Trend Spotter

Investment Focus

In October Crayson opened a new ‘Investment’ division which is headed up by Peter Jenkins who was recruited from the financial sector in Hong Kong.  As the London market and goal posts change we are being innovative at the way we look at our involvement in London property and are expanding in a non-traditional way.

In the past year George Osborne has continued to target and undermine the Central London property market with the levying of the highest property taxes in the world. However, some opportunities have sprung up.  This in not to say that we think that the residential buy to occupy market is dead.  Far from it!  The last quarter has been very positive at Crayson – we are starting to benefit from giving robust advice to clients – particularly regarding price.  It has taken many time to adjust to the 2015 market – especially since there is still a plethora of agents overvaluing property – which both skews the market and gives the wrong message to prospective buyers.

There have been various factors effecting the London property ‘investor’ market this year:  From the stock market crash in China – to the weakening of emerging markets currencies against Sterling and the US Dollar, particularly the Rouble.  Overall investor demand has weakened in London – however there is also an increased case for investing in London as the UK is seen as being economically and politically stable and hence a safe haven.

However whilst Central London is still adjusting to the increased SDLT top band rate of 12% – we are finding that there is an increased demand from investors looking buy new-build flats in bulk.  The number of new-build developments coming available over the next 18 months is set to outstrip supply and this is mirrored by the number of profit warnings coming out of some developers with big exposure to the London market.  In 2016 and 2017 there are set to be over 7,500 unit completions in each year (properties expected to sell at or above £1,000 per sq. ft.).  This is almost double the completions for the previous two years.  It is likely that there will be some great deals for investors looking to buy at deep discounts.  It looks like Osborne’s announcement in his recent Autumn Statement of an increase of 3% on the SDLT levy for people buying buy-to-let and second homes will not affect those buying in bulk (15 units or more) or those buying through companies.

There are quite a few advantages to buying £1m flats in bulk.  Firstly and most importantly; the purchase of 6 units or more in the same building one can apply for commercial rates of SDLT – which has a ceiling of 4%.

In the 2 months that Crayson Investments have been in business we have had had over £100m of offers for investment properties.  This section of the market is far from dead!  I am predicting a very active 2016 and an expansion of our investment side.  Wishing you all a Merry Christmas and a Prosperous New Year!