London’s most expensive homes are set to outperform those in the rest of the UK residential property market as wealthy buyers remain undeterred by property tax increases, according to a report from Knight Frank LLP. 

 

The estate agent’s broker arm has revealed that price of super-prime houses and flats costing £10 million or more has are estimate to balloon by 5 per cent in 2013. 

 

Values of luxury properties climbed by 6.9 per cent in the past year as buyers competed in a sector with fewer properties available to be sold.

 

The report also found that 98 deals valued at £10 million or more were completed in the nine months leading up to September, a significant rise from 94 transactions a year earlier in 74 in 2010.

 

It was also shown that London’s high-end properties have been attracting investors seeking appreciating assets, despite Europe’s on-going financial crisis and the financial and political turmoil in the Middle East.

 

Luxury properties are often bought by shell companies set up in tax havens – such as the Cayman Islands – to avoid expensive taxes implemented by the government.

 

Most recently, Chancellor of the Exchequer George Osborne introduced a stamp duty rate of 15 per cent on all properties bought from overseas, with homes worth in excess of £2 million levying a 7 per cent charge.

 

Prior to the introduction of these taxes, 32 per cent of homes worth over £10 million were purchased by offshore companies, a figure which has since dropped to 3.8 per cent.

 

Taxes have mostly affected luxury properties whose value lies between £2 million and £5 million – sales in this bracket fell by 44 per cent in Q3 2012, when compared with the same period in the previous year.

 

For homes worth less than £2 million, however, house sales were found to have increased by 13 per cent.

 

Liam Bailey, Knight Frank’s head of residential research, said: “Stock in this segment is very limited. The population of very wealthy potential buyers has been rising strongly over the past two years and looks set to rise into 2013.”