
Historically, the prime market in the Home Counties has been underpinned by a ripple of demand emanating from the capital, although headline-grabbing price rises in London and relatively sluggish growth in prime markets outside the city have conspired to slow this process in recent years. However, as prime markets in the capital pause for breath, buyers have been tempted by the extra space and relative value on offer. Accordingly, the number of Londoners buying property in the Home Counties so far in 2016 was 36% higher than the previous year.
Premier League: Case Study
In our Corporate Services department we have assisted Managers, Coaches and Players from sports clubs based in London and the Home Counties.
Recently we received an introduction from a Premier league club who had a player that was commuting over an hour to training. Due to this commute he had decided to put his property on the rental market and search for a short let until January.
We discussed requirements with the player and his partner, who both stated they were looking for a 5 month rental until their long-term future was more certain. At this point we advised that it would be more financially viable to consider a long let (one year contract with a six months break clause), as short lets come at a premium and you should expect a 50% increase on the long let price.
Once we had discussed locations, the length of the tenancy and finances we sent a list of properties across four separate areas and from multiple agents. From this list we created a short list of properties that would be worth them viewing; these were booked in for the following morning. That afternoon an offer was made on one of these properties. We helped throughout the offer process, explaining the procedure of making an offer. The player requested bills to be included so we proposed this to the Landlord and, after explaining the profile of the applicant, the offer was accepted. The player moved into the property the following week.
The advice given by us saved the player £6,000 and provided flexibility if he and his family required to extend their contract.
Are you moving?
Knight Frank offer a complimentary Homesearch specifically tailored to the tenants relocating internationally or locally. The team work closely with each of the Knight Frank London & Home Counties offices, offering a dedicated point of contact for each individual search.
The team are dedicated to sourcing the best properties for a range of private clients who benefit from their expert guidance through the time consuming formalities associated with sourcing a property.
The team source properties from the entire market, showing other agents’ properties to ensure that you see the best properties on the market. This provides you with a dedicated point of contact offering clear and concise advice.
Whether you hope to secure a bolt hole in the centre of town or a family house in the Home Counties, the team will ensure the process runs as smoothly as possible. To find out more, simply get in touch.
Prime Central London: Sales and Lettings
High stamp duty has also fuelled demand among tenants, particularly in higher price brackets. The stamp duty on the purchase of a £15 million property is £1.7 million, which is the equivalent to three years rent. It is a calculation that helped drive transactions above £5,000/week 16% higher in the year to September 2016 compared to the previous year. However, the flow of stock from the sales to the lettings market is not one-way. As rental values decline and ahead of cuts to tax relief next year, a small number of landlords have begun to explore a sale. It is an early indication of how the lettings market may self-correct, supporting rental values as stock levels reduce.
It should also be remembered that other asset classes are showing weak returns. Bond yields are edging upwards from historic lows, hedge funds are struggling to anticipate central bank policy and geopolitical events while many believe stocks look fully priced after successive rounds of quantitative easing. As has been demonstrated repeatedly in recent years, there are perennial attractions of owning tangible assets like bricks and mortar.
Although the stand-off has been easing as asking prices have come down, the UK general election, the Brexit vote and the election of Donald Trump have captured the headlines. In reality, fiscal policy remains the biggest influence on demand and Brexit has merely served as the catalyst for a number of overdue price reductions. As a result of lower asking prices, leading indicators of demand have turned more positive. The number of viewings, new prospective buyers and properties under offer in prime central London all experienced increases in the three months to September 2016 compared to the same period in 2015. A more tangible impact of the Brexit vote is that currency is playing a greater role in the prime central London property market, with the weaker pound spurring interest from buyers denominated in foreign currencies. However, it has been more limited than some of the headlines suggest for two reasons.
First, part of the demand is opportunistic in nature, based on an erroneous belief that the decision to leave the EU has triggered sudden price declines across prime central London. This has caused some buyers to seek unrealistic double-digit price reductions on top of a favourable double-digit currency swing. The second reason is that some buyers are anticipating further currency weakness. The current high levels of volatility in the sterling/dollar exchange rate, which now moves following interventions by key politicians, underline the heightened short-term risks of this strategy.
Meanwhile, in the lettings market, uncertainty over the short-term outlook for price growth means more vendors have become landlords. Higher supply has pushed down rental values and annual growth slowed to -4.9% in October. This has helped to drive transactions and the number of tenancies agreed in prime central London in the three months to September increased by 25% year-on-year.
The super-prime lettings market in the Home Counties is concentrated on a relatively small number of areas primarily in Ascot, Virginia Water, Cobham and Esher. There is a strong correlation between the market and proximity to international schools such as ACS Egham, ACS Cobham and TASIS, the American school, with education a big driver at the top-end of the market. ‘Try-before-you-buy’ tenants who want to get to know an area before committing to a purchase are another key source of demand.
The Home Counties are often the first destination for individuals moving out of London, while excellent transport links back to the capital mean they’re also favoured by international tenants looking to relocate to the UK, but who might be keen for more space.
While the decision to leave the European Union has created short-term uncertainty in the prime London property market, it needs to be viewed in a wider context.
Annual growth in prime central London slowed to -2.3% in October 2016, down from 6.5% two years earlier. The primary reason behind the current slowdown is higher rates of stamp duty not the decision to leave the EU or, for that matter, the election of Donald Trump.
Following two stamp duty hikes in the space of 18 months, a stand-off developed between buyers and sellers over higher transaction costs and how far these should be reflected in asking prices. Accordingly, there were 8,599 transactions in the year to 30 June 2016 in prime central London, which was down 25% on the same period two years earlier.
If you have any questions or are searching for properties please contact: Alexander.Mclean@knightfrank.com 0207 861 1577