The Stamp Duty reforms by the Treasury at the end of 2014 have caused sales of premium London properties to drop by almost two-thirds last year, according to the latest research from estate agent
Sales of £2m-Plus London Homes Drop 64%
Douglas & Gordon.
The firm found that sales volumes of these homes – houses and flats in the capital selling for £2m or over – decreased by 64% in the last nine months of 2015, compared to the same period in 2013.
Chancellor George Osborne removed the old step-based system and replaced it with a tiered structure. This cut the amount of Stamp Duty charged on properties sold between £500,001-£937,000, but charged a huge 12% in the tax on homes worth over £1.5m.
The significant 64% fall in sales will have reduced the Treasury’s expected revenues from Stamp Duty. Douglas & Gordon urges it to consider a cut in the top rate of Stamp Duty in 2016.
Property sales values in London were also hit over the past year.
Homes in prime postcodes – what Douglas & Gordon defines as the area between Notting Hill and Chelsea – experienced an average annual sales value decrease of 1.4% in 2015.
Ed Mead, Executive Director of the firm, comments: “The significant drop in sales of £2m-plus properties during 2015 shows the profound impact of the SDLT [Stamp Duty Land Tax] changes.
“Tax revenues will have fallen sharply as a result, so we would urge the Government to consider lowering the higher SDLT rates.
“Looking ahead, we are expecting the market to be split around the £1.5m mark. Property worth up to £1.5m could grow in value by as much as 5%, but owners of any property worth more than £1.5m can expect a static year.”1
It will be interesting to see how the planned extra 3% Stamp Duty charge for landlords will affect the London market further. However, we reported earlier that London Central Portfolio expects investors in the capital to absorb the additional charge better than anywhere else: /only-prime-central-london-landlords-can-absorb-extra-3-stamp-duty/
1 http://www.propertyindustryeye.com/london-sales-of-2m-plus-homes-collapse-by-64-says-douglas-gordon/