We would not want to be in Philip Hammond’s shoes when he rises to make his first Autumn Statement in the Commons on 23 November. The Chancellor has an in-tray the size of Big Ben and, in the wake of the vote for Brexit, a particularly hard hand to play.
But one measure we would urge on him, drawing on our first-hand experience of the prime central London property market, is to review the stamp duty regime, particularly as it effects £1 million-plus properties.
His predecessor, George Osborne, hiked stamp duty on luxury properties not once but twice, increasing the basic rate in 2014, then adding an extra 3 per cent to the stamp duty payable on second homes, effective from April of this year.
As recently as 2014, someone buying a London property worth, say, £5 million would have had to pay 7 per cent stamp duty, or £350,000. Now they would have to pay £513,750, if it was their main home, or 15 per cent, or £750,000, if it was their second home.
Compare that 15 per cent figure with the stamp duty on an equivalent property in Paris, which currently stands at just 5.8 per cent. Which side of the Channel looks the more tempting proposition if you are looking to buy a luxury penthouse in Europe? Our case rests.
We believe that the London property market is in pretty good shape and that its long-term prospects are rosy – there will always be takers for the kind of magnificent properties that we see all around us in Belgravia. But it needs an injection of confidence after the summer slowdown.
In the three months between June and August, just 5 properties valued at over £10 million were sold in central London, compared with 35 in the same period last year. Some analysts have attributed the downturn to post-Brexit uncertainty. Talking to our clients, from across the world, we believe the increases in stamp duty imposed by George Osborne has had the strongest impact on the top end of the market – with a trickle-down effect on the rest of the London property market.
“The constant stamp duty hikes by Mr Osborne were ill-thought-out when it comes to the prime central London property market,” says James Bailey, Chief Executive of Henry & James. “They are impacting on inward investment across the capital. Stamp duty should be reviewed in the Autumn Statement.”
Clearly, there is no turning the clock back. The vote for Brexit has happened and, inevitably, there will be some uncertainty before the economic contours of post-Brexit Britain are clear. Stamp duty rates can be adjusted now and we strongly believe they should be in the Autumn Statement. It would the best possible tonic for the central London housing market.Back to News