29 Jul Stamp duty hike hits prime property market in UK, research suggests
Sales of homes worth over £1.5 million in the UK have reached a plateau and are set to fall for the first time in two years due to property tax change, according to a new report.
This is despite growth in this price sector of 36% year on year from 2012 to 2014, says the latest market analysis report from national estate agents Jackson-Stops & Staff.
‘The wider UK residential property markets are reasonably buoyant now that we have the general election behind us and the uncertainties that any potential political changes bring,’ said Nicholas Leeming, chairman of Jackson-Stops & Staff.
‘However, the revision to stamp duty rates late last year has contributed to the widespread stagnation of the higher valued markets in 2015, both in London and the country, where many properties are finding it difficult to attract buyers,’ he explained.
‘Sale volumes have plateaued across the country in response to high transaction costs, reflecting the fact that the UK has one of the highest taxed property sectors in the world,’ he pointed out.
Under new stamp duty legislation the value portion between £925,001 and £1.5 million has resulted in an additional 10% bill, and anything above £1.5 million added another 12% charge.
‘We have an ageing house owner population with too few younger entrants onto the property ladder. Mortgage funding is difficult to raise for people in their forties, even if they have been previous house owners, irrespective of their credit history,’ Leeming said.
‘We need to encourage trading down so that larger houses are released to families needing more space. The changes to inheritance tax will incentivise older house owners to trade down, but we also need to enable property owners to move without new restrictions to mortgage funding and reduce the top levels of stamp duty to free up the higher value markets at no net loss to the Exchequer,’ he added.
Alastair Hancock, the firm’s director at its Sevenoaks office, revealed that over a third of available stock is priced in excess of £1.5million and this is due to a lack of incentives for buyers at the mid to high end of the market.
‘Since the stamp duty hike last December, we have seen a significant decline in volume of sales at this level as the 12% continues to penalise the country house market, which is still struggling to recover from the recession,’ he said.