Member Article

Gov facing £45m stamp duty hit as London ‘super prime’ sales suffer Brexit hit

The sale of so-called ‘super prime’ London properties has suffered a marked decline in the last three months as the upper end of the capital’s property market feels the squeeze from Brexit uncertainty.

According to Land Registry data analysed by London Central Portfolio (LCP), the sale of properties worth £10m or more in the capital has tailed off significantly following the EU referendum, with just five transactions in the three months to August, compared to 35 during the same period in 2015.

The average price of the most expensive transactions has also fallen significantly, dropping 25% to £16.3m, while demand for new-build super prime develops has collapsed as buyers flee to older, safer stock.

According to LCP there were no sales above £10m outside of London’s prime postcodes nor were there any sales above £10m for new build properties.

The figures will be a worry for the Treasury, with the property firm estimating that Philip Hammond’s coffers could face a £45m hit from the super prime market alone, as lower sales and property values impact on Stamp Duty receipts.

Naomi Heaton, Chief Executive Officer of LCP commented that there was an air of inevitability about the price correction that is currently rippling through the market, and that the capital would remain an attractive proposition for buyers due to the limited stock available.

However, she went on to warn that the overall economic outlook was worrying and the decline in the luxury property market was likely to have big consequences for the government.

She said: “Overall, this slowdown in the luxury property market – a big contributor for the Exchequer and UK economy - is very concerning. As the Government faces the daunting task of negotiating Brexit together with a potential slowdown in the UK economy, it should consider its strategy on residential property taxation carefully to ensure it meets its objectives of increasing revenues.

“Ironically, the rapid devaluation of sterling, now attracting foreign investors back to London, may be the biggest hope of salvaging a potentially embarrassing and costly situation.”

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