Thanks George! London housing market hit by Stamp Duty hikes

The London property market has been hit by Stamp Duty changes, two major house builders have reported to the City.

The higher end of the market, particularly in central London, has slowed, John Tutte, group chief executive of Redrow, said in the firm’s results for the year to June 30.

He said: “Activity in this section of the market remains sluggish.”

In the autumn statement in 2014, made in December, then Chancellor George Osborne announced the ‘slab’ system of Stamp Duty was to be immediately removed. Those buying homes worth £937,000 or more would see their stamp duty bill go up.

Stamp Duty was raised 3% more for second homes and buy-to-let properties from April this year.

In its interim management statement for May 1 to August 31 the Berkeley Group stated: “Transaction taxes are now too high and this is restricting both mobility in the second hand market and the pace of supply and delivery of new homes in London and the south east.”

Both developers reported they had seen little impact of the Brexit vote on the market.

Berkeley reported reservations were 20% lower in the first five calendar months of this year compared with 2015.

This was “as customers adjusted to higher property taxes and the uncertainty surrounding the UK referendum”, the trading update stated.

But it added: “After a hiatus either side of the referendum, the market in August, traditionally a quiet month, has returned to the relative levels reported for the first five months of the year.”

Redrow’s group revenue was up 20% to a record £1.38bn, driven by a 17% increase in legal completions and a 7% increase in average selling price to £288,600. Pre-tax profits rose 23% to £250m.

Berkely said it was on course to deliver £2bn of pre-tax profits over the three year period ending on April 30, 2018, having delivered the first £0.5bn of this in the year ended April 30, 2016.

 

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