London luxury sales volume drops hard as new tax takes effect

Number of transactions dropped to a post-crisis low in April

New York /
May.May 09, 2016 08:06 AM

The prime Central London luxury home market – a major center of post-crisis real estate investment – in April recorded its lowest monthly sales volume since 2009, and a new tax on home purchases may be a big reason for it.

Just 125 Central London homes sold last month, a significant drop even from the previous low of 151 sales recorded in January 2009, at the height of the financial crisis, according to data from London broker Huntly Hooper.

The low sales figures follow the implementation of a new tax on real estate transactions in the city – in the form of a one-off stamp duty at the time of sale — that adds about 3 percent to prices for buyers based outside the U.K. and those seeking to invest in the properties as rentals, the Wall Street Journal reported.

While long-term price growth has slowed demand in the city to some extent, the numbers may still prove to be something of a blip. In March, just before the new rules took effect, the area saw 420 sales, well above the long term average of 310 sales, according to the data.

The new London tax is roughly analogous to New York City Mayor Bill de Blasio’s proposed pied-a-terre tax, which would add 1 percent to the price of all homes in the city purchased for over $1.75 million. Groups such as the Real Estate Board of New York have backed the plan, saying it would raise needed revenue. Other have argued such a tax could drive potential foreign buyers to other world cities, such as … London. [WSJ]Ariel Stulberg


Related Articles

arrow_forward_ios
The house on Britten Street in Chelsea, London (Harding Green, Getty)
School-bus sized London apartment lists for $1.4M
School-bus sized London apartment lists for $1.4M
China Evergrande Group's Hui Ka Yan and 2–8a Rutland Gate (Getty, Twitter, Rutland Gate)
London mansion back on the market after 2020 record-setting sale
London mansion back on the market after 2020 record-setting sale
Albert Henry Stanley, 1st Baron Ashfield (Lord Ashfield) in front of South Street, Mayfair, W1K in London (Hugh Cecil - via Wikimedia Commons, Spudgun67 - via Wikimedia Commons)
Mayfair home of London Underground founder listed for $20M
Mayfair home of London Underground founder listed for $20M
(Getty Images, iStock/Photo Illustration by Steven Dilakian for The Real Deal)
A London of Russian oligarchs says good-bye to all that
A London of Russian oligarchs says good-bye to all that
Michael Fuchs and Alvina Collardeau circa 2011 (iStock, Getty Images, Illustration by Kevin Cifuentes for The Real Deal)
Chrysler building owner Michael Fuchs in messy legal drama with ex
Chrysler building owner Michael Fuchs in messy legal drama with ex
Google buying London office for $1B
Google buying London office for $1B
Google buying London office for $1B
Leon Black and Debra Black with the townhouse (Getty, Beauchamp Estates)
Former Apollo CEO Leon Black buys $28M London townhouse
Former Apollo CEO Leon Black buys $28M London townhouse
Vatican nears sale of London property at the center of sweeping scandal
Vatican nears sale of London property at the center of sweeping scandal
Vatican nears sale of London property at the center of sweeping scandal
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...