DBPR asked Mark Parkinson, Head of Middleton Advisors, about the recent SDLT reforms and their effect on the London and country property markets.
Why are transaction volumes below 100,000?
“In London and the south it has to be the stamp duty increase. It really has hit home an the general sense amongst the property industry is that there has been little or no effect from Brexit (apart from a few that fell through in the immediate aftermath) and SDLT remains the biggest issue that has faced the market for some years.”
Has Stamp Duty surcharge genuinely hit transactions?
“Yes, we see daily evidence of this; buyers not spending as much on a second home in the country/ London flat. Above £3.9m the stamp duty is in excess of £500k if its not your principal private residence and as we know that does not get you a great deal in PCL. In the country it has had less of an effect – buyers tend to take a much longer term view so it has had less effect.”
Would removing the SDLT surcharge help the market
“Definitely. It would give vendors the confidence to market their properties and obviously it would be more attractive to buyers and developers etc. In the country less so. The dynamics of the country market are much more about supply of good houses as people only tend to make generational moves- a cut in the surcharge is unlikely to make them put their house on the market.”
Is it fair to give a tax cut to those that can afford to buy a second home?
“It is not just the traditional second home owners it affects. If the point of the surcharge was to discourage the traditional weekend house buyer living in London, I would say it has comprehensively failed. That market is as competitive as it has ever been.
It has mainly affected international buyers in London where it will probably be their only property in the UK, but as the legislation covers worldwide property they are liable for the surcharge. We celebrate the fact that London is one of “The World’s Great Cities” and the international appeal but penalise those who buy a property here.”