We are often asked by clients, keen to understand the state of the property market, whether we are busy and where our clients are selling and buying.
Following the pandemic, we naturally saw an increase in the number of domestic clients purchasing second homes outside London, in areas such as the Cotswolds, and freehold properties with garden space in areas beyond central London.
Prior to the summer break, competition for properties was fierce as sellers were reluctant to sell amidst the economic and political uncertainty. Our clients were often asked to enter into Exclusivity Agreements, requiring buyers to pay a substantial non-refundable deposit of tens of thousands of pounds, before being supplied with the draft papers. Buyers in a competitive situation have no choice but to agree if they wish to secure the property, reflecting the shortage of properties on the market and the relatively high demand.
House prices and demand were expected to increase following the Stamp Duty Land tax reductions announced in the recent mini-budget, but with the rise in interest rates and affordability issues, it remains to be seen, whether non-refundable deposits will continue to be required in the general property market and whether the tax cuts will be sufficient to stave off an ultimate fall in house prices.
However, in the Prime and Super Prime markets, we have seen overseas clients bounce back, purchasing apartments in areas such as Marylebone, Chelsea and Knightsbridge, reflecting the return to normality and proving that London remains a key city for investment. With purchasers less affected by a rise in interest rates or the cost-of-living crisis, and in particular benefiting from the devaluation of Sterling to an all time low, this represents a good time to buy, and to sell. Sellers seeing renewed interest from overseas buyers may very well wish to require that they pay a non-refundable deposit, in exchange for keeping the property off the market and away from other interested parties.
Carly Clayton, an Associate Solicitor in the Residential Real Estate team, explores the pros and cons of these agreements, which require very careful advice and Andrew Goldstone, a Partner in our Tax team, considers a recent case on Capital Gains Tax main residence relief which could have wide implications for our High Net Worth clients.