There are a number of reasons for this, including upcoming changes to stamp duty land tax (SDLT) for domestic and overseas buyers, as well as proposed changes to capital gains tax (CGT).
The long-term uncertainty around Brexit appears to have come to an end and there is also the continued exodus from London to the country to acknowledge.
But further to these macro-economic and lifestyle implications, it’s worth recognising the proven resilience among the high net worth (HNW) as businesses have adapted to the changing environment and remained strong throughout the crisis.
There is no doubt that the temporary cut to SDLT kick-started the market as it was designed to.
However, this was predominantly at the lower end of the market so when speaking in terms of the prime London market, the possible changes to CGT are likely to have had more of an impact.
The potential changes to CGT – which could be introduced within the next year – could see the level of tax due on profits from buy-to-let properties or second homes increase from 28 per cent to 40 per cent for higher-rate tax payers.
So for HNW individuals, it’s been the perfect opportunity for reassessing property portfolios.
There is also the long-awaited two per cent surcharge on top of existing SDLT for overseas investors of UK residential property that is now just a few months away from being put in place.
Overseas buyers are responsible for approximately 40 per cent of sales in the UK prime market and some have sought to purchase new homes ahead of the introduction of the levy.
On balance, however, there is a question over how much of an impact this has actually had given international clients have been unable to reach the UK to make their investments over the last year.
Regardless of this higher rate of tax, we do believe that London will retain its appeal as a cultural and global financial centre and that this will continue to drive demand.
Despite the pandemic, the HNW market has remained resilient as entrepreneurs have reacted quickly to changing conditions.
Adding to this the financial services and professional sectors have remained strong, meaning income levels have been largely unaffected and therefore affordability remains strong.
Escape to the country
Last, but by no means least, there is the continued interest from people who have previously resided in London and prime city locations in more rural locations.
As we have adapted the way we work and live over the last year, buyers are seeking more space, both within their homes and around them, as being locked down has shone a spotlight on the importance of multifunctional living.
We’ve certainly seen this happening over the last 12 months and as much we expect to continue seeing it in some form, it will be interesting to see how a return to the office impacts these plans.
Looking forward, there is reason for optimism if the government meets its targets for the vaccine roll-out.
But there is reason for optimism regardless as people will always seek somewhere to live and prime locations will retain their appeal, even if it’s in the form of a pied-a-terre, rather than a family home. More certainty over Brexit could also unlock blockages in the market, so after a very busy six months, we look forward to seeing what 2021 has in store.