Wealthy homeowners will be forced to slash house prices in central London following the Government’s sweeping stamp duty reform, experts have warned.
Vendors with property worth more than £1m are preparing to reduce their asking price to attract buyers who will be hit with a heftier tax bill following the Autumn Statement.
Mr Osborne reduced the burden of stamp duty on buyers in the mainstream housing market when he switched the old slab system to a new graduated one, ridding the market of huge jumps in transaction tax.
However, the top end of the market is now paying substantially more in stamp duty. “It is in London’s £3m to £10m price band where the changes will have the biggest impact, here the market will almost come to a halt,” said Gary Hersham, high end estate agent and managing director of Beauchamp Estates.
In order to shift their property some of these vendors will need to reduce their prices, he explained. Buyer, Camilla Dell, from the agency Black Brick, has forecast a 10pc drop in prices in the £2m plus market.
“While we accept that stamp duty is a one-off purchase tax that the majority of high-end property buyers can comfortably afford to pay, these latest changes are likely to have a pronounced impact on market conditions in the coming months,” she said.
Other property professionals have voiced their concerns that should Labour win the general election, Ed Miliband will bring in mansion tax on top of the new stamp duty regime.
“It really will be a case of killing the golden goose. Politicians simply don’t understand the amount of money that comes into the UK from wealthy foreigners buying property in London and the south east,” said Hugo Thistlethwayte, managing director of buying agency Prime Purchase.
“Meddling with further taxes will sabotage that and affect all the builders, decorators and others who benefit through property changing hands. It makes the whole thing unsustainable and these buyers will go elsewhere.’
The forecast fire sale follows a stampede of wealthy buyers trying to push through their transactions before the early hours of yesterday morning to avoid the additional tax hit.
The new progressive system came into force at midnight on Wednesday, unless a buyer had already exchanged, at which point the individual can choose which system to sell under.