The London property market plunged into meltdown yesterday.
The effects were seen in the rapid wake of the Chancellor’s bombshell announcement that purchasers using companies as the buying vehicles of £2m-plus properties would be stung by 15% Stamp Duty as from midnight. In London, buying via company vehicles is extremely common.
Within hours, London agents were reporting chaos, as deal after deal fell through. Staff at some upmarket agents, including Savills - which last week revealed it has 50 properties on its books at £15m or more - were working until midnight trying to get deals through before the deadline.
First to warn was Ben Everest, partner at LDG in the West End.
He said that there had been a ‘dramatic’ effect, with deals in the region of £2m-£2.5m being urgently re-negotiated downwards.
By 6pm, Ed Mead, director of Douglas & Gordon, said there had been fall-throughs across London.
He said: “It has been less than seven hours since the Chancellor delivered the Budget and the prime central London property market has gone into meltdown.
“I don’t think anyone has quite clicked that many of the properties at this price level are bought by a company through personal choice rather than a way to avoid Stamp Duty taxation.
“Most property companies buy for development through companies and they’re pulling out too.
“There have been fall-throughs seen across London by several estate agents, with company buyers unwilling to pay this absurd 15% tax.
“A few buyers have tried to off-set this additional cost by decreasing their offers by as much as 10%, which has caused vendors to pull out.
“The repercussions of these fall-throughs has caused widespread chaos, with property chains being broken and deals that have only a few days to complete falling through.”
He went on: “Why are we slamming doors in the faces of international buyers who have built London into what it is, and who have been spending billions whilst here?”
He said: “A sledgehammer has been used to crack a nut, but at what cost?”
Mead warned that if deals continued being hit “in a very important market that uniquely is driven from the top down”, the effects could be catastrophic.