Feb. 20 (Bloomberg) -- Miles Shipside, commercial director at Rightmove Plc, discusses London home asking prices, which surged to a near record this month. Average asking prices in the U.K. capital rose 2.5 percent from January to 449,252 pounds ($710,300), less than 1,000 pounds below the record reached in October, the operator of Britain's biggest property website said. Shipside speaks with Owen Thomas on Bloomberg Television's "Countdown." (Source: Bloomberg)
Feb. 20 (Bloomberg) -- Peter Damesick, chief Europe, Middle East and Africa economist at CBRE Group Inc., discusses investment in London property by non-European buyers. He speaks with Andrea Catherwood on Bloomberg Television's "Last Word." (Source: Bloomberg)
Asking prices for London homes rose to close to a record in February, helping push national values up the most in almost a decade, Rightmove Plc said.
Average asking prices in the U.K. capital rose 2.5 percent from January to 449,252 pounds ($710,300), less than 1,000 pounds below the record reached in October, the operator of Britain's biggest property website said in a report today. Prices in England and Wales rose 4.1 percent on the month, the most since April 2002.
"Confidence in bricks and mortar in the capital seems set to continue, with 'seller-power' twice as strong in London compared to the rest of the U.K.," Miles Shipside, commercial director of Rightmove, said in a statement. "Upwards price- pressure is likely to be maintained in 2012."
A lack of supply is helping to prop up prices, while an increase in retail sales in January and better-than-expected services and manufacturing surveys suggest Britain won't plunge back into a recession. Bank of England Governor Mervyn King said this week the economy should "gradually" recover this year.
The number of new property listings in London fell 9 percent in January from a year earlier, Rightmove said. This is an "early indication that shortage of sellers and upwards price pressure will again feature in 2012," it said.
Nationally, home prices rose 1.4 percent in January from a year earlier to an average 233,252 pounds. In London, the annual price increase was 4.3 percent.
The London districts of Richmond-upon-Thames, Kingston- upon-Thames and Wandsworth recorded the largest monthly increases in asking prices within the capital, Rightmove said. Nationally, all 10 regions of England and Wales tracked by the company showed asking prices gained. The southeast led the increase, up 6.9 percent.
While Britain's economy shrank 0.2 percent in the fourth quarter and unemployment held at a 16-year high of 8.4 percent, U.K. retail sales unexpectedly rose for a second month in January. Meanwhile, manufacturing returned to growth in January and expansion in services accelerated.
"The onset of the spring moving season generally leads to more ambitious pricing of properties coming to market, partly due to estate agents vying for new seller instructions," Rightmove said. Search activity on the company's website "indicates a pent-up desire to move that out-weighs the uncertain economic outlook," it said.
In a separate release today, the Council of Mortgage Lenders said that while U.K. gross mortgage lending fell 14 percent to 10.5 billion pounds in January from the previous month, it was up 10 percent from a year earlier. A seasonal decline is expected in January, the London-based CML said.
"Should inflationary pressures continue to fall back, the squeeze on household finances should ease progressively and help support stronger economic recovery going into the second half of the year," CML chief economist Bob Pannell said in the statement. "This can only be good news for the housing market further down the track."
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A brief update on UK's 2012 Budget announced last week, along with a property focus. Please contact our Tax Manager at email@example.com for any UK Tax or VAT queries.
Stamp Duty Land Tax
The Chancellor promises to clamp down on stamp duty avoidance. Key measures include:
Capital gains tax
To support the above, capital gains tax will apply where "enveloped" vehicles (e.g. companies) dispose UK residential properties.
Enhanced capital allowance
Enhanced capital allowances to be available from 1 April 2012 to taxpayers located in the following areas:
(ECAs enable a business to claim 100% first year capital allowances on their spending on qualifying plant and machinery.)
Top rate of 50% income tax rate to reduce to 45% from April 2013.
To support a more competitive tax system, main corporation tax rate to fall to 22% by April 2014 (i.e. down from 24% in April 2012 and then 23% in April 2013).
Correction of certain VAT anomalies/loop holes, e.g. applying VAT to the provision of self storage facilities and to approved alternations to listed buildings from 1 October 2012.
General Anti-Abuse Rule
The government is stepping up on introducing the General Anti-Abuse Rule to tackle artificial and abusive tax avoidance schemes. A consultation document will be issued in summer this year with a view to bringing forward legislation in next year's Finance Bill. Importantly, it has now been announced that the government will extend the GAAR to include SDLT.
More government consultation to take place in 2012 particularly around the role REITs play in supporting the social housing sector.
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