Top agency says London slump down to stamp duty, not Brexit

One of the most respected buying agencies in the country, Property Vision, says the estate agency industry's turnover is down not because of Brexit but because of stamp duty.

PV, which deals with properties at the high end of the market - the sector which, contrary to the rest of the market, has seen higher stamp duty for almost two years - says agents are feeling the pain because turnover is their lifeblood.

“If you add price declines into the mix, downward pressure on fees as they fight for market share and the rise of the online agencies like Purplebricks, it is beginning to look like a perfect storm” says Property Vision in its latest online blog.

Using figures from data consultancy LonRes, PV says in the second quarter of 2016, the number of transactions in prime central London was down 42% per cent on the same period of 2015. 

“Brexit is the obvious villain but the problem would appear to be more structural as the turnover in the first half of 2015 was 17 per cent down on the same period of 2014” says PV. 

It suggests that the first quarter of this year should have bucked the trend when there was the rush to get deals through before the additional homes stamp duty surcharge but “in fact that period was down three per cent on the same in 2014.” 

In a scathing critique of the current exchange rate problems, PV goes on to say: “On the one hand there are buyers who think in dollars and visit, rather than live in, their trophy [homes]; who are rich, rather than merely wealthy. On the other, there are those who live in their house or at, work in London and think in pounds.”

PV says the first are taking advantage of a weak pound whereas the second group “are finding life expensive and are looking for bargains - if they are looking at all. Their default position is to stay where they are, given the costs of moving.”

Criticism of the government’s stamp duty regime on homes selling for over £937,000 - almost all of which now incur higher stamp duty thanks to George Osborne’s reforms of December 2014 - has been increasing in recent days, ahead of the Autumn Statement by new Chancellor Phillip Hammond next month.