Should high-end agents stop crying wolf about London?

Ed Balls accusing a high-end estate agency, Savills, of “scaring everybody” over mansion tax raised a wry smile from yours truly - and not just because when it comes to scare tactics, Ed Balls has proven to be in a class of his own.

While I think his proposal for a mansion tax is heavy handed and aimed more at taking a pot-shot at pantomime villains than doing anything about Britain’s housing shortage, I have to say Balls has a point about a few high end estate agents crying wolf.

For example, look at what happened when George Osborne announced his reform of stamp duty and, in particular, the increase in the charge on properties costing £937,000.

As it happened at the moment that Osborne was delivering his Autumn Statement I was at a magazine lunch with over 40 estate agents, each of them from central London and each of them at the sharp end of the new duty. Most shrugged in reluctant acceptance - not one became shrill and not one said that that news heralded the end of the London market.

Yet the next day a representative from London Central Portfolio - a firm which buys and manages high-end property on behalf of investors - described the Chancellor’s stamp duty reforms as meaning London’s market could face “complete and utter collapse.”

Her comments attracted criticism (from estate agents, rather than the public) on social media. But with 98 per cent of buyers benefitting from Osborne’s reforms, her comments were - surely - well in the category that Ed Balls would call “scaring everybody.”

We’ve been here before of course.

In September 2012 Hamptons International predicted that George Osborne - yes, him again - would trigger a 40 per cent fall in the sale of £2m-plus properties in London by the introduction of his 15 per cent levy on ‘non-natural persons’ and by the introduction of an annual charge and changes in Capital Gains Tax for non-doms.

“This represents approximately 700 fewer transactions and this implies potentially foregone SDLT taxation revenue of £150m to £175m” said Hamptons.

It didn’t quite work out like that. London sales, including those above £2m, sailed high; stamp duty receipts soared similarly. It was a crisis that in the end didn’t happen.

It’s too early to know whether Savills’ similarly outspoken predictions about mansion tax fall into the ‘accurate’ or ‘scare tactics’ category.

A press release from Savills - which contributed to a story on Estate Agent Today on November 6 - claimed that if Labour introduced a “full” mansion tax it could reduce prime central London prices by five per cent in 2015.

Some online and hard copy publications ran headlines saying 10 per cent rather than five, citing specific Savills presumptions about much higher value properties. For example, Financial Reporter emphasised the Savills 10 per cent figure claiming that a property now worth £7.5m would rise to £8,424,043 in 2017 without mansion tax but just (yes, it used the word “just”) £7,601,040 if the tax was introduced.

Savills might, of course, turn out to be completely correct if a mansion tax is introduced. Or the firm might just turn out to be wrong. Or such a tax might never be introduced anyway.

But the point is this.

There seem to be some common denominators when it comes to the small number of estate agents who occasionally declare the end of the housing market as we know it.

Such claims tend to come from (a) agents heavily active in central London, (b) agents heavily reliant on extremely rich clients, and (c) agents with substantial PR budgets to promote their views and give them a currency probably well beyond their true worth.

Does this reflect badly on the vast majority of estate agents who are not in London, have ordinary clients, and actually just keep their head down and try to let and sell houses?

Well, that’s for you to say - you’re the estate agents, I’m just a journalist.

But when Rightmove produces research showing that Labour’s mansion tax is actually popular with the public, and when George Osborne introduces Conservative stamp duty reform making house buying cheaper for 98 per cent of the public, it seems unwise for a few agents to go into PR overdrive and say how unfair this is to buyers in Knightsbridge.

Ironically most of their peers seem completely reconciled to some form of tax, for good or bad, and aren’t minded to talk up the problems and in doing so, talk down the market.

There will be more of this (much more, whether we like it or not) in the build up to the general election.

This article originally appeared in the Industry Views section of Estate Agent Today

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