03 Dec UK urged not to increase property stamp duty further
UK Chancellor George Osborne is being urged not to tinker with property taxes when he makes his Autumn Statement later this week or in his 2013 Budget. In March 2011 stamp duty was increased to 5% for properties above £1 million, affecting many ‘ordinary’ family homes in London and the south east where property prices are much higher than the rest of the UK.
In March this year stamp duty was increased further to 7% for people buying properties over £2 million in their own name and 15% through corporate vehicles.
Both moves are regarded by many experts as having had a negative effect on the residential property markets. Last week, London Central Portfolio (LCP) reported a 53% decrease in Greater London transactions between £2 million and £5 million caused by the legislation changes.
Newly analysed data now reveals that this suppression extends to the whole of the country. According to HM Land Registry, sales between £2 million and £5 million across all of England and Wales have fallen by 30% in the third quarter of 2012 compared with the same period in 2011. Even the prime central London market has seen a reduction in sales of 9% across the board this quarter.
LCP points out that this has resulted in a massive loss in stamp duty to the exchequer. It puts this at £203 million. It also reckons that this has hit jobs and therefore the general economy.
‘Given the fragile state of the property market, stamp duty is unlikely be tampered with under the £250,000 mark where 75% of all of purchases take place. However, anyone with a property worth £250,000 upward should be on guard for higher charges at the next Budget and that means half of all the buyers in greater London,’ said Naomi Heaton, chief executive officer of LCP.
LCP has calculated that a fall in sales of 30% for all properties between £250,000 and £2 million on the back of a 1% increase in stamp duty would result in a further net loss of £297 million in tax receipts over one year.
‘Given the evident negative impact of higher taxes, in what is traditionally a buoyant quarter, and continuing uncertainty whilst buyers wait on tenterhooks to see where the next blow will fall, there is likely to be a further reduction in activity and associated economic fall out. Increased taxes do not always result in increased revenues and the tax losses due to SDLT changes are a clear example,’ added Heaton.