George Osborne gave Londoners a good kicking today by raising stamp duty on houses purchases over ’2 million to 7%. But the real pain for the wealthy came in the form of a 15% rate on residential property owned within a corporate structure
George Osborne gave Londoners a good kicking today by raising stamp duty on house purchases over £2 million to 7%. But the real pain came in the form of a 15% rate on residential property owned within a corporate structure.
‘This has the potential to stall the market in prime central London,’ Peter Wetherell, the leading estate agent in Mayfair, tells me. ‘The extra hike will not be absorbed by buyers and therefore the proposal will have an effect on selling values.’
That’s mighty worrying considering 40% of house purchases processed by Wetherell over the last 18 months have been via companies.
And it’s got an ironic edge. ‘If George Osborne thinks that he has closed the property stamp-duty loophole, he can think again,’ says Saul Empson at Haringtons. ‘A whole industry has sprung up around the issue of avoidance and this will continue; he has simply ensured that generations of tax lawyers and accountants can pay their school-fees for generations to come.’
Perhaps more disturbing still, the £2m threshold will encompass swathes of houses in modest parts of London. ‘I predict that for sales between £2 and £2.5m, apportionments will be made for fixtures, fittings and furniture that will ensure that the sale is kept below the critical figure,’ says Empson. ‘In other instances, it will become like France – where the price on the contract gets paid, and another sum changes hands “under the table”, whilst the notaire is out of the room.
‘This is a creeping criminalisation of normal, law-abiding citizens,’ he continues, ‘whereas the very rich, internal, complex buyer will find a legal (albeit expensive) route around this issue. To see this done under a Conservative government is simply mindboggling – I'd struggle to find anyone who would own-up to having voted for this.’