Now we know where we stand
Thu 24 Jun 2010
No sooner had we learned the result of the election, we were informed of an 'emergency' budget, meaning a further two months of putting the property market 'on hold' and allowing markets to drift. Well, now we know what is going to happen and whilst it's not going to be pretty (I simply can't believe anyone was expecting it to be so) its perhaps not as bad as it couldve been and in my view has left just enough 'meat on the bone' to allow property owners and investors alike to enter the market with a medium to long term strategy.
Homeowners buying into the market are in pretty much the same position as before - historically low interest rates, tight but loosening money supply, and with perhaps a little more to choose from in London (but still less than the long term average). First time buyers don't pay stamp duty on purchases below 250,000 and as of next April, the level of stamp duty will rise to 5% for purchases over 1 million. Painful, but not so painful that it will push those buyers out of the market - most are buying a home after all.Now, the investors do have it a bit rougher but let's put it into perspective: As a property investor looking to buy or sell, you now know exactly where you stand and the rate of Capital Gains Tax is still 12% LESS than it was just 3 years ago. This coupled with the aforementioned low mortgage rates and a particularly strong rentals market makes London property a particularly compelling investment option still capable of returning circa 5% together with long term capital appreciation in a city that continues to 'suck in' huge amounts of home grown and overseas cash looking for a safe home. In my view the remainder of 2010 and indeed the next few years will only see this increase and I continue to be very positive in my outlook on the London property market.