Changes to the stamp duty system introduced at the end of last year have led to a slowdown in sales of high-value homes in London, analysts say.
Reform of the tax by the coalition government in December 2014 meant that purchasers of properties worth more than £1 million would face higher stamp duty bills. New figures from HM Revenue and Customs show that a quarter of all stamp duty revenue is now generated by just 10 boroughs, with Westminster and Kensington & Chelsea leading the way.
But Tom Bill, head of London residential research at Knight Frank, said the changes had been felt immediately in the capital’s prime market.
“Although the new stamp duty rules were only applicable for a quarter of the period in question, combined with a slowdown in activity that began after last summer as the general election campaign got underway and the prospect of a ‘mansion tax’ began to loom larger, there is a discernible impact on the prime central London market,” he said.
“The stamp duty figures show the contribution to overall UK revenue of the top two local authorities in the country, Westminster and Kensington & Chelsea, declined last year.”
However, Bill added that the rate of growth for stamp duty revenue in Westminster and Kensington & Chelsea had slowed and remained below the UK average.
“Stamp duty revenues in Kensington & Chelsea grew by 1.6% in 2014/15 compared to 27.6% in 2013/14.
“In Westminster, revenues grew by 13.3% last year compared to 19.4% in the previous year. Meanwhile stamp duty revenues in the UK grew by 16.3% compared to 31.5% in 2013/14. The other top-contributing London boroughs also saw sharp falls in growth in 2014/15 that were below the UK average.”