George Osborne’s decision to apply a seven per cent stamp duty charge to homes worth more than £2m in the Budget has been criticised by a number of London-based estate agents.
Fears that such a move could particularly undermine the London housing market might be justified considering that, according to Zoopla.co.uk, 2,059 properties worth £2m or more have been sold in London in the last two years – which equates to almost three-quarters of the total number sold in England and Scotland during this period.
Peter Rollings, chief executive of Hammersmith-headquartered estate agent Marsh & Parsons, believes the decision to raise stamp duty from five per cent to seven per cent on these properties could thwart the thriving property market in London.
He said: “The hike will only exacerbate the existing bias in the property tax system against London and the South East, where prices continue to strengthen while they weaken in other parts of the country. Not only will this policy disproportionately target London, where house prices are in a league of their own, it risks killing the goose that lays the golden egg.”
Rollings added that the government’s decision to raise stamp duty does nothing to entice buyers to the London property market – one of only a few regions in the UK deemed to be healthy – at a time when action needs to be taken to encourage investment.
He said: “The UK already has among the highest property taxes in the world, with the prime market shouldering a hefty share of the burden. This additional stamp duty hike risks deterring prime property transactions, thereby undermining the government’s stamp duty tax take – as well as limiting London’s appeal to wealth-creating business. With the property market still far from healthy, we need to see the government supporting activity at all levels, rather adding yet another tax burden.”
Rollings is not the only person to voice their displeasure at the government’s stamp duty hike, with David Newnes, director of LSL Property Services, claiming the move could deter property investment at all levels, but particularly foreign investment in London property, which has driven growth in the sector in recent years.
He said: “The proof will come in the next few months, but with growing barriers to entry, this decision will give the foreign investors who are driving forward the prime market pause for thought as they look to property as a way of protecting their assets rather than increasing their tax exposure.”