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Contact Show me the money: two-fifths motivated to cash in their investments

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Show me the money: two-fifths motivated to cash in their investments

  • Releasing capital investment the most popular reason for selling a Prime London property, accounting for 43% of selling decisions
  • Upsizing more prevalent in family-orientated Outer Prime London
  • A fifth of sellers in Prime Central London looking to relocate further afield
  • A third of those selling a property for more than 1.5m are looking to downsize, to avoid paying higher Stamp Duty on their next purchase

The most common reason for selling a Prime London property is to cash in on capital returns and release investments, according to Marsh & Parsons.

Four in 10 sellers in Prime London (43%) put their homes on the market in order to release their investments in Q1 2016, making this the most prominent motivation behind selling up.
After this, nearly a third (29%) claim they put their property up for sale in order to upsize to a bigger home. A further one-in-five (19%) sellers intend to relocate after finding a buyer. Only 5% of Prime London sellers put their property on the market in order to downsize to somewhere smaller, while 3% of Prime London homes were sold due to divorce in Q1.

A much higher proportion of sellers want to upsize in Outer Prime London areas. In areas such as Balham, Battersea, Queens Park, East Sheen and Clapham popular with first-time buyers and young families 34% of sellers put their home up for sale in order to move to a bigger property.

In Prime Central London, where average house prices are higher and often incur the top rate of Stamp Duty, only 12% of sellers put houses on the market in order to upsize Instead, relocating is the second biggest reason pushing homeowners to sell up in Prime Central areas, accounting for more than a fifth (21%) of selling decisions. Releasing investments constituted the main reason to sell overall, motivating almost half (49%) of all sellers a higher proportion than elsewhere in the capital. Downsizing was more common in Prime Central London than the wider capital average too, with 9% of homeowners intending to move to a smaller property.

David Brown, CEO of Marsh & Parsons, comments: The London property market has long been the home of outstanding capital returns especially in infamous Prime Central postcodes. The vast majority of Londoners are understandably attempting to capitalise on the rapid rise in house prices over the past few years, alongside the steady stream of eager buyers, by selling their home in order to liquidate their investment. But in Prime Central areas, there is much greater appetite to downsize and relocate elsewhere to circumvent the more stringent Stamp Duty levy, which they will have to pay as a buyer on their next purchase.

However, property sellers in Outer Prime London are more likely to be looking to move up the ladder. These more affordable locations act as a great springboard for many first-time buyers and young professionals, with lower property prices enabling their first foray onto the housing ladder, yet still delivering some of the strongest house price growth and capital returns on offer across the capital.

Among homes sold above the highest Stamp Duty threshold of 1.5m, down-sizing was much more likely to motivate putting a property up for sale, acting as the factor behind 29% of sales. Overall, releasing investments (33%) was the primary reason for sellers at this level of the market. However, property supply is shortest within this tax bracket, with only 11% of all Q1 property purchases taking place above 1.5m, as buyer demand is more cautious since the 12% tax rate was imposed.

Of the houses sold within the Stamp Duty bracket of 950,001 – 1.5m, releasing investments was a much more prominent factor behind the decision to sell (50%), followed by upsizing (23%), relocating (13%), and downsizing (10%).

The majority of Q1 sellers (69%) sold homes priced between 250,001 and 925,000, and none of these intended to downsize anywhere smaller. Instead, upsizing was more common (32%) for these sellers, while releasing investments was less of a consideration (42%) than in other tax brackets.

David Brown concludes: Those selling the most expensive and exclusive homes in London have to be aware of the much increased rate of Stamp Duty now liable on purchases. Concerns about the impact this had had on buyer interest or of having to compensate for this additional cost in their asking prices has dampened some seller enthusiasm over the past year, but as the new status quo beds in, property is still coming up for sale regularly, and were now seeing homeowners getting on with life decisions. The impact of the Stamp Duty revisions is perhaps now more evident in that fact that sellers at the top-end are looking to downsize, and avoid this higher levy on their next move.

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