The head of a central London property firm says an unintended consequence of the new stamp duty thresholds is that fewer affordable homes are being built.
Bruce Ritchie, head of Residential Land, says the profit generated on new-build flats priced at £1.5m or more funds the affordable housing that is also built as a result of a development. But since last December’s higher stamp duty for most homes costing £937,000 or more, demand for high-end apartments has dropped - especially for those above £1.5m.
“Put simply, higher stamp duty at the top end is choking off the supply of affordable housing, with the result being fewer homes overall” Ritchie writes in Property Week.
He says another unintended consequence of the stamp duty changes is that developers are stepping up the supply of one-bedroom units that fall well beneath the £1.5m limit, distorting the mix of homes supplied.
“As the figures for the end of 2015 come through, the 30 per cent fall-off in sales volumes experienced by properties in excess of £1.5m will have far-reaching consequences” he believes.
“It is clear that the Chancellor has succeeded in cooling the market, but the figure of 12 per cent stamp duty was an overshoot and should be reassessed to nine per cent between £1.5m and £6m. Unless the Chancellor wants to see his overall stamp duty take continue to fall, he will adopt this measure in his November 25 Autumn Statement” writes Ritchie.
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