The upmarket estate agent Savills has warned that Britain’s housing market could slow in the coming months due to increased stamp duty and growing uncertainty surrounding Britain’s membership of the EU.
The firm beat City forecasts with a 16% rise in pre-tax profits to £98.6m for 2015, with revenues rising nearly a fifth to £1.3bn. Underlying profits in the UK were up 10% to £71.7m while Asia posted a 1% decline to £34.2m, with a slowdown in mainland China and Singapore. Savills has been expanding overseas, and its smaller businesses in continental Europe and the US performed well.
Savills has become the latest company to warn of the impact of the EU referendum on the property market. Critics argue that the June vote is likely to put off potential buyers and lead to companies postponing decisions on leasing offices, particularly in London.
The firm’s chief executive, Jeremy Helsby, said: “We expect the UK residential and commercial investment markets to be subdued, for the former, as stamp duty reforms take effect, and, more generally, in the run-up to the EU referendum in June.”
Stamp duty charged on second homes rises by 3% from 1 April. This means on a £250,000 property, buyers will pay £10,000 of stamp duty rather than £2,500.
BlackRock, the world’s biggest asset manager, warned of the impact of the EU referendum on the London property market last week. Its report said: “Investors in London’s commercial property market are understandably nervous about the Brexit vote. London has a lot to lose. It accounts for 23% of European cross-border commercial property investment.”
Savills has opened new branches in Earl’s Court and Ealing in west London, and Shoreditch in east London. Revenues in its UK residential business fell 1% to £127.9m last year due to weaker resale volumes, which offset growth in private renting. The firm said the prime market where it is the leading player took a hit around the time of the general election.
Looking ahead, the Peel Hunt analyst Clyde Lewis said: “While 2016 will not be an easy year, continued growth in the US combined with better European results and performance from the group’s investment management and consultancy businesses should offset softer Asian and UK transaction activity.”
