The increase in Stamp Duty for properties worth more than £2m penalises Londoners and could damage transaction levels at all price points, experts warn.
In last week’s Budget, chancellor George Osborne announced that Stamp Duty will rise to 7% for properties worth over £2m. Previously, everything sold for more than £1m incurred a 5% levy.
The change came into effect on Thursday last week.
Adam Challis, head of research at Hamptons International, says the Stamp Duty move will have a negative impact on top-end transactions and disproportionately affect the London market.
He says: “The Stamp Duty increase will hit 2,600 homes across the UK, 45% of which are in central London. We predict 400 properties are likely to now be marketed below the £2m mark as a direct result of the change.”
Nicholas Leeming, business development director at Zoopla.co.uk, says around three-quarters of £2m-plus sales are in London, making the increase as much a tax on Londoners as on the wealthy.
He says: “And this move will not only affect the wealthy but is likely to have an adverse impact on the entire property market. We’re likely see a slump in activity from buyers at the top level and this will have a knock-on effect all the way down the chain.”
Capital Economics says the change is likely to dampen activity at the top end of the London housing market, and while the added cost may be little more than an inconvenience for the super-rich, it could be a deal breaker for others.
Ed Stansfield, chief property economist at Capital Economics, says: “On balance, however, we suspect that the move will have only a modest dampening impact on the number of £2m-plus transactions and will not materially affect price pressures except for properties valued at just over £2m.”