Camilla Dell, Managing Partner and Founder of Black Brick, a premier buying agency specializing in London real estate, is gearing up for a notable visit to Dubai and Riyadh in November. This strategic trip aims to connect with Middle Eastern investors and shed light on the enduring appeal of London’s property market, even amid shifting economic landscapes.
London continues to capture the interest of Middle Eastern buyers, thanks to its rich cultural scene, world-class educational institutions, and robust investment opportunities. Despite the recent UK budget, the impact on many Middle Eastern investors has been minimal. Most buyers of UK real estate from the Middle East do not plan to become residents in the UK, so the proposed modifications to the UK Resident Non-Domicile tax regime hold limited relevance for them. Additionally, London’s temperate climate offers an attractive escape from the scorching Middle Eastern summers, further boosting its appeal as a destination for second homes.
One change that will impact all buyers of second homes, is the increase in the Stamp Duty surcharge (irrespective of whether the buyer is British or international) which was increased by 2 per cent in last week’s UK budget with immediate effect. This means that, depending on property value and buyer nationality, buyers of second homes will pay up to 19 per cent over the value of their home in buying tax.
Black Brick believes the prime London market will be able to absorb the tax changes. Managing Partner Camilla Dell comments, “I don’t believe an additional 2 per cent will deter someone from wanting to buy a property in London. On a £2 million purchase the additional tax equates to just £40,000. I think that in the very short term, between now and Christmas, things could be a bit slow,” she said.
“It will take a bit of time to feed into peoples’ psyches and there may be buyers who attempt to negotiate a 2 per cent price cut to cover the higher tax. But it does not fundamentally alter why people like to buy property in Prime Central London (PCL). As with previous rises in Stamp Duty, we expect the ultimate price for the rise to be paid for by the seller. History has shown that when Stamp Duty goes up transactions slow down while reality sinks in. Prices then fall in line with the rise, and sometimes overshoot it.”
As a result, Dell expects to see more standoffs between buyers and sellers over who will cover the extra tax. “At Black Brick we are already embarking on some tough renegotiations for clients under offer and not yet exchanged to take into account the additional 2 per cent.”
“With weaker market sentiment, we are seeing a dynamic market shift that presents significant opportunities for buyers,” said Camilla Dell. “This year, Black Brick has achieved an average saving of 9 per cent off asking prices for our clients, compared to 6 per cent last year. Recent data from Knight Frank indicates an 18 per cent drop in £5m+ transactions in the year to September. With an increase in new listings, buyers have an abundance of options and now hold a strong position in the market. This shift marks a buyers’ market that hasn’t been seen in years.”
In a positive move for the UK property market, UK Chancellor Rachel Reeves decided against hiking Capital Gains Tax for buy to let investors – a widely anticipated move which sparked an exodus of landlords from the sector over the summer.
There could also be a silver lining for investors buying multiple properties.
“Interestingly there’s been no change at all to “the rule of six”,” said Dell. “Investors buying six or more properties, or a property that is classed as mixed use – with residential and commercial uses – still benefit from significantly lower Stamp Duty rates of just 5%. I expect to see more interest from bulk investors taking advantage of the current buyers’ market, particularly from Middle Eastern investors who like this kind of investing. Bulk investors enjoy a series of benefits beyond Stamp Duty: control over their running costs, the opportunity to sell a building if the need arises, or to break it up and sell flats individually, and the ability to negotiate a better price.”
“At Black Brick we’ve successfully negotiated as much as 20 per cent from asking prices on bulk deals from developers,” said Dell. “And with rents rising and yields improving, this sector is looking more attractive, particularly for freehold blocks.”
This year, nearly 20 per cent of Black Brick’s clientele has originated from the Middle East, including the company’s largest deal of the year: an exclusive off-market country estate transaction valued at approximately £42 million.
As part of her visit, Camilla Dell will co-host two high-profile events in Riyadh. On November 12, she will collaborate with HNW Advisor Events to host an exclusive gathering that will provide high-net-worth individuals with valuable insights into the London property market. On November 13, she will co-host a distinguished lunch event at the Intercontinental Hotel alongside Forster’s Law Firm and Barclays Private Bank, fostering in-depth discussions on UK investment opportunities.
Navigating London’s competitive real estate market, which boasts over 7,000 estate agents, requires expert guidance. Black Brick stands out for its ability to provide clients with tailored advice and access to off-market properties, with nearly 50 per cent of deals sourced beyond traditional channels. Camilla Dell is eager to meet with investors in Dubai and Riyadh, offering them unparalleled insights and support in navigating one of the most complex and dynamic real estate markets in the world.
Sources….
