A new report suggests that changes in stamp duty will lead to the sales of high-value properties falling for the first time in two years.
Analysis from national estate agents Jackson-Stops & Staff indicates prices are set to drop off, despite a growth of 36% in this sector between 2012-2014.
Under the new stamp duty legislation, properties valued between £925,001 and £1.5m have had an extra 10% bill added, with this figure rising to 12% for properties in excess of £1.5m.
‘The wider UK residential property markets are reasonably buoyant now that we have the general election behind us and the uncertainties that any potential political changes bring,’ said Nicholas Leeming, chairman of Jackson-Stops & Staff. ‘However, the revision to stamp duty rates late last year has contributed to the widespread stagnation of the higher valued markets in 2015, both in London and the country, where many properties are finding it difficult to attract buyers.’
‘Sale volumes have plateaued across the country in response to high transaction costs, reflecting the fact that the UK has one of the highest taxed property sectors in the world,’ he added.
Stamp duty increases affecting prime market
Mr Leeming went on to say, ‘we have an ageing house owner problem with too few younger entrants onto the property ladder. Mortgage funding is difficult to raise for people in their forties, even if they have been previous house owners, irrespective of their credit history.’
He feels that Government must encourage, ‘trading down so that larger houses are released to families needing more space.’ He also said, ‘the changes to inheritance tax will incentivise older house owners to trade down, but we also need to enable property owners to move without new restrictions to mortgage funding and reduce the top levels of stamp duty to free up the higher value markets at no net loss to the Exchequer.’
Director of Jackson-Stops & Staff’s Sevenoaks office Alistair Hancock commented that more than a third of available stock is priced in excess of £1.5m. He believes that this is down to a lack of incentive for prime buyers at the middle-to-top end of the market.
‘Since the stamp duty hike last December, we have seen a significant decline in volume of sales at this level as the 12% continues to penalise the country house market, which is still struggling to recover from the recession.’