Prime UK property priced over £2million is set for a tougher time in 2016, says a development company chief, and market forces may mean it looking further away from Central London.
Bob Weston, Chairman and Chief Executive of top developer, Weston Homes plc ,says the market under a million pounds is likely to be stable and values are likely to move marginally above inflation, but prime property at higher levels may suffer, including in the buy-to-let sector.
“The top end – two million plus – will be different. It’s not just higher stamp duty; low oil prices and a strong pound will continue to have an effect. The new stamp duty rates for second homes, coming through in April, will only add to this.
“In terms of its impact on buy to let, it’s bound to make some think twice, especially those buying with mortgages who are already put off by the changes coming through in 2017 that will prevent investors from deducting interest payments from taxable income."
Almost three in 10 (28%) of Weston Homes Plc homes sold in 2015 were Help to Buy properties, so the move to increase equity loans in London to 40% of value will be massive for sales below £600,000.
“Because of where we think the market will be in 2016 and beyond, we are looking to be sub-£800 per square foot, which will mean building further away from Central London.
“Permitted Development (PD) being made permanent will help to deliver more housing on brownfield sites – something we as a business have always looked to do. PD contributed circa 30,000 homes in 2015. With the uncertainty gone, this figure will be even higher in 2016, while the intention to allow office buildings to be demolished and converted into purpose-built residential will increase interest from professional housebuilders like us and further boost the numbers.”
In 2016, Bob Weston would like to see a flat rate for affordable housing. “Developers with the best viability assessors end up getting the sites because they can pay more for it. It’s inflating land values.
“The government must give certainty so everyone knows what they have to work with. I would also like an incentive for local authorities to sell land to developers with the best scheme rather than always to the highest bidder. If we can buy land at a better price it will enable the homes we build to be more affordable.”