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Written by rosalind renshaw

London agents have been telling of their busiest day ever. In the hours after the Budget, deals were both clinched and fell through, and small fortunes in commissions were won and lost.

Meanwhile, a top tax adviser specialising in property warned that the new 15% Stamp Duty rate applies to all company purchases of property worth £2m-plus, and not just to offshore companies. He also warned that the new rate could apply to property sales exchanged on Budget Day itself - casting serious doubts as to whether agents' frantic attempts had even achieved their aim of saving purchasers extra Stamp Duty.

Stacy Eden, head of property and construction at national audit, tax and business advisory firm Crowe Clark Whitehill, said: "It seems safe to assume that the new 15% rate of Stamp Duty Land Tax on residential properties worth more than £2m potentially applies to all company purchases  (ie, both UK and non-UK resident companies), as other proposed Budget changes are specifically restricted to non-resident companies.

"The move, which intents to clamp down on perceived tax avoidance by the wealthy, is likely to see residential property transactions of £2m plus through corporate vehicles where the effective transaction date is March 21, 2012, or later, subject to the new 15% tax rate.

"In addition, the Government is considering the form of an annual tax charge when such properties are held via a company."

Savills revealed that on Wednesday, over £50m worth of deals exchanged before midnight, in the space of hours.

A spokeswoman said that a number of clients, anxious for deals to be secured at 5% Stamp Duty and not 7% or 15%, had driven the frenetic activity.

She added: “It’s right to say that a small number of our agents were involved in securing details right up to the wire – the latest at 11.15pm – on exchanges that were not planned to happen until the Chancellor’s announcement, some involving international buyers, their banks and interpreters. 

“Solicitors were extremely busy, and in one case a client had to switch solicitors because their existing adviser was too busy, but worked hard to ensure their clients’ transactions happened.”
 
In one of the most dramatic stories, a newly instructed property at Hamptons International was moved all the way through to exchange on Budget day.

Jonathan Godfrey, head of valuation at Hamptons, said: “An hour before the Budget, we issued a mortgage valuation for a property in north London being purchased at over £3m. The instruction came in last week and there seemed to be no urgency, but due to rumours in the media, we were asked to get the report out immediately.

“If the potential purchaser had failed to exchange by midnight, they would have incurred an increased Stamp Duty liability of over £60,000.”

John D Wood reported a flurry of Budget day exchanges before schedule but said it had not lost any deals, whilst Jackson-Stops & Staff reportedly lost a major deal involving a Far Eastern buyer.

At central London agency Hudsons Property, senior negotiator Margaret Connerty pushed through a sale on a property in Fitzrovia that was still a couple of weeks off exchange.

She said: “I had agreed this sale back in January, with exchange subject to some outstanding contractual amendments.

“However, I had read in the FT about the proposed plans to increase Stamp Duty on purchases in excess of £2m to 6% or even 7%, so I got in touch with both solicitors asking if they could speed up these amendments in anticipation of the Budget confirming the increase.

“I then sat at my desk, watching the Budget unfold live on Sky News, eagerly awaiting for the announcement on Stamp Duty. As soon as Osborne confirmed that Stamp Duty was indeed going to rise, not only to 7% but for it to take effect on the same day, we had about three hours to get the exchange through in time, or the buyer would have incurred an extra £53,000 in tax.

“I got on to the seller, the purchaser and both solicitors straight away with a view to them pushing it through before the deadline.

“Both solicitors were fantastic. They liaised immediately and exchange of contracts was confirmed within the hour.”

Ed Mead, director of Douglas & Gordon, said he knew of several London firms which had lost, or would lose, two or three deals each, each one worth millions. Some aborted deals were the result of developers planning on doing up single properties pulling out, because they had not factored in sufficient Stamp Duty costs.

Mead said: “It is not so much the loss of estate agent’s commission that concerns me as the damage that will be done to London. Someone buying a £4m house in Chelsea will do a lot of shopping in London, spend a lot of money and will be an employer, providing jobs.

“These are the people who have made London what it is.

“The fact is that 40% of property buyers in central London use companies as their purchasing vehicles.

“The Chancellor may have thought he was just closing a loophole, but the effects on the London property market – and which could well ripple out – could have massive, unintended consequences.”

*Up to Budget day, Knight Frank was reporting that prime London property prices rose by a further 1.1% this month, taking them to 11.3% higher than this time a year ago, while transactions have also soared.

Knight Frank said that sales subject to contract in the £5m-plus bracket were up 93% in the first three months of this year, compared to the same period in 2011, and by 42% across the whole of prime central London.

But the firm warned that supply is failing to keep pace, with new applicants up by 26% but new instructions up by just 12%, and down by 11% in the £5m-plus sector
 
Speaking before the Chancellor's announcements, Liam Bailey, head of residential research at Knight Frank, said: “Prices for Prime London property have been rising strongly for three years on the back of foreign demand and London’s position as a safe haven for investors.

“Once again our research highlights the status of London property as a unique global asset class, which has gained the confidence of investors looking for strong returns.”

Comments

  • icon

    Hello Wardy. I'm back.

    • 27 March 2012 14:58 PM
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    Rosalind change the spam sum at the bottom!

    please please please....@agents are crooks! will have no idea what to do.

    • 24 March 2012 10:01 AM
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    Your wealth is only exceeded by your intelligence!

    • 23 March 2012 18:16 PM
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    Is it because I is rich?

    • 23 March 2012 17:46 PM
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    "I am now going to sell all my 12 properties as soon as all of them touch £2m I'm so happy to be sitting on £28m cash"

    12 X £2,000,000=?

    It isn't £28,000,000

    You will be left with less than £16,000,000 by the time you have paid CGT on 11 properties, £7k on cheap agents fees, £1,440,000 on solicitors fees and £29.99 on a 10litre tub of magnolia emulsion. Less an estimated £9,000,000 mortgage liability that will leave you under £5,000,000. Sadly for you old son your Daddy can only gift £3,000 per anum to you.

    I am sure with a big pay out in store for both HMRC and the Money Laundering folk, Mr Daniels might be getting a call to trace your IP address.
    Thank you for posting or should that be Thank you for boasting

    • 23 March 2012 17:28 PM
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    Harrods won't sell you the Decorum! If you have got to your age without any, don't make a prat of yourself by asking for some. Decorum is hereditary; if you weren't born with it you sure as hell can't buy it.
    Your old man might be the a multi-millionaire but it seems he is so tight he hasn't even given you any Manners.

    • 23 March 2012 16:07 PM
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    stunning new Diamond Rolex whihc is £70,000!

    The Standard Rolex is virtually indistinguishable from the crappy ones sold in Motorway service stations and lots of people have bought them too embarrassed at their stupidity to get a refund.

    Make sure you get the Decorum Edition. Harrods will take your money and let you have a Standard watch but they will hang onto the Decorum Editions for their regular customers who know about these things.

    Wearing a Rolex without Decorum is like sticking an M5 badge on a 525d, it really is very obviously wrong.

    • 23 March 2012 15:48 PM
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    Oh how "snoring" this article is.

    There is another part of England outside London don't you know?

    Yes a land where modest mobile homes are priced at WTF £40,000?
    Ex Council Semis at £180,000 + (ave earnings for a young family?)
    Stock standard 1930's semis at a quarter of a million (of mortgage/loans) pounds +

    Yes its where the "poor" people live in the suburbs drinking s*** starbucks coffee and buying over priced Super Dry clothing from shops that fail on their lease after they reach their rent free period.

    Thisis the forgotten part of the England just outside of the M25, where poor english people have had three jobs in 18 months due to redundancies. Where average family homes are now out of reach (unless you are a canny BTL investor) and the only way to move out of Ma and Pa's house is by getting knocked up the local chavvy gangsta or being committed.

    Its not nice here for us lot - its not all Champagne Super Novas, Bentlys and Lativian Lap Dancers ;)

    The tax at the top can either be easily paid or not I guess and for those buyers that are re-negotiating prices good luck to them if it starts to bring some realistic price adjustments for the rest of the UK that has to put up with what is after all a "clone" town infrastructure created by last lot of national socialist numpties -

    Vive La Revolution!

    • 23 March 2012 13:16 PM
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    @agents are crooks! What a load of bull!
    Firstly what the hell are you doing on here anyway, surely you've got better things to do?? Its a site designed for estate agents - the clue is in the name.....

    I can guarantee estate agents in SW3 do not charge 2%, and they charge even less in "highly desirable Fulham" - even Savills would probably do you a deal at 1% in the current market. So for £20,000 + VAT do you honestly think an agent would not easily get you an offer worth £20k more than an online agent?!?!

    Who in their right mind would sell such a high value asset through a bargain basement service?! Good luck selling the Bentley through teletext!!!

    For anyone looking to spend £2m on a house, £40,000 extra stamp duty is nothing. The hype was only because those people who were already in the process of buying said houses hadn't budgeted for it.

    It will have very little effect on prices over £2m except for those houses priced marginally above this level. The majority of these buyers are paying in cash, and have plenty of it.

    • 23 March 2012 11:43 AM
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    It's nearly lunchtime. Please never, ever, mention gussets and Hackney in the same sentence again.

    • 23 March 2012 11:39 AM
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    agents are crooks

    Thank you for proving my point.

    • 23 March 2012 11:20 AM
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    agents are crooks

    Good for you, hope you sell your portfolio through an online agent, as I for one certainly wouldn't want you as my client.

    • 23 March 2012 11:03 AM
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    Actually I'm really an unemployed gusset weaver from Hackney, I just dream of owning a property of my own instead of sharing a room in a council hostel.

    • 23 March 2012 11:03 AM
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    WARDY.

    Are you an idiot?

    Have you heard of the supply and demand rule?

    As those properties between £2m - £2..5m fall back oridinarily the next tier down would fall.

    HOWEVER, IT WON'T! WHY? Because all those who were buying will be then looking to buy the £1.5m - £2m properties creating huge extra demand on top of those who were "ordinarily" looking at that band in the first place creating double demdn and upward pressure on pricing.

    Given I am now going to sell all my 12 properties as soon as all of them touch £2m I'm so happy to be sitting on £28m cash when you muppets are working in an estate agency branch listen to the boring stories of your colleague named backdoor Deairdre and working 14 hours a day for a crappy low salary of £100k pa.

    I make that a month just by sleepying on my 85 strong property portfolio!

    You crooks will only be getting my £599 online agent listing fees and that gives me full access to Rightmove, Prime Location, FindaProperty, Look4AProperty, Zoopla, etc etc without paying your thieves 2% robbing me commission.

    Wealth PRESERVATION at its VERY BEST!!!!!

    Enjoy you day working for a lowly £100k p.a.

    • 23 March 2012 10:35 AM
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    I never realised Peter Stringfellow could spell so well.

    • 23 March 2012 10:27 AM
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    @agents are crooks!
    Is it possible to be that wealthy and yet that stupid?
    What do you think happens to £2m property when all the £2.3m property reduces to £2m ?

    • 23 March 2012 10:09 AM
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    Sorry, cannot respond to any comments, I have to get back to the scrap yard / amusement arcade / bingo hall / used car lot etc.

    • 23 March 2012 10:06 AM
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    Take some Time Off In Lieu when things inevitably get quieter.

    • 23 March 2012 09:44 AM
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    @all agents are crooks

    Now listen dear boy, bloody good of a multi millionaire property magnet like you to come on here and tell these blighters what's what but steady on chap you sound like a trumped up fantasist from HPC and we can't have that what?

    • 23 March 2012 09:38 AM
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    And I was one of them this morning "Bob", up at 4 am for the dear old BBC (and no fee or breakfast), such is the life of an occasional property commentator (yes, still!). Loss of FTB holiday and 7/15% Stamp Duty will certainly concentrate the minds in the market for a while! Have a good day everyone -
    BiG T

    • 23 March 2012 09:32 AM
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    Let me be the first to wish @agents are crooks! the very best.

    Most agents are not crooks, some are good, some indifferent and some awful, but there are very few crooks.

    I have a feeling that you may also have added a few extra zeros into your figures there too.

    • 23 March 2012 08:57 AM
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    @agents are crooks!

    Surely houses now on for just over 2 million to 2.5 million will now drop in price to 2 million to avoid the 7% percent tax, leading to an equal drop in prices of houses currently on at 1.5 million to 2 million.

    Numerous estate agents and so called property experts were saying this on the BBC News and Radio Five this morning.

    • 23 March 2012 08:48 AM
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    WELL SAID THE TRUTH!

    I'm so happy. I sold my £4.6m SW3 house using an online agent and paid just £699 instead of £92,000 + VAT which is £110,400 which is what all these non-sense Henry Higgins fitzroy named agents wanted at 2%.

    I hope the London property scene cools now and many of these agents go out of business as they are ALL sharks in cheap £99 suits speaking like they are chewing a wasp! Lol!

    I have 12 other properties in the £1.5m - £2n bracket and given this us the band just below the new higher stamp duty band this will now see huge demand as buyers trade down to this band to avoid the 7% band.

    I think I'll wait till all of them get to £1,999,999 then sell them all using online estate agent £600 service as it will be a piece of cake to sell them (they are all in highly desirable Fulham) and happily avoid the rip off agents fees!

    I can then stash the £28m all in my account having paid 12+1=13 x £600 = £7800 to sell 13 properties in total rather than pay £1.435m in agents fees which is an utter rip off.

    Agents are deceitful and thoroughly dishonest and I hope their businesses now decline.

    In case you're wondering I'm a self made multi millionaire who doesn't get ripped off by false speaking Thomas or Sandra Fitzroy-Harvey slimey agents!

    • 23 March 2012 08:29 AM
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    Typical EA total PR guff. They can never resist an opportunity to hype a market - even if this one was only for 3 hours! LOL. No, none of this is the real issue. The REAL issue is the 'consultation' on an annual charge on property held in corporate wrappers. As we learn from KF, 40% of top London is currently (presumably now WAS) bought in such wrappers. The LibDems will be pushing hard for this annual levy to be a meaningful number 2% or something. But what will concern potential buyer and especially recent corporate envelope buyers is that you just don't know what this rate is going to be. People are going to get pretty nervous. And of course a big levy on 'corporate' wrappers would be overwhelmingly popular in the country. As the Chancellor said: "you have been warned".

    • 23 March 2012 08:08 AM
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