A new report, commissioned by Westminster council, estimates that owners of trophy mansions spend some £2.3 billion a year on improvements to their homes, in shops and restaurants and on employing staff. Far from providing no benefit to the UK economy the report suggests that owners of homes worth more than £15 million spend an average of £4.5 million a year in London while those in the £5 million to £15 million bracket spend £2.75 million annually.
The key findings are:
- Between 2003-2012 there were 3,335 property sales valued at more than £2 million in Westminster – 8% of the total number of transactions, but accounting for more than 40% of the value.
- The evidence suggests that the great majority of this small proportion are either occupied by the owners or rented to London workers.
- Westminster on its own, yields more Stamp Duty Land Tax (SDLT) than 29 of the largest local authorities in the UK combined (£348 million in 2012-13).
- Owners of properties worth more than £15 million spend around £4.5 million each, in London annually and those owners in the £5-£15 million range spend around £2.75 million.
- Owners of properties in the £5 to £15 million price band and of properties above £15 million, together contribute at least £2.3 billion a year to the London and the wider economy.
- Over the past four years, sales of homes more than £2 million have averaged 450 in Westminster, annual stock turnover in Westminster ranges between 2,700 to 6,000 units – so homes of more than £2 million account for between 8% and 17%.
The evidence suggests that prime residential property transactions differ from others. While the number of prime transactions track “global” indicators like the price of gold, prime prices have remained relatively stable (while average house prices have seen significant increases). This suggests that properties worth more than £2 million are seen as stores of value more than as a speculative opportunity.
The overarching conclusion from the report is that the prime sector of the market is a less significant driver of a number of trends in the market than is generally perceived. It also suggests that prime property and its owners make a significant positive contribution to London’s economy.
Also, the prime sector is not a major direct driver of the increase in London house prices as is sometimes asserted, nor are the number of prime homes a major factor in Westminster meeting its housing need.
This is the first time that the impacts of the prime residential market has been explored in this amount of detail, bringing together information from a wide range of sources and seeking to separate evidence from anecdote to provide a robust piece of research. It is probably the most authoritative account of the issues available at this moment in time.
Responding to the report, Councillor Robert Davis, Deputy Leader of Westminster City Council and Cabinet Member for the Built Environment, said: “This independent report strongly counters the perception that overseas investors are buying high value properties in London as an investment and then leaving them empty".
Jersey is a major provider of property structuring services into the UK for international investors. This report powerfully reinforces the Capital Economics findings which showed that Jersey adds £9bn of value to the UK economy, supports 180,000 jobs and generates £2.3bn for the UK Exchequer (almost as much as the entire UK music industry) proving again the value of Jersey to the UK.
Read the full 'Prime Residential Market in Westminster' report