Stamp duty falls in capital for first time in a decade

THE amount of stamp duty paid on the purchase of central London properties has fallen for the first time in 10 years, HMRC data shows.

The report, published yesterday, showed revenues from stamp duty fell by 1 per cent during the 2016-17 tax year due to reforms paralysing the higher end of the market.

London house prices also fell for the first time year-on-year since the height of the financial crisis eight years ago, underperforming the rest of the UK.

Earlier this year a report by Oxford Economics showed stamp duty reforms have raised half as much money as the Treasury predicted because people are being discouraged from buying expensive properties.

The Exchequer received £370million less in stamp duty than the £700million expected after major changes made by the then chancellor George Osborne, it said. The Government is under growing pressure to cut stamp duty amid suggestion that the policy is having unintended negative effects on the market. Experts say the policy has led to a steep decline in property sales and has cost the economy nearly £1billion because of a reduction in the number of people selling homes and a flow-on reduction in demand for services such as removals or renovations.

The fall in stamp duty from central London came despite receipts for the rest of the UK soaring by a third in the three years since the system changed.

Receipts have increased by 33 per cent since Mr Osborne hiked stamp duty for homes worth more than £925,000 in December 2014, equal to £2.14billion for the Treasury’s coffers.

While revenues in the last year have increased by 18 per cent, transactions fell by 8 per cent. This was caused by the stamp duty hike making it too expensive for many to move. Across all of London, revenue increased by just 1 per cent. The mean stamp duty paid on each transaction in the last year has increased by 27 per cent to £7,900.