Mortgage advice for central London

The central London mortgage and housing market is currently undergoing a readjustment of house prices and mortgage lenders are reluctant to expose themselves too much in Zone 1.

In the autumn statement of 2014 the chancellor, George Osborne, announced changes to stamp duty. Although the changes brought a reduction in the tax for many, those buying at £937,000 plus saw an increase in stamp duty. The banding above £1.5m is now 12%.

The introduction of a non-resident capital gains tax and also clients wishing to buy in an offshore Ltd company have seen an increase in taxes. Further tax changes to stamp duty in 2016 brought increases of 3% per banding for anyone buying a second property. These changes have helped to make property less attractive and have contributed to prime central London property inflation falling.

On the flip side, Greater London prices continue to increase. According to Hometrack which tracks 20 of the UK’s major cities, London is only second to Cambridge in terms of property inflation over the last 12 months.

Data compiled from the land registry figures by Wealth Manager, London Central Portfolio, said that that the average property price in 32 of London’s Boroughs excluding the city is now £600,076 and has therefore risen above £600,000 for the first time. LCP said prices in the capital have risen by 14% this year. In the last quarter alone prices have risen by 7.9%.

Zoopla has the average property price across the whole of London as £671,098 and reported the £600,000 barrier being broken across London in December 2014.

Availability of property finance in London

With mortgage rates at record lows taking out a mortgage is a s cheap as it has ever been. Lenders are keen to lend in London although there are some constraints.

Lending limits have been imposed by some banks. Halifax have measures in place to reduce the amount they will lend, they cap lending above £500,000 at 4.5 x income.

Increasing numbers of large loan property development lenders and bridging finance companies are currently not lending above £2.5Million to £3Million on single units in Central London. They have told me that they just don’t have the appetite at the moment as the property inflation in central London is falling and there is a feeling that prices there have reached their current peak in the cycle.

To discuss the availability of London mortgage finance on residential, buy to let and commercial property including property development finance and bridging finance contact London mortgage broker Fox Davidson.