Data from the buying agency Black Brick reveals just how big an impact has been made by the additional homes stamp duty surcharge.
Black Brick - which specialises in high end clients buying in prime markets - says all of transactions undertaken so far this year have been for primary homes.
In 2017 only half of its transactions were for this purpose and in 2016 just a quarter were purchased as a primary home.
“This complete shift in people buying second homes is a direct result of Stamp Duty Land Tax and the additional three per cent in tax people now have to spend on a second home or a buy to let” explains the agency’s managing partner, Camilla Dell.
“The consistent rise in the number of our clients purchasing primary homes in central London indicates that clients are no longer buying for investment, or for discretionary second home reasons, they are buying to live here and choosing London as their home so they are close to work and London’s excellent schooling options” she adds.
Black Brick’s figures come in the wake of HMRC admitting that its tax receipts from stamp duty have declined.
Some £1.987 billion was raised in the second quarter of this year from receipts in England and Wales, compared to £1.999 billion in the third quarter of 2015 before the introduction of the three per cent surcharge for second home-buyers and landlords.
Receipts were even lower in the first quarter of this year, at £1.883 billion.
“This is the first time there has been real evidence that supports the notion that higher tax rates do not lead to increase tax take. Whilst stamp duty remains a political hot potato, we can only hope that Chancellor Philip Hammond takes note of these figures and looks to reduce stamp duty rates at some point in the future” adds Dell.
The company’s data also shows a substantial change in the nationalities of buyers.
In the first half of 2018, two thirds of its buyers have come from the UK - a significant increase on previous years which saw fewer than 50 per cent of purchasers coming from the UK.
Black Brick’s managed sale service has also seen a shift in nationalities with 66.6 per cent of vendors coming from Russia and the remaining sellers coming from the UK.
“We’re seeing a real shift in the London property market both in terms of buyer nationalities and their reasons for buying a property. We believe that the rise in UK buyers is due to the British being knowledgeable about what’s happening in the UK economy and politically, and able to take a view” according to Dell.
“Whilst Brexit and potential political uncertainty are certainly a factor for UK buyers, they are more comfortable about proceeding, particularly when there is a real need to move and get on.”