The ‘lower priced’ 80 per cent of homes in prime central London are seeing price rises again, giving hope they have at last factored in stamp duty rises - but the top 20 per cent remain at a lower average price now than three years ago.
Research from property investment specialists London Central Portfolio suggests that from late 2014 (when ex-Chancellor George Osborne’s stamp duty reforms were announced) to the end of the first quarter of this year, double digit growth was recorded for the bottom 40 per cent of the prime central London market.
This is where prices are under £936,000 - the threshold below which stamp duty remained the same or was made cheaper by the Osborne reforms.
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Can we have a second article on this please headed: "STAMP DUTY KEEPS MARKET FLOWING OUTSIDE LONDON". The stamp duty reforms have saved the majority of house buyers thousands of pounds each and helped to stop the general residential property market in England and Wales falling into recession. For those buying houses between £250,000 and £500,000 in particular the savings are substantial and that is the average price range in many areas outside the capital. I am in the process of buying a house myself just under the £400,000 mark. My stamp duty would have been nearly £12,000 under the old regime; it is now a little over £9,000, and I am just one of many homebuyers satisfied that the Government has seen a little bit of common sense for once by creating the progressive stamp duty regime that those in the industry have been crying out for some time. Yes, the top end is extortionately high, but perhaps a bit of rebalancing was long overdue and London should now be looked at as a special case as our city state develops more and more as an individual entity out of kilter with the rest of the UK.
Perhaps we need a Londoxit, let's build a wall
While sympathy for the top end may be muted, the London market has been hit by the triple whammy of Stamp Duty, the reduction in demand from foreign buyers (Brexit), and reduced demand from investment purchasers (Stamp Duty and tax changes).
The additional effect of the Stamp Duty changes and Brexit for certain areas in the regions and the coastal market, has been the collapse in second home and retirement purchase demand, partly due to sentiment in worrying times. The reduction in interest from Londoners who, having previously been considered as almost cash buyers due to the earlier strength of the London Market, has resulted in them now being considered like everyone else.
The Help to Buy measures and Stamp Duty adjustments to the lower and middle sector have generally been welcomed, except for the effect on the investment market. Higher Stamp Duty should not, in my view, be applied to would-be second home owners. Local taxes for second home owners should be the means by which extra revenue can be derived: these can provide specific benefit to the areas in which they are located.
The bottom line is that the overall income from Stamp Duty from residential transactions has fallen, which can't have been the government's intent. Any changes suggested now should focus on the collapse in the volume of transactions.
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