There has been much speculation about bonus monies and how they will influence the London property market.
However some are not convinced that this years’ bonuses will have a significant impact on the property market as has traditionally been the case in February/March time.
Jo Eccles, Director of Sourcing Property, says:
“Vendors and estate agents get excited when they see the headlines about big bonus payouts, however, it’s important to remember that these bonuses tend to be for the top 10% performers in each organisation, rather than the company as a whole. Also, bonuses are not paid 100% in cash. For example, this year, from a £1m bonus, £500,000 will be taken in tax and typically two thirds will be paid in shares, so the actual cash sum will be approximately £166,000. The two thirds paid in shares can usually only be cashed in over a three year period (there is talk of increasing this to five years), meaning that bonus money is likely to filter into the market over a longer period than we’ve previously seen. Therefore, whilst some recipients may well look at purchasing a property with bonus money, it’s unlikely to have a huge impact.
“What is most likely to affect the spring market is the introduction of the 5% stamp duty on purchases over £1m which comes into force on 6th April this year. This is likely to lead to heightened activity at the top end of the market in the run up to 6th April. For example, we are currently acting for a number of clients searching for a property priced up to £2.5m; if they complete after 6th April, their stamp duty fee will be £25,000 more. These buyers are therefore keen to try and complete by the end of March, and we expect to see a greater number of buyers wanting to do the same.
“Inflation concerns are also having an impact on the market, and this has been a regular discussion point with clients recently, especially our UK based clients. A number of them are keen to invest in property, rather than have their cash sitting in the bank eroding in value.
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