The collapse of the London sales market has helped blow a £9.5bn black hole in earlier Treasury estimates of its take from Stamp Duty Land Tax.
The Office for Budget Responsibility has said in its latest economic and fiscal outlook document: “Receipts were notably weaker at the top end of the residential and commercial markets, particularly in London.”
The OBR, which says that transactional weakness has been “concentrated at the top end of the market”, estimates that receipts from Stamp Duty will be £11.3bn in the current financial year – £1.6bn less than expected – and next year will be £12.2bn – £2bn less than predicted.
Sales in the capital have almost halved since the Leave vote in June and at the top end of the market by some 70%, although the large majority of agents blame George Osborne for Stamp Duty hikes, rather than Brexit.
They say the slowdown goes directly back to Osborne’s 2014 Autumn Statement, which introduced higher Stamp Duty rates for purchases over £937,000. In April this year, Osborne also introduced a 3% Stamp Duty surcharge on the purchase of second homes.
Someone buying a £1m property now pays £43,750 in Stamp Duty, or £73,750 if it is a second home. For a £2m purchase, the bill is £153,750, or £213,750 for a second home.
Trevor Abrahmsohn, of Glentree Estates, told the Evening Standard that the rates are a “war on London”.
Strange that we have a Chancellor who is property savvy – he has his own property company after all – is my MP in stockbroker belt Surrey – who knows exactly how the upper end of the market has been hammered – yet he does nothing about top levels of stamp duty despite rapidly falling capital receipts. What is the agenda of this Government? They want to build more houses, yet first time buyers cannot afford a 25% deposit. They want us to save to old age, yet tax the hell out of small landlords. They want to ease costs for tenants, yet want to force rent levels up. What a mess!
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The trouble is the government can’t do anything. Even if they did accept the top end of the market has caused a blockage to the market, adjusting the higher end stamp duty would be an incredibly unpopular thing to do because it would be reported as a Tory government helping out the rich.
Don’t misjudge my comment however, whilst I understand their predicament but that doesn’t detract from my view that this is now looking like the second successive Tory leader, who had promise, but is now looking spineless exactly as her predecessor did, by allowing the media and all those who shout loudest, to mould policy.
We may as well that get used to the fact that its actually the Daily Mail and The Sun that run the country and our government merely sorts out the admin.
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