A small one bed apartment on the ground floor of the Regency building in Notting Hill, West London, commands an easy 2 million pound price tag, while a large countryside estate tucked away in its own private acreage in Staffordshire struggles to reach the same price. This tells the tale of the £2 million plus residential property market in certain areas of the UK and why the UK Government is introducing a new stamp duty bracket for these properties at 7%. A flat with the right address in London will sell far easier than a six-bedroom country house with sweeping driveway, tennis courts, staff quarters and a separate granny flat.
Even in such a stagnant property market and long lasting recession, a total of 96 properties were sold in England and Wales for more than £2 million pounds in February 2012. Only 15 of these were outside London. Another 104 properties fetched between £1.5 and £2 million and only 37 of these were outside the capital.
While the Eurozone crisis is effecting property prices across the rest of the country and there has been a year on year drop in property prices of around 2.3%, such unpredictability and uncertainty is not affecting the top end of the property market in London.
London continues to attract rich international buyers with an endless flow of wealthy Greeks coming to rent and buy prestigious properties.
Central London seems to be seen as a 'safe zone' by both international and domestic buyers with millions to spend on an apartment, despite the UK Government's intentions to tax properties sold at more than £2 million at 7% if bought by a private person and a whopping 15% if bought through a company. This will amount to a minimum of £140,000 to £300,000 on top of the purchase price. These new tax brackets have affected property prices, more or less eliminating properties priced between £2 million and £2.5 million, with many people trying to sell in this price range, having to drop their prices to just under £2 million. A price tag of £2 million means the buyer will pay 5% tax, if the price is £2,000,001, the tax jumps to 7% - a £40,000 increase in tax payable.
It is location rather than size and facilities that sets the price tag for central London properties. In April 2012 one property in the capital sold for a staggering £55 million.
Prices for prestigious properties in areas such as Kensington and Chelsea have risen by 11.6% in the twelve months ending in April 2012, with the average property there being valued at just over £1 million.
The latest fashion accessory and status symbol for the mega-wealthy is no longer an imposing country mansion, but a small cramped basement apartment with a Notting Hill address. It is location that now matters, not size and facilities.