Investing in London
residential property –
important tax considerations
By Anthony Thompson and Charlotte Knight,
Wragge Lawrence Graham & Co
After a brief dip in confidence ahead of the general election
in early May this year, the perceived stability of a Conservative
Government has revived the London residential property
market as buyers and sellers had been waiting for the outcome
of the election. Their fears, no doubt, were centred on Labour's
pre-election promises to impose a mansion tax on all properties
above £2 million and abolish the so-called 'non-dom' tax status.
Following the election, with a clearer understanding of what is
likely to lie ahead for the next five years, the residential property
market in London has picked up.
Why London?
It is worth noting that the central
London residential property market
is a very different market from that
of the rest of the UK. For instance,
according to a recent house price
index published by the Office for
National Statistics, prices in London
were up by 11.2% in the year to March
2015, compared with 5.7% in Wales.
This is in part because there is not
enough stock. The city needs 63,000
new homes each year, but only a third
of these are being built and house
60
building has flat-lined for the past
30 years. A record number of new
homes were registered to be built
in 2013, while construction orders
for new housing rose to £5.3 billion.
There are a huge number of new
build residential properties currently
being constructed in London, which
will be coming onto the market in the
next five years. Could this have an
effect on price? Perhaps, although by
2020 it is predicted that there will be
nine million Londoners and by 2031
over ten million so demand should
still be there.
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