Flats and maisonettes are attracting the highest average prices in the £1 million-plus residential property market as demand for advice on inheritance tax issues (IHT) continues to grow, new analysis* from Investec Wealth & Investment shows.
In 2022, the average price paid for high-end flats and maisonettes was £1,908,782 compared with £1,805,004 for terraced houses; £1,663,880 for semi-detached houses and £1,616,859 for detached houses, Investec Wealth & Investment’s analysis of the most recent Land Registry data for England and Wales found.
However detached houses dominated the number of sales, accounting for more than half (52%) of all £1 million-plus sales ahead of terraced houses on 23%, semi-detached on 13% and flats and maisonettes on 12%, the analysis of over 20,000 transactions found.
Properties valued at £1 million-plus made up 3.21% of all sales in 2022** compared with 2.75% in 2021; 2.37% in 2020 and 1.78% in 2019.
The strength of the high-end property market is driving a rise in demand for advice on IHT. Investec Wealth & Investment is helping more clients who are downsizing on strategies to manage potential IHT issues as a result of gains from selling their properties. Typically, they include parents and grandparents seeking advice on gifting money to family. Government data*** for the 2021/22 tax year shows IHT receipts hit an all-time high of £6.1 billion – a 14% rise on the previous year.
The wealth manager’s analysis shows around 40% of the £1 million-plus sales last year were in London and homebuyers in the capital paid the highest average price out of the ten areas with the largest number of sales. Richmond, Bristol, St Albans and Reading made the top five in total number of sales while Richmond, Leatherhead, ,Sevenoaks and Guildford made the top five on average prices out of the ten areas with the largest number of sales.
Investec Wealth & Investment’s analysis highlights the huge number of people that are liable to pay inheritance tax. Couples can now leave property worth up to £1 million before paying any tax, but the tax-free amount depends on who you leave the property to and the overall value of your estate.
For those with larger estates, the main residence nil-rate band, and therefore the amount they can pass on tax-free, reduces gradually, known as ‘tapering’. For every £2 that their estate is over £2m, the property allowance is reduced by £1.
Faye Church, Financial Planning Director at Investec Wealth & Investment, said: “Homeowners are increasingly facing the possibility of IHT bills when they sell their home. Many will be buying similar priced properties, but significant numbers will be looking to invest the money they have made on their property sale and would benefit from specialist support on managing their wealth. We are also seeing parents and grandparents that have decided to downsize for lifestyle reasons, reaching out to us to help them put a strategy in place for what to do with the proceeds, be that to gift, invest or use for a special holiday with lockdowns lifted.
“In addition to this, our analysis highlights the thousands of people who are liable to pay inheritance tax on their properties because of their value, and again they should seek professional financial advice on how to plan for this.”
Investec Wealth & Investment works closely with individual clients to plan and manage their wealth, and with charities, trusts and clients of professional advisers to help deliver optimal returns on their investments and bring financial peace of mind.
As one of the UK’s leading wealth management companies Investec Wealth & Management focuses on a relationship-based approach to Financial Planning and Investment Management with the purpose of making a tangible and meaningful difference to clients and their families.
