House prices in prime and expensive locations could improve by over 4.5% if Boris Johnson delivers on his promise to rescind the duty increases imposed on properties over £1.5 million.
In 2014, George Osbourne made significant tax changes to prime and super prime UK property by increasing duty on properties valued between £1 million and £1.5 million from 5% to 10%. Property duty increases for properties valued over £1.5 million rose to 12% from 7%.
This meant that stamp duty land tax imposed on these properties climbed by £60,000 following the changes.
Recent research by prime London property specialists, Vyomm, assessed the negative impact these changes had on the market. In England and Wales, the average price of property valued over £1.5 million dropped by -3.72% and -4.15% on property over £10 million.
The average London property valued over £1.5 million fell by -3.41% with an average loss of £101,410.
The super prime London market’s properties over £10 million suffered losses of -4.66% with an average fall of £738,653.
Vyomm has speculated that, should the suggested stamp duty reductions take place, London property valued over £1.5 million should rise by 3.41% or £102,911.
Founder and CEO of Vyomm, Utsav Goenka, commented:
“Despite the string of attacks against the high-end homeowner in London and the wider nation as a whole, the prime and super-prime market has weathered the storm, remaining a very attractive investment for those with the financial means to do so with transactions showing strong growth in recent months.
Of course, such a drastic change to stamp duty in 2014 was going to have a detrimental impact on buyer sentiment due to the far greater financial cost of buying. On a property worth ten million pounds we’re talking stamp duty in excess of one million and for those looking to buy as an investment, the additional 3% stamp duty charge pushes this cost to over four million pounds.
Although the market has adjusted and price growth has stabilised since these changes and the resulting price decline, there is currently an air of hesitation across all levels of the market due to the political landscape. However, a reversal of these stamp duty changes could provide the adrenaline shot that is needed to entice more buyers back to the prime and super-prime markets and this will see prices increase notably when it happens.”
