Stamp duty land tax has had such a negative impact on home sales in prime central London that people are putting their next step up the property ladder on hold.
Estate agent Jackson-Stop & Staff says "prohibitive levels" of Stamp Duty Land Tax are preventing the domestic market from buying and selling. Overseas buyers however are still attracted to purchasing property in London, given the weak pound.
Jackson-Stops & Staff is calling for a one third reduction in stamp duty levels to get market moving again.
Toby Whittome, Sales Director at Jackson-Stops & Staff London, commented: “Potential buyers in central London used to approach us about their next home move, driven by factors like a growing family or need for a home with more bedrooms or a bigger garden. These are the “old reasons” for moving, from before December 2014. Our purchaser registration numbers are up, but the fluidity of the market has diminished hugely. When buyers are looking at 20% transaction costs including stamp duty, solicitor’s fees and moving costs, the attitude becomes: ‘we’re better off staying where we are’.
“In my patch of Kensington and Chelsea sales have fallen to around 120 a month, compared with around three times that number in peak 2014. In 2016 Kensington and Chelsea contributed £514 million in residential stamp duty receipts, the highest of any local authority.”
Nick Leeming, Chairman at Jackson-Stops & Staff, added: “If stamp duty levels weren’t causing so much harm to the million plus market I think we would see the health and fluidity at the lower to middle end of the Greater London market spread to the higher end too.
“One recommendation is a UK wide reduction in stamp duty levels of around a third, which should boost the property market at all levels, particularly at the million pound plus level. It is worth remembering that in central London typical family homes will likely be worth £1 million or more and, with stamp duty levels preventing these homes entering the market, it means that families are unable to move up or down the property ladder when they need to.
“Aggregate prices remain stable against a backdrop of economic uncertainty and low transaction levels, demonstrating that demand is sufficient to keep prices supported.”