With investors now buying more homes in less expensive districts, prices below Osborne’s threshold are climbing and owner-occupiers, who should have benefited from his tax cuts, are being penalized, Dell said. The tax increases kick in at 937,000 pounds.
“The very buyers Osborne was setting out to help, he’s put at a disadvantage,” she said. “At the same time, sales at the higher end have frozen. It was a very, very bad move.”
The number of investors registering an interest to buy a home in prime central London with Hamptons International dropped 10 percent in the first half compared with the same period last year, said Johnny Morris, head of research at the broker.
Investors who buy multiple apartments for about 500,000 pounds in London typically receive a rental yield of 4 percent to 5 percent, compared with about 2 percent for a luxury home in London’s best districts, Morris said.
In Kensington & Chelsea, the U.K.’s most expensive property borough, 137 homes were sold in April, the lowest monthly total since March 2009, according to the Land Registry.
Values in some of London’s best districts have been falling since the stamp-duty changes, according to broker Knight Frank LLP. Prices in the seven months through July dropped 2.3 percent in Chelsea, 2.1 percent in Knightsbridge and 0.6 percent in Notting Hill, according to data compiled by the broker.
The decline in values in prime central London “is a temporary correction, but I think PCL will eventually continue to grow,” said Giles Hannah, senior vice president at Christies International Real Estate. “That’s because there has been historical shocks before and the market has recovered.”
About 5,000 U.K. homebuyers paid the higher stamp duty levies in the first half, two-thirds of them in London, according to Nationwide Building Society. If the levies had been raised a year earlier, 6,900 purchasers would have been affected, Nationwide estimates.
The average value of a London home sold by broker Savills Plc fell by 200,000 pounds to 3 million pounds in the first half of the year, compared with the same period in 2014, while transactions fell 15 percent in the period, the broker said on Thursday.
“The buyers’ market has returned,” William Carrington, chairman of data researcher Lonres, wrote in a report on London’s best districts on Monday. “I do not see an improvement in market conditions before September.”