LonRes has just released its summer review of the residential property market in Prime Central London (PCL), which concluded that the massive jump in Stamp Duty Land Tax (SDLT), introduced between 2012 and 2016, when the top rate moved from 4% to 12-15%, depending on your status, was the major reason for price falls in the capital.

The authors of the report state: “No one disagreed that a mechanism had to be found to reduce the pace of capital appreciation year-on-year in London, which was compounded at approximately 10% from 2009. However, by April 2014, the market had started to slow – naturally, as part of a cycle. The government was behind the curve in this respect. They wanted a slice of the revenue, so walloped the top rate with a hefty 7% increase from December of that year.”

More recently, the latest figures released by HMRC on SDLT receipts for the whole of the UK, confirmed an 8% decrease in transactions in the year to Q2 2019. Receipts were correspondingly (5%) lower too.

Higher rate transactions, which have accounted for 33% of all liable transactions since Q1 2018, fell again in Q2 2019, down by 3% annually. Further headlines from HMRC state that 47% of residential receipts were from higher rate transactions, of which approximately 46% came from the additional 3% rate. Transactions fell most for more expensive homes. Comparing the number of residential transactions at £2m or more in Q2 shows a 22% annual fall.

Transactions in PCL have more than halved since the SDLT increase
LonRes looked at Q1 data from 2013 in PCL, compared with Q1 this year (2013 was the last full year before the market peaked). It found that overall transactions fell 53% and estimated (aggregated) receipts were down 26%.