Thank goodness the wooden-headed former Prime Minister, Sir Keir Starmer, is now firmly part of the history books. To replace him, we have the ‘hey-Ho, off to work we go’ Mr. Burnham and, judging by his obsession with ‘buuuses’ and ‘traynes’, perhaps the clue is in the name.

He certainly looks like a committed parochialist. We can see him being enormously useful to Mr. Zelensky in sorting out the public transport in Kyiv. Whether he will be quite so comfortable getting his head around the geopolitical problems confronting America, Europe and the UK, is another matter.

Giving Mr. Zelensky the wiring diagrams of the Storm Shadow/Scalp Cruise Missiles is a good idea, since the innovative Ukrainians will no doubt manufacture them cheaper and faster than the UK, with far less bureaucracy.  However, even these have their limitations.  They cost between £1-2million each and have a range of between 150-350 miles which will not reach far into the depths of Russia, particularly as some of the home-made Ukrainian drones have a range of 1400 miles but can only carry 10% of the payload.

‘Rough sleeping’ is desperately unfortunate, and any reduction in VAT on heating bills is welcome, however trivial, but these are relatively small beer compared with the ‘elephants in the room’ i.e. the exploding welfare bill, Britain’s mountainous indebtedness and the almost complete absence of meaningful economic growth, to name but a few.

Bless him, I fear that ‘No 10 North’ will be a short-lived political gimmick which will be resigned to the dustbin of history, alongside other notable soundbite relics such as the Millenium Dome, the Northern Powerhouse, Levelling Up, The Big Society and don’t laugh, John Major’s 1990s attempt to restore traditional values, i.e. ‘Back to Basics’.

I am hoping and praying that without scrutiny the Prime Minister, a committed and pathological localist, hasn’t just waltzed into the prime-ministerial position, which is a big job and could well be beyond his skill set. After all, ‘handing out sweeties’ as the Mayor of ‘Muunchaster….by goom’ is far different to taxing the Electorate in the next Budget when Santa Clause morphs into Mr. Scrouge, and his short-lived honeymoon disappears into the ether.

However, if Mr. Burnham can secure cross-party support to tackle the welfare explosion, with 8.4 million people claiming Universal Credit compared with around 1.77 million unemployed, we may even be moved to say ‘chapeau!’

And, as for the re-emergence of Harry and Meghan, who in Montecito have morphed from wannabe Kardashians into ‘Kar-crashians’, one can only feel for our esteemed King and Queen.

Heartwarming though seeing more of the Sussex grandchildren may be, the self-induced calamities that follow these two odious characters like a bad smell, must make their return a distinctly mixed blessing, and perhaps another unwelcome dose of Royal reflux.

Their renewed proximity must evoke the horror of a peaceful Balmoral weekend, the equivalent of being suddenly interrupted by heavy footsteps in the corridor and the realisation that Uncle Les Patterson (aka Barry Humphries) the belching, slobbering Australian Cultural Attaché, has arrived uninvited. We all know the price that happy families pay for errant relatives who turn up unexpectedly and are as desirable as ‘flatulence in a space suit’.

But enough political frivolities. What is actually happening to residential property?

Prime Central London

At the upper end of Prime Central London, particularly above £15–20 million, international buyers have historically dominated the market. With non-doms and international purchasers accounting for around 70%, the recent tax assault has inevitably taken its toll.

Real values are, in some cases, down by as much as 25%. But not all properties have suffered equally. The beautifully finished house, where the buyer can arrive with a suitcase and their food and enjoy the dream, is proving considerably more resilient.

The un-refurbished wreck however, requiring one year of planning gains followed by two years of building work, is another matter entirely. International buyers have discovered that there are only so many times one can be told that the project will be ‘finished by Christmas’. They often don’t have the time nor inclination to ‘Faf’ about with these never-ending projects.

Apartments: developers are blinking

Apartments generally across London are suffering particularly badly from excess supply, especially the new developments conceived several years ago in halcyon days, when everyone apparently believed London property prices would rise forever and build costs would never go up. Reality, rather rudely, intervened.

Developers are now becoming ever more inventive, and increasingly desperate to shift stock. Stamp Duty contributions, paid for estate-agent fees, service-charge holidays, reduced deposit deals, mortgage subsidies, cashback, furniture packages and legal-fee contributions are all appearing on the menu to entice buyers. The price often doesn’t change, it has merely been dressed up and sent through the back door.

Barratt London, Bellway, Berkeley and Galliard are among those offering increasingly attractive packages to get unsold stock moving and, more importantly, cash back into their bank accounts, but it’s a slow tedious process.

Help-to-Buy schemes whilst well intentioned policies at the time, did more for the developers to oversell their products to naive buyers than they did for the vulnerable first-time purchaser.

Angela’s 300,000 homes

Our 20th Housing Minister since 2010, Angela Rayner, (fresh from her dispute with HMRC about underpaying SDLT) has the unenviable task of delivering the political holy grail of 300,000 new homes a year, or so the slogan goes, which was used liberally during the last Election. At the current rate, we may be lucky to see half of that. A woeful effort.

Although the latest news of granting superseding powers to the local Mayors on major development schemes, which have formerly been turned down by the Council, is a good initiative, let’s see if in practice the system works. Any attempt to clear the constipation of the planning process must be welcomed!

As housebuilders lick their wounds from some of their London developments, I wonder how enthusiastic they will be about dipping into their land banks and building yet more product for which the market is increasingly reluctant to consume. As an illustration, it is rather difficult to persuade umbrella manufacturers to make more product, when the sun is shining and there are plentiful supplies of unsold stock in the warehouse.

But don’t jump off Beachy Head just yet

Before we all throw ourselves off Beachy Head, maybe because we want to, there is some rather better news from the wilds of North-West London.

Values are surprisingly stable and, at worst, perhaps 10% below the heady days of the post-Covid boom. Indeed, we have successfully sold properties recently in the £8–12 million bracket to domestic buyers at prices we would not have exceeded in the last two years.

Shhh… hear me well! Here is the great secret of how to predict where a property market is heading: stock, stock and thrice stock.

Fortunately, there is no great oversupply. In fact, we are short of properties in good condition across virtually all price ranges.

Buying activity is certainly reduced. Two years ago, a £2–3 million property might attract 30–40 applicants and five offers. Today, it may attract 10–15 applicants and one or two offers, but you only need one to do a deal.

The buyers haven’t disappeared. They’ve simply become considerably more cautious, more pedantic and certainly more scrutinous. The point being, that there is no oversupply of stock which is serving to underpin values.

The cardinal rule for sellers is simple, price no more than about 5% above true underlying value. Go beyond that and you are effectively taking out insurance against selling the property. The marketing period stretches from months into years until, eventually, reality percolates through and the sellers’ expectations finally lands on terra firma.

Rent rather than buy?

For the over-75s, particularly empty nesters, we increasingly recommend considering the formerly unfashionable idea of renting rather than buying, which was all the rage in the 60s. You preserve liquidity, avoid Stamp Duty and retain capital which can potentially be distributed elsewhere amongst the family. And, if property prices are not rising significantly, you aren’t missing out on much capital appreciation. Hello?

If Mansion Tax arrives, there is another delicious irony, the landlord gets the bill. The tenant gets the advantage.

The rental market

The rental market itself remains remarkably resilient, taking all matters into account.

As Buy-to-Let landlords sell up and go home, good rental stock is becoming increasingly scarce and rental values are rising. This is the unintended paradox from the imposition of the new Renters Rights Act which, contra intuitively works against the interests of the vulnerable. Another example perhaps of socialistic political dogma triumphing over pragmatism.

In the rarified sector of the market however, uber rentals have recently achieved eye wateringly high levels of £34,000 and more recently, £40,000 per week.

Twenty or thirty years ago, this market was positively sleepy. Today, from Glentree’s rich seam of wealthy international entrepreneurs, particularly from Hong Kong and China, who might once have otherwise bought super-mansions, are perfectly happy to rent them instead.

Why buy, when HMRC may effectively hand you a saving equivalent to the Stamp Duty you would have had to otherwise pay as a purchaser, which represents a gift of circa 19% of the value. At Glentree, we call it a ‘fool-proof tax-saving scheme’, unwittingly permitted by the Government, but extremely welcome for the beneficiaries, nonetheless.

London isn’t dead

There is growing optimism among some international non-dom clients who have temporarily decamped to Dubai, Monaco, Milan, Portugal and Geneva that a future Conservative/Reform administration might eventually reverse some of the tax measures which drove them away in the first place.

Perhaps the non-dom regime will return and even the Stamp Duty Tax will eventually be abolished, which is certainly a policy consistently propagated by Kemi Badenoch of the Tories and The Reform Party.

Lest we forget, London remains the ‘greatest city on earth’ for a multiplicity of reasons and has no peer in the world. It offers an intoxicating and highly desirable combination of civility, opportunity, diversity, in a tranquil, relatively safe, liberal environment. What’s there not to like?

The tax advantages of living in Britain used to be the icing on the cake, now all but disappeared, but its re-emergence, with the help of a new political administration, is the silver lining and the sunny uplands that we could look forward to before too long.

 

Trevor Abrahmsohn is founder and director of Glentree International in north London.