x
By using this website, you agree to our use of cookies to enhance your experience.

TODAY'S OTHER NEWS

Boris Johnson's stamp duty plans could revive prime property market

Conservative leadership frontrunner Boris Johnson's plans to reverse stamp duty changes could help to kickstart the prime property market, according to Vyomm.

The super-prime property portal says that a reversal of stamp duty changes made at the top end of the market in 2014 could boost prime prices by over £700,000.

Prior to December 2014, any property priced between £1 million and £2 million was charged stamp duty at a rate of 5%, with anything over £2 million taxed at 7%.

However, George Osborne's reform of the stamp duty system introduced tax rates of 10% on any property priced between £925,000 and £1.5 million and 12% on properties costing over £1.5 million.

It's been well-documented that the changes have had a significant impact on transactions and average prices in the prime property market, particularly in London. 

Talking about his plans for a first budget should he become Prime Minister, Johnson described stamp duty as a 'problem' and said tax cuts could get the 'locked up' market moving.

As well as cuts to high-end stamp duty, Johnson also mooted cutting tax further at the lower end of the market with the aim of helping first-time buyers.

"I think particularly in London there is clearly a problem with stamp duty and it needs to be addressed," Johnson told the Telegraph.

"I’m not going to put a figure on how much we’re going to cut but we will certainly be looking to do that because I think actually you can do that in such a way as to increase revenues if you get it right because the market is locked up at the moment."

Vyomm's analysis shows that in the year between the stamp duty changes, the average prices of all £1.5 million+ properties in England and Wales dropped by £103,988 from £2,797,013 in 2014 to £2,693,025 in 2015, equivalent to almost 4%.

It predicts, however, that a stamp duty reprieve at the top end of the market could see average prices in the £1.5 million+ price bracket climb by over 3.5% from the current value of £2,782,154 to £2,885,590 in 2020.

The portal's predictions for the £10 million+ price bracket suggest London prices could be uplifted by almost £800,000 if the 2014 stamp duty changes are reversed.

A change in stamp duty like this would benefit residential buyers, however investors would still be required to contend with the 3% stamp duty surcharge on the purchase of additional homes.

"Despite the string of attacks against the high-end homeowner in London and the wider nation as a whole, the prime and super-prime market has weathered the storm, remaining a very attractive investment for those with the financial means to do so with transactions showing strong growth in recent months," says Utsav Goenka, Vyomm's founder and chief executive.

"Although the market has adjusted and price growth has stabilised since these changes and the resulting price decline, there is currently an air of hesitation across all levels of the market due to the political landscape."

"However, a reversal of these stamp duty changes could provide the adrenaline shot that is needed to entice more buyers back to the prime and super-prime markets and this will see prices increase notably when it happens," he says.

Table shows market data for the year prior to and following George Osborne's changes to stamp duty

Prime category

Location

Avg Price - Pre SDLT-Change (2014)

Avg Price - Post-SDLT-Change (2015)

Change (%)

Change (£)

£1.5 to £5m

England & Wales

£2,249,849

£2,198,639

-2.28%

-£51,210

£5m to £10m

England & Wales

£6,604,667

£6,525,226

-1.20%

-£79,441

£10m+

England & Wales

£15,808,118

£15,152,443

-4.15%

-£655,675

All £1.5m +

England & Wales

£2,797,013

£2,693,025

-3.72%

-£103,988

£1.5 to £5m

London

£2,315,081

£2,275,424

-1.71%

-£39,657

£5m to £10m

London

£6,573,192

£6,538,645

-0.53%

-£34,547

£10m+

London

£15,857,040

£15,118,387

-4.66%

-£738,653

All £1.5m +

London

£2,973,735

£2,872,325

-3.41%

-£101,410

Table shows current market data and potential uplift of stamp duty reversal based on previous trends

Prime category

Location

Current Avg Price (2019)

Avg Price (2020)*

Change (%)

Change (£)

£1.5 to £5m

England & Wales

£2,249,818

£2,301,027

2.28%

£51,209

£5m to £10m

England & Wales

£6,581,540

£6,660,703

1.20%

£79,163

£10m+

England & Wales

£16,597,558

£17,285,977

4.15%

£688,419

All £1.5m +

England & Wales

£2,782,154

£2,885,590

3.72%

£103,436

£1.5 to £5m

London

£2,320,732

£2,360,486

1.71%

£39,754

£5m to £10m

London

£6,574,510

£6,609,064

0.53%

£34,554

£10m+

London

£16,870,209

£17,656,057

4.66%

£785,848

All £1.5m +

London

£3,017,761

£3,120,672

3.41%

£102,911

*Average house price in 2020 forecast based on previous trends on decline of the market in the year following George Osborne’s changes to stamp duty tax in 2014. E.g. the £1.5m market in England and Wales fell by 2.28% in the year following the changes, so this projection shows a return of growth at the same level based on the current average sold price in this market.

Poll: Is a reversal of the 2014 stamp duty changes necessary for the market to thrive?

PLACE YOUR VOTE BELOW

  • icon

    Good old Osborne, what a mess he made. Stamp duty stops people moving and is now so expensive, it's even putting people off moving jobs because of the cost. If you get a new job out of area you can't rent your home out because of the tax and can't move because often your first years salary is lost in stamp duty (which is paid net of income tax of course.) Good job.

    Brit Miller

    We had a whole host of problems. We had a shortage of property at sky high prices, many people with multiple properties were were taking equity out & buying more properties pushing prices higher. Whole generations were priced out, George Osbornes reforms started to change this back. The reason people aren't buying the higher properties is because they are priced to high, drop the price and you have a market.

     
  • icon

    Simple, change is needed.

  • icon

    The reason houses over £1.5mil are not selling well, is because of the current ludicrous levels of tax. On top of the huge amounts of tax already paid by these buyers, to find another £100,000 or £200,000 or £300,000 on top of the house purchase, is expecting too much. On principle, many buyers will just not give this additional extra amount of tax to the Gov't. The argument that if you can afford a million pound house, then you can afford this tax is wrong. Hence the stagnation of this area of the market. Halve the tax double the transactions equals same revenue for the Gov't. Plus many other spin offs.

    Brit Miller

    Halve the house price and far more than double the transaction level.

     
icon

Please login to comment

Zero Deposit Zero Deposit Zero Deposit
sign up