Central London property deals halve after Brexit, tax hike

A man passes advertising for new flats under construction in west London

LONDON (Reuters) – The number of properties sold in central London’s priciest areas halved in the three months after June’s Brexit vote, hit by the uncertainty created by the referendum and a tax hike, according to official data analyzed by a residential fund.

There were 620 transactions in the third quarter and a total of 3,696 in the year to the end of September, one of the lowest levels to be recorded for the city center’s mix of million-pound apartments and mansions, the London Central Portfolio (LCP) said.

Uncertainty before and after the June 23 referendum and an increase in the amount of stamp duty paid on the purchase of second-homes and buy-to-let properties from April both hit demand in a market popular among domestic and foreign investors.

“The past 12 months not only witnessed a marked slowdown in sales activity as Stamp Duty changes dramatically affected sentiment, but uncertainty has been a recurring theme, both before and following the UK’s Brexit vote,” LCP said.

Transactions fell by an annual 24 percent in the year to the end of September, but prices remained stable, down by just 0.5 percent, according to Land Registry data examined by LCP.

Estate agents Savills <SVS.L> does not expect prices to rise again until 2019 but the uncertainty around Donald Trump’s presidency and upcoming French elections could boost demand for London property, often seen as a safe haven in times of flux.

“After a year of constrained activity and increased uncertainty both in the USA and elsewhere in the EU, investors will actively re-enter the market,” said LCP’s CEO Naomi Heaton.

“LCP expect steady but muted price growth for 2017.”

(Reporting by Costas Pitas; editing by Stephen Addison)