Osborne's new tax regime for rich a disaster, says top agent

An agent specialising in ‘millionaire’s row’ properties in London has said his turnover is down 50% because of the new tax treatment of rich overseas purchasers buying £2m-plus properties through company vehicles.

Trevor Abrahmsohn, of Glentree Estates, told the Telegraph that George Osborne’s decision to increase VAT to 15% on such deals has acted as a major disincentive.

He told the paper: “These people are not idiots. They have various places they can go to [to buy houses] and we have to be careful not to damage the golden goose.”

He said that the Treasury had “done more to appease left-wing zealots than it has to raise money. Is taxation there to raise money for the Exchequer to get the deficit under control, or to play the game of envy politics?”

Last month, Osborne also announced details of the new Annual Residential Property Tax, to be paid by rich buyers using corporate vehicles.

The new ARPT will start at £15,000 for properties worth between £2m and £5m, go to £35,000 for properties between £5m and £10m, and to £70,000 for properties between £10m and £20m. For properties over £20m, the annual tax will be £140,000.

On top of that, a new Capital Gains Tax regime intended to catch wealthy property purchasers for the first time is to be announced soon.

Agents, who saw up to 80% of their sales to corporate purchasers drop since the original plans were outlined in last year’s Budget, are concerned that many corporate purchasers will not change to buying through their own names.

This, they say, is partly because such purchasers want privacy, and partly because of the implications they would face for inheritance tax and capital gains.

Meanwhile, Knight Frank is predicting no price rises this year in prime central London.

That is after the firm said that prime central London prices finished last year 8.7% higher than they started.

Knight Frank said it is expecting house prices in the area to be unchanged this year, but to start rising again next.

It is concerned that the number of buyers purchasing through a company structure will continue to fall, after the Chancellor confirmed in his December statement that new tax rules will apply.

Higher Stamp Duty on £2m-plus properties announced for individual buyers in last March’s Budget have also had an effect, says Knight Frank. Purchasers buying in their own name now pay 7% Stamp Duty on properties over £2m.