New figures reveal stamp duty impact on London prime property market
The Treasury’s overhaul of the stamp duty system at the end of 2014 contributed to sales of ‘premium London homes’ collapsing by nearly two thirds last year, according to estate agents Douglas & Gordon (D&G).
New figures released by the firm reveal sales volumes of what it classifies as 'premium London homes' – houses and flats in London selling for £2m and above – declined by 64 per cent in the last nine months of 2015 against the same period in 2013.
While the Chancellor's unexpected changes from the old 'step' based structure to a tiered one reduced the stamp duty land tax (SDLT) burden for properties sold between £500,001 and £937,000, the introduction of a 12 per cent levy on properties valued above £1.5m has had a significant impact on sales in London's premium home market.
The 64 per cent drop in sales volumes will have reduced the Treasury's expected revenues from SDLT, and D&G is urging it to consider a reduction in the top rate of SDLT in 2016.
Sales values were also hit in the capital over the course of 2015. 'Prime' postcodes, defined by D&G as the area between Notting Hill and Chelsea, saw property sales values decline 1.4 per cent year-on-year overall in 2015.
Sales values in D&G's 'Emerging Prime' areas – stretching from Hammersmith and Shepherd's Bush in the west, to Clapham and Balham in the south – fared slightly better, with a year-on-year rise in overall sales values of 0.6 per cent for 2015.
Douglas & Gordon Executive Director Ed Mead said, "The significant drop in sales of £2m+ properties during 2015 shows the profound impact of the SDLT 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 to 2016, 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 per cent, but owners of any property worth more than £1.5m can expect a static year."
For more Re:locate news and features about residential property, click here