Record number of homes worth £2m or more sold last year

A record number of residential properties were sold for £2m or more last year, with the lion’s share located in London and the South East, a study has shown.

The top end of the property market was “largely immune” to the problems facing the rest of the generally weak housing market, according to Lloyds TSB’s study.

Across the country, some 1,518 property sales were worth at least £2m last year, up five per cent on 2010’s figures – the highest number of homes sold in this bracket since records were first made in 1995.

Land Registry figures show 84 per cent of multimillion property sales were in London and the South East.

The study estimates that 1.3 per cent of homes in London are now worth at least £2m, compared to 0.2 per cent across the country as a whole.

However, sales of high value homes could be hit this year after the government increased the stamp duty rate on properties worth more than £2m from five per cent to seven per cent.

IdealProperty.co.uk managing director Stephen Dyer said: “I think all levels of the market are being hit by various structures being put in place.

“At the bottom of the market it is stamp duty and mortgages, along with the difficulty people are having in qualifying for them as lenders cherry pick the best borrowers.

“Up the scale, stamp duty becomes a big part of the property purchases that are sub-£2m and now even more so at seven per cent for properties over £2m.

“It’s becoming quite a factor in a lot of conversations with potential clients before they instruct me. For £3m to £3.5m properties I am finding there is a lot of sensitivity to stamp duty. While these things settle down as time goes on, it’s certainly making a big difference.”

While Dyer accepts increased stamp duty rates could weigh down on sales, he believes property sellers, or vendors, could help themselves by pricing homes more realistically.

“Vendors overpricing is a huge hurdle – mainly for the vendors – the level of overpricing far exceeds the level of stamp duty.

“Considering the amount we are talking about in terms of stamp duty, some vendors are half a million overprice on properties between the £2.5m to £4m level – stamp duty just pales into insignificance.

“It’s far better to get interest in the property because things like stamp duty don’t tend to figure in such a significant way in any negotiation.”