8th January 2016
The market for £2 million-plus homes in London has collapsed following the change to stamp duty.
The sale of expensive properties in the capital has fallen two thirds since the stamp duty reforms, according to estate agent Douglas & Gordon.
Sales fell 64% in the past nine months as those buying £2 million properties saw their stamp duty bill hiked. The reform of the tax sees those buying cheaper homes pay significantly less but purchasing a £2 million home now costs £50,000 in stamp duty. This rises to £150,000 for those buying a home worth £5 million.
The increased stamp duty bills mean property values have fallen 1.4% in the last year in the most exclusive and expensive parts of the capital between Notting Hill and Chelsea, equal to a fall of £20,000 in value.
Ed Mead, director of Douglas & Gordon, said a fall in prices in one area had a knock-on effect in other areas ‘causing paralysis in the market’.
Mead told the MailOnline: ‘The significant drop in sales of £2 million-plus properties during 2015 shows the profound impact of the stamp duty changes. Tax revenues will have fallen sharply as a result, so we would urge the government to consider lowering the higher stamp duty rates.
‘Looking ahead to 2016, we are expecting the market to be split around the £1.5m mark. Property worth up to £1.5m could grow in value by as much as 5 per cent, but owners of any property worth more than £1.5m can expect a static year.’