‘Tax prompts slowdown in London prime property’ said Knight Frank

An increase in a property levy paid on top-end homes in London and uncertainty over future tax changes saw the lowest price growth in the UK capital’s prime property market in just over six years, a consultancy said yesterday.

Knight Frank’s prime central London index rose just 0.9% last month from a year ago, the lowest annual growth since October 2009.

Britain cut its stamp duty tax, which is paid when a home is bought, for most buyers last December.

But those buying million-euro homes saw the amount of tax increased, affecting many London properties.

In some of the capital’s most sought-after areas such as Knightsbridge, home to department store Harrods, and Chelsea, where properties regularly sell for well over €1.42m, prices fell in November.

Knight Frank said that an increase in stamp duty on second homes and for those buying properties to rent them out, added uncertainty.

Separately, the Bank of England might take action over the number of properties acquired by investors with the intention of renting them out, Jon Cunliffe, a Bank of England deputy governor, said.

“You have to monitor those risks and if necessary you have to take action to curtail those risks,” he said.

The bank took no action on the buy- to-let market at the latest meeting of its Financial Policy Committee.