Stamp duty hike wipes £215m off Earls Court plan
A SLOWDOWN in the London housing market has forced a leading developer to slash the value of a flagship project by £215m.
Capital & Counties – or Capco – plans to build 10,000 homes in Earls Court in west London in one of the biggest regeneration schemes of recent years.
The homes will be built on the site of the former Earls Court exhibition centre, which is being demolished having hosted a string of events since opening in 1937, including the Royal Tournament, the Brit Awards and indoor volleyball in the 2012 Olympics.
Publishing its results for 2016 yesterday, Capco said the value of the project fell by 20pc last year to £1.1bn following ‘a correction in the central London residential market’.
Ian Hawksworth, chief executive of Capco, blamed ‘weakened sentiment in the residential market, following changes to stamp duty and political uncertainty, particularly in the first half of 2016’ before the Brexit vote.
Former Chancellor George Osborne raised stamp duty on homes worth more than £937,500, hitting vast swathes of the housing market in the capital.
The stamp duty bill on a £1.5m home has increased by £18,750 to £93,750 while the levy on a £2m home jumped £53,750 to £153,750.
As well as raising stamp duty on expensive homes, Osborne also slapped higher taxes on landlords and those buying second homes.
The Mail this week revealed that sales of properties worth more than £1.5m fell by almost 40pc last year – causing the stamp duty sum collected by the Treasury to drop by £440m in a sign Osborne’s tax raid has spectacularly backfired.
But while Capco felt the pain at its Earls Court development, it said the value of its project in Covent Garden rose by 6.4pc to £2.3bn as it continued to attract high- quality shops and restaurants to the area.
‘Despite macro-economic uncertainty, London is one of the great cities of the world, desirable as a retail destination and residential location,’ said Capco chairman Ian Durant. Shares rose 4pc, or 12.2p, to 309.4p. The update from Capco will fuel fears over the outlook for the housing market in London – and, in turn, the rest of the UK.
A report by the Office for National Statistics showed the London housing market had stalled with average prices no higher than they were in July.
Separate figures from Knight Frank show average house prices in central London fell 6.7pc in the year to January – with prices down 13.3pc in Chelsea, 11.9pc in Kensington and 9.8pc in Notting Hill.
And the Council of Mortgage Lenders said the number of people taking out a loan to buy a house in London last year fell to its lowest level for 25 years.
It said families moving home in the capital took out just 32,400 mortgages in 2016, which was the lowest figure since the recession of 1991.
Property expert Henry Pryor said the cost of moving was deterring people. ‘The problem is the “transaction friction” – predominantly the higher rates of stamp duty at the upper end,’ he said.