The Treasury has admitted that stamp duty ‘take’ is expected to soar from £11.2 billion this year to £17.8 billion in 2020/21 - a forecast that underpins the latest three per cent duty surcharge announced last week by Chancellor George Osborne.
The figures were contained in papers released after Osborne’s recent Autumn Statement. They are based not only on the surcharge income but on additional stamp duty raised as a result of the more fundamental overhaul of the system announced by Osborne almost exactly a year ago.
However, that is still some £2.8 billion less in stamp duty receipts than had been expected when the Office for Budget Responsibility had issued an estimate for the same period back in July - the slowing London market is said to be responsible for the recalculation.
These figures are disputed by some in the estate agency industry.
For example, high end London agency Chestertons claims the 2014 stamp duty overhaul will cost the Treasury up to £750m in lost revenue this year alone. The agency claims the new rates have impacted sales over £1.4m, brought parts of the high-end market to a near-standstill, and is having an unintended impact in lower price brackets as developers find it more difficult to subsidise the building of starter homes.
“By ignoring urgent industry calls to review last year’s changes to stamp duty, the Chancellor is burying his head in the sand and will likely be in for a shock when the final year’s receipts are counted and he realises how much the new regime is costing the Treasury” according to Chestertons chief executive Robert Bartlett.
“The Chancellor said his new second homes or buy to let levy on top of stamp duty would raise £1 billion for the Exchequer by 2021, but extra revenue is completely obliterated by the losses over that same period” Bartlett says.
Adrian Owen, Head of Residential Consulting at BNP Paribas Real Estate, says there may also be an unintended disadvantage for those involved in the sale and construction of new-build homes.
“Simply put, without investors there will be far fewer housing starts in London. Investors buy off plan, and this is essential for developers whose banking mandates require at least 30 per cent of properties to be sold before funding can be drawn down that enables them to begin construction” he says, adding that around 60 per cent of new homes in London are bought by investors.