Hours before midnight, scores of wealthy individuals, families and investors were scrambling to exchange and complete on properties above the £925,000 mark and the introduction of the new Stamp Duty thresholds.
A surge of property deals worth more than £925,000 were hurried through late last night as home buyers rushed to exchange before the Chancellors stamp duty cut off. If a buyer had already exchanged they then had the choice under which tax system to complete.
On Wednesday the Chancellor overhauled the stamp duty system, cutting stamp duty for 98% of buyers while increasing the rate for homes worth more than £1.5m.
As an example one Central London client was trying to exchange on a £7.5m apartment in Ennismore Gardens, Knightsbridge before the deadline. Under the new regime the buyer would have to pay £813,750, an extra £288,750.
“We’ve had a number of last minute attempts to exchange as a result of today’s changes including one at £980,000, saving the purchaser £2,550 and one at £2m, which saved the purchaser £55,000 – the lawyer of the latter had to cancel his wedding anniversary plans in order to get the deal done.”
“It is a big revenue winner for HMRC, but it might suppress transaction levels at the upper end of the market. Still, it is not as punitive as a mansion tax, so it won’t necessarily deter buyers.”
A property advisor working for one of the big four accountancy firms said an overseas client had flown in yesterday afternoon following the Chancellor’s Autumn Statement to exchange on a £20m home and save himself £400,000.
This policy does not just target the ultra wealthy. As a result of 20% price hikes in certain parts of London over the last year there are more families than ever before living in million pound plus homes, who will also be affected.
Paul Emery, real estate partner at PwC, said: “The losers of the reforms will include many families in London and the south east. Someone buying a family home in Central London for £1.5m will be £18,750 worse off. Unless they’ve been able to rush through a transaction, people will have to revisit whether they can afford the property they’re looking for.”