Greater demand for lettings    One aspect of the London property market that has seen a strong level of growth in the last quarter is lettings and the demand for rental property. In prime areas this is being driven by an influx of wealthy young professionals, often from overseas, who are looking for short-term lets during their tenure in the capital. However, if the Conservative party regains control after May 7th and the Right to Buy scheme for council property tenants is revived, that in turn could push the demand for general rental property even higher.    Investors looking for London property in key areas such as Canary Wharf, East London and the City (in particular WC1/2, N1 and EC1) to add to a strong rental portfolio could spur a new rush for buildings that could be transformed into multiple-occupancy rental accommodation. This in particular would yield a very high return for landlords both in the short and the long term.    London Property – Course correction could stabilise market   While the rest of the economy may be relatively stable and, in some cases, buoyant, the property market still appears to be lagging behind slightly. As always though, there are parts of the UK that buck the trend, and investors would naturally expect London to be pushing forward as more money pumps into the capital’s economy.       However, soft numbers for the last few quarters indicate that London’s housing stock is yet to go through a return to pre-crash form, although some areas such as the East End, Canary Wharf and Shoreditch are showing small and steady gains. This could then be translated across the rest of the capital if positive key indicators continue to boost the economy during the next few quarters.       Commentators regard this situation as a natural course correction for a market that is ‘overpriced, overleveraged and overbuilt’. In the first quarter of 2015 London house prices declined, while across the rest of UK prices went up. So what are the reasons as to why London is a soft bet for real estate at the moment?       The Election        Key to the ‘wait and see’ mentality of buyers is the election. Burrow down through the vote-bait policies and into the manifestos and it’s clear that property owners and investors could be in for an interesting (and perhaps challenging) time during the next parliament – depending, of course, on which party forms the next government.        On the one hand the ‘Mansion Tax’ could cool the prime market. But alternatively the extension of the ‘Right To Buy’ could boost both prime and non-prime areas of London. The removal of inheritance tax on properties under £1million will have more of an impact in London than almost anywhere else in the country and get the market moving again, especially considering that sub-million properties make up the bulk of the London stock.        Getting a foot on the first rung        What impetuous there is in the London property market is primarily being driven by first-time buyers, thanks to schemes such as the ‘Help to Buy’ and a more pro-active approach to mortgage lending. Arrears and repossessions are also down, which shows that the previous struggles that many homeowners faced are now being negated thanks to a more stable economy, a slow but steady rise in salaries and record low interest rates. In 2014 the number of mortgages in arrears (10% or more of outstanding balance) dropped by 14%, according to the Council of Mortgage Lenders (CML). Repossessions fell by 26%, the lowest rate since 2006.        Any push forward in the property market in London isn’t being driven by movers or those up or downsizing, but by first-time buyers and investors looking to boost their portfolios. So this translates into two key areas – low-cost housing (flats and apartments rather than larger, more expensive family homes), and investment opportunities. Effectively there exists a London property market of two halves – high-end prime real estate and low-cost properties in less desirable but still-central locations.        Help to Buy – limited appeal in London?        One of the biggest factors in preventing the London property market drop even further than it has in recent quarters has been the introduction of the Help To Buy scheme. This is a series of Government schemes to help homebuyers get onto the property ladder by providing help with either an equity loan or a mortgage guarantee. There are various caveats attached, including the fact that the property has to be a new-build. The scheme does not include pre-existing housing stock, so while the scheme has provided a helping hand for many first-time buyers, its appeal in London in particular where the new-build options are limited has been less than in other parts of the UK.        The Help to Buy Equity Loan was initially intended to run until March 31, 2016, but has been extended until 2020, according to the Financial Times.        The Help to Buy Mortgage Guarantee runs until December 2016, although again depending on who wins the election in May, that could be extended too.        All figures and quotes are accurate at the time of publishing    

Sales: Vanet Property Asset Management is a trading name of Countrywide Estate Agents,
Registered in England Number 00789476. Registered Office: Greenwood House, 1st Floor, 91-99 New London Road, Chelmsford, Essex, CM2 0PP

Lettings: Vanet Property Asset Management is a trading name of Countrywide Residential Lettings Limited, Registered Office: Greenwood House, 1st Floor, 91-99 New London Road, Chelmsford, Essex, CM2 0PP.
Registered in England Number 02995024 which is an agent and subsidiary of Countrywide Estate Agents, Registered Office: Greenwood House, 1st Floor, 91-99 New London Road, Chelmsford, Essex, CM2 0PP.

Registered in England Number 00789476. Countrywide Residential Lettings Limited is regulated by RICS. Countrywide Estate Agents is an appointed representative of Countrywide Principal Services Limited which is authorised and regulated by the Financial Conduct Authority.