What happened in property in 2016

Man jumping into a pool © Airbnb
Look before you leap into off-plan properties

• The number of high-end property transactions in central London has fallen by 24% in the year to the end of September 2016, according to property agency London Central Portfolio. The firm puts the drop in demand for prime property in these areas down to the recent introduction of extra stamp duty on the purchase of second homes, as well as uncertainty in both the lead up to and the fallout from the EU referendum.

Prices of prime central London property were down by 0.5% over the year. Across the UK, house prices rose in November for the first time since March, but the market shows signs of “losing momentum”, say analysts at Capital Economics. “With house prices very high and some buyers still cautious following the Brexit vote, we expect the slowdown to be extended well into next year.”

• The tax burden for real-estate investors is going up. This year saw buy-to-let landlords hit by the introduction of an additional 3% stamp duty surcharge on purchases of second homes. Occupiers of commercial property premises faced the first increase in business rates since 2010. And from next April, tax relief on interest payments on buy-to-let mortgage interest will start to be capped at 20%, regardless of your marginal income-tax rate.

Yet even before taking this into account, the UK’s property taxes are already the highest in the developed world, according to data from the Organisation for Economic Co-operation and Development (OECD). Property taxes accounted for 12.7% of the total amount collected in taxes in 2014 (the last year for which data are available), note Szu Ping Chan and Isabelle Fraser in The Daily Telegraph. This is more than double the average for the OECD’s 35 members. The amount collected in taxes on residential and commercial property – including stamp duty, inheritance tax and business rates – increased from £69.8bn in 2013 to £74.2bn in 2014.

• Short-term lettings company Airbnb has agreed to police local limits on the number of days per year a property can be let through its system, making it the first company of its kind to enter such an agreement, says Nicky Woolf in The Guardian. Airbnb’s growing presence in major cities around the world has been blamed for turning scarce housing for local residents into short-term rentals, leading to calls for increased regulation of its operations.

Until now, the firm has “fought tooth and nail” to avoid regulation, says Woolf, but it appears to have capitulated in this “dramatic change of policy”. In London, hosts are limited to letting properties for up to 90 days per year, unless they have a licence.

• A court in Málaga has said that Spanish bank Banco Popular must repay a British couple £227,000 that they invested in an off-plan property which was never built, says Graham Keeley in The Times. Roughly 100,000 British buyers invested an estimated £2bn in off-plan Spanish properties that were never finished when many developers went bust during the global financial crisis.

The Supreme Court in Madrid ruled earlier this month that Spanish banks should be held jointly responsible, along with property developers, for repaying people who lost out. The British couple involved in this case spent eight years fighting to reclaim their money and are among the first people who have won repayments.

Merryn

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