Thousands of apartments which have been bought off-plan could be returned to the London market next year, it has been claimed, with foreign investors disillusioned.
Reasons include the 3% Stamp Duty surcharge that kicks in next April, the fact that overseas investors are now caught by Capital Gains Tax, and the strength of the pound compared with other currencies.
Faisal Durrani, head of research at agent Cluttons, said: “We can expect a flood of supply with non-domiciled investors returning off-plan residential stock to the London market, especially throughout 2016.
“We estimate approximately 60,000 homes are due for completion in 2016 and 2017.
“Of these, we believe between 50% to 60% have been sold off-plan to international buyers. Therefore, it is likely that up to 30,000 properties could be returning to the market in the coming two years.”
NAEA managing director Mark Hayward said: “The significant additional Stamp Duty on potential investment properties bought off-plan will mean purchasers will be unable to escape punitive charges as these homes will miss the April deadline.”
Many off-plan properties were sold, controversially, to overseas investors sight unseen at overseas property fairs.
Market analysts will be looking to see whether the off-plan purchasers will make a profit or take a bath if and when they ‘flip’ their properties so early. The prices they paid, in places such as Nine Elms, were well beyond the means of local first-time and most other buyers.
Comments (2)
Not sure where Cluttons got their figures but they sound right to me.
Cluttons say 60,00 homes are due for completion in 2016 and 2017. Compare that with CBRE’s Property Industry Overview which says in London in Q3 2015 there were 730 schemes under construction which will eventually deliver 87,550 private units to the market.
Cluttons say between 50% and 60% have been sold off-plan to international buyers. Berkeley say they have been selling 40% of their stock to overseas buyers.
And Berkeley has been selling 50% to ‘investors’. Not going to be a good year is it? Watch those buyers back away …
Cluttons is just doing its best to reset sellers’ expectations
“We estimate approximately 60,000 homes are due for completion in 2016 and 2017.
“Of these, we believe between 50% to 60% have been sold off-plan to international buyers. Therefore, it is likely that up to 30,000 properties could be returning to the market in the coming two years.”
so all nonsense figures: we believe, we estimate and up to.