Stamp duty change blamed for slump in central London property sales

Central london black and white
Residential property transactions in central London fall

The number of home sales in central London has fallen by one-third in the first quarter of 2015.

Central london black and white
Residential property transactions in central London fall

In the first three months of 2015, there were 638 prime central London transactions, down 33.1% from the 949 transactions in the same period a year earlier.

The fall in activity at the top end of the capital’s housing market is being blamed on changes to stamp duty rates last December.

Under the tax changes, the average London home selling for £510,000 saw its tax bill cut by £4,900. But a property worth £2.1m saw its tax bill rocket by £18,750.

Based on data covering the first three months of the change in stamp duty rates, property firm DTZ says sales in prime central London generated an estimated £92.8m in tax revenue – 25.6% less than the £125m generated over the same period a year earlier.

And in the three months before the new rates of stamp duty were introduced, 837 prime central London property transactions were completed, generating stamp duty receipts of £140m.

David Ramsdale, a residential research analyst at DTZ, says: “Although the new progressive banding has led to a 10.3% increase in the amount paid in stamp duty per property, the Treasury has so far lost out considerably.”