Back in December 2014, changes were made to the way stamp duty was calculated, moving to a new format from the old ‘slab structure’, how has this affected the UK property market where transactions are concerned?
Lettings and sales agent, Benham and Reeves, has looked at how these changes have affected property transactions and where has seen the biggest decline.
The changes were introduced to make buying more favourable for the ‘average homebuyer’ with only those buying at the highest price bands in line to pay more.
However, the research has found that on average, transaction levels across England since the changes have dropped by -0.8% when compared to the same time period prior to their implementation.
It’s clear that the attack on the top-end of the market has worked with Kensington and Chelsea seeing the largest decline, with transactions since the changes down -21.2% when compared to the same time period prior.
The City of Westminster has also seen one of the largest declines in transaction levels at -20.5%, followed by Tower Hamlets (-20.2%), Elmbridge in Surrey (-18.7%) and Cambridge (-18%).
Prime central London compiles much of the worst-hit areas with Islington also seeing a reduction of -17.3%, followed by Hammersmith and Fulham -17.1%.
Kingston upon Thames (-14.2%), Camden (-13.8%) and Welwyn Hatfield (-13%) complete the worst areas for a reduction in transactions since the changes to stamp duty.
Since the introduction of Land Transaction Tax in Wales last year, transactions have already slumped -3.7% when compared to the same time period previous, with Monmouthshire the worst hit, down -15.11%.
However, since changing over to the new Land and Building Transaction Tax in Scotland, transaction levels have increased by 7.9% north of the border, although Aberdeenshire (-16.2%), the City of Aberdeen (-11.6%), the Shetlands (-2.2%) and East Dunbartonshire (-1.1%) have all seen a drop.
Marc von Grundherr, Director of Benham and Reeves said, “While it was the changes to second home and buy-to-let stamp duty that have caused the most detrimental impact to the UK property market, it’s clear that even on a residential basis, the Government’s re-shuffle has dented buyer sentiment across the board, particularly at the top end of the market.
“Of course, those buying a home at the highest price threshold may be better able to afford stamp duty, but a steep increase has left many thinking twice, while the average home buyer is still consistently caught out by having to pay it, and often deterred as a result of factoring it in prior to a purchase.
“Although the idea of switching the responsibility to the seller was a welcome one until it was quickly backtracked on, the Government should seriously consider scrapping their archaic money grab to help stimulate an otherwise weary housing market, as tinkering with the nuts and bolts has done nothing to help.”