Independent buying agency Black Bricks says before the stamp duty reforms announced by Chancellor George Osborne in 2014, someone with £2m to invest would have probably purchased a single property and by splitting their purchases they are diminishing their liability.
Black Brick managing partner Camilla Dell says “Now a £2m property would carry stamp duty of £153,750 while two £1m properties would be taxed at £43,750 each – encouraging our £2m investor to buy two £1m properties and ‘save’ £66,250 in stamp duty”.
“Our data suggests investors are targeting the lower end. In January to July last year, our average deal value was £3.54m. In the same period this year, that average has fallen to £1.5m” she says.
Dell goes on to say that “The policy has also backfired on its own terms, reducing the tax-take to the Treasury. Research firm LonRes calculates that stamp duty paid for prime London sales is down 6.4% since the reform was introduced compared with the same period last year”.
She says prime London’s property market needs a “major correction” of as much as 20% to bring it back to its former glory.