London sees signs of BTL recovery after volatile times

The most recent Price Paid Data from Land Registry showed recovery for both the mainstream and premium sectors of Prime Central London. This follows falls after changes to stamp duty in 2014 and 2016.

LCP said the mainstream sector – the bottom 60% of the market, where property is priced under the top Stamp Duty band – largely represents buy to let property. It has seen prices increase by 5.6% from the pre-additional rate stamp duty peak.

Average prices are now £822,812, 15.6% higher than three years ago, before the tax was changed from a ‘slab’ system to a graduated one.

The mainstream sector is now outperforming England and Wales, which has seen growth of 7.1% over the same period.

Naomi Heaton, chief executive of London Central Portfolio, said the mainstream buy-to-let sector in prime central London has experienced “unusual volatility” over the last two years.

“Despite this, we have now seen signs of recovery as buyers absorb the additional cost of investing,” she said.

“Brexit jitters also appear to be calming down as global political and economic uncertainty makes the UK an attractive place to invest in once more. Prices in the mainstream sector, now edging upwards again, are outperforming the general market in England and Wales.”

In addition to recovery in the lower value sector, the premium end of the market is now just 3.3% down from the 2014 high, following a 7% market correction over the year.

Heaton added: “Discounts offered on more expensive property has reinvigorated buyers, encouraging them back into the marketplace. International investors have also taken advantage of current exchange rates and continuing low interest rates.”

“However, the Chancellor should take heed of the delicate position of the market, which has recorded a 10.3% decrease in stamp duty tax take, according to HMRC’s latest report. More tax meddling may tip the scales back in the other direction.”