Unexpected tax reforms in December pushed sales of houses in London’s most expensive areas to their highest one-day volume for a decade, new data show.
In parts of the capital such as Knightsbridge, Chelsea and Belgravia, more homes changed hands on the day of the Autumn Statement, when the stamp duty reform was announced, than on any other day in the past decade, according to research by Lonres and Dataloft.
The chancellor moved Britain’s stamp duty system away from its “slab” structure to a progressive scale, from midnight on the day of his announcement on December 3.
The change meant that anyone buying a home for more than £937,000 would pay more tax. The top of the new scale is 12 per cent of the purchase price, for properties costing more than £1.5m.
As a result, buyers rushed to exchange contracts in the hours between the announcement and the midnight deadline, with estate agents’ offices staying open until the end.
One in six of all homes sold in London’s most expensive areas in the last three months of the year changed hands on December 3, Lonres and Dataloft found.
The rush saved buyers £9.4m in taxes, they said.
It also supported sales volumes for London’s most expensive homes in the final quarter of 2014 — the number of sales of properties worth more than £5m remained steady year on year.
By contrast, volumes dropped in cheaper price brackets. Sales of properties worth less than £1m fell by more than 40 per cent, while those priced at £1-£2m fell by 20 per cent and those worth £2-£5m fell by 29 per cent.
The central London housing market was already slowing before the chancellor’s announcement. More homes worth more than £2m were withdrawn from sale in the first six months of the year than changed hands, Lonres found earlier this year.
Sales volumes in central London fell by a third year on year in the third quarter of 2014.
Estate agents have said the tax change will “clobber” the central London housing market, pushing down house prices.
Ed Mead, executive director of London estate agent Douglas & Gordon, said nearly all its sales since the stamp duty reform had been worth less than £937,000.
“It has been a significant fillip for the lower end of the market,” he said. In particular, there had been more sales of 1-2 bedroom apartments in areas such as Westminster, Chelsea and Kensington, and of bigger houses in less expensive areas such as Shepherd’s Bush and Wandsworth.
Buyers of more expensive homes were holding off because they feared further property taxes if the Labour opposition won the general election in May, Mr Mead said.
Labour has said it will introduce an annual “mansion tax” on homes worth more than £2m if it comes to power.
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