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Higher stamp duty on high-end London property is offset by slowing price growth

Stamp duty rises for second homes cancelled out by stalling price growth in luxury London market

By Maurice Shasha  //  Wed 19th April 2017
Slow price growth offsets cost of higher stamp duty for London investors and second home buyers looking for high-value homes.
Slower price growth at the top end of the central London market is absorbing the cost of higher stamp duty on properties bought by investors and second home buyers.

Investors and second home purchasers are effectively saving money on the cost of a property as prices at the luxury end of the market have slowed in the last year as a result of stamp duty rises and the uncertainty caused by Brexit.

According to research carried out by Private Finance, investors and second home buyers in London can save on average £169,410 as a result of slowing property price rises. This far exceeds the increased cost of stamp duty, which amounts to £77,431 for high-value properties.

This is positive news for potential second home buyers and investors keen for a slice of London's luxury property market, and who want to buy in areas such as Knightsbridge or Belgravia.

The additional 3% stamp duty surcharge was introduced in April 2016, and this change has affected the prime London market in particular.

Property price rises have slowed at the top end of the market, more so than across the rest of the market.

Director of Private Finance, Shaun Church, said: "If there is one silver lining for would-be buyers and investors, it’s that slower growth of high-value property prices has had a positive impact on affordability. A buyer today can pay markedly less for a high-value property at the top end of the ladder than if growth had kept pace with the rest of the market, making it easier to absorb any extra stamp duty fees."

Multiple stamp duty changes have occurred in recent years, affecting the property market as a whole. Now, slowing price rises on high-end properties is positive for potential buyers.

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Financial Reporter