An estate agent is linking a drop in transactions of as much as 20 per cent with the stamp duty increases introduced by ex-Chancellor George Osborne back in 2014.
London agency Benham and Reeves has analysed transaction levels since Osborne’s reform of stamp duty moved from the ‘slab structure’ to a new format charging a percentage at each price threshold rather than one percentage for the total price of the property.
The changes were introduced to make buying more favourable for the ‘average homebuyer’ with only those buying at the highest price bands in line to pay more.
However Benham and Reeves has found that on average, transaction levels across England since the changes have dropped by -0.8 per cent - and vastly more in some areas.
The agency says it’s clear what it calls “the attack on the top-end of the market” has worked with Kensington and Chelsea seeing the largest decline, with transactions since the changes down 21.2 per cent when compared to the same time period prior to skate 2014.
The City of Westminster has also seen one of the largest declines in transaction levels at 20.5 per cent followed by Tower Hamlets (down 20.2 per cent), Elmbridge in Surrey (down 18.7 per cent) and Cambridge (a fall of 18 per cent).
Transactions in Islington and Hammersmith and Fulham are both down over 17 per cent, while Kingston upon Thames, Camden and Welwyn Hatfield in Hertfordshire are down in excess of 13 per cent.
“While it was the changes to second home and buy to let stamp duty that have caused the most detrimental impact to the UK property market, it’s clear that even on a residential basis, the government’s re-shuffle has dented buyer sentiment across the board, particularly at the top end of the market” explains the director of Benham and Reeves, Marc von Grundherr.
“Those buying a home at the highest price threshold may be better able to afford stamp duty, but a steep increase has left many thinking twice, while the average home buyer is still consistently caught out by having to pay it, and often deterred as a result of factoring it in prior to a purchase” he adds.
von Grundherr says the government should consider scrapping stamp duty to help an ailing housing market.