£200m house deal stampede wealthy to beat stamp duty hike
BUYERS snapped up more than £200million worth of property in the hours after George Osborne announced sweeping changes to stamp duty.
The Chancellor’s reforms on the transaction tax in his Autumn Statement sparked one of the busiest periods for estate agents in 25 years. One overseas buyer saved £1.4million in stamp duty when contracts on a £30million house in Surrey were exchanged just 15 minutes before midnight on Wednesday – after which the new rules applied.
The sale of a second £30million house – in upmarket Hampstead in London – went through at 11.30pm. Estate agents are predict- ing a property boom in the run-up to Christmas and into the New Year as families raise their offers and first-time buyers realised they could afford to buy sooner.
The new system will replace the unpopular ‘slab structure’, once labelled ‘the worst designed tax in Britain’, with a gradually increasing rate of duty.
The changed rules – said to benefit 98 per cent of buyers – mean the so-called ‘cliff edge’ where the tax was charged on a whole value of a property is replaced by gradually rising charges in a string of bands. It means someone buying an average-priced home worth £273,000 will be about £4,500 better off.
Yesterday the switch triggered a flood of calls to solicitors and estate agents as sellers and buyers rushed to capitalise on the change. Sellers who had been previously forced to undervalue their home to keep the price below stamp duty bands of £250,000, £500,000 and £1million are hoping to increase the sale price.
Nick Riddle, at estate agents Eadon Lockwood and Riddle in Sheffield, said: ‘ We have already received calls offering asking prices on 15 properties that had previously received lower offers. Now that buyers aren’t burdened in the same way by outdated stamp duty fees, they are better placed to pay what the property is really worth.’
Kevin Hollinrake, of Hunters estate agents, based in North and East Yorkshire, said: ‘Minutes after the changes were announced we had two or three people on the phone increasing their offers by £5,000 or more because of the stamp duty saving.
‘We were working late last night and received well over 100 calls
‘100 calls from clients in an hour’
from clients within the first hour and a half of opening.’
While most buyers will be better off, stamp duty for homes over £937,500 has risen.
Lawyers were paid bonus fees of up to £10,000 to get the paperwork finished before midnight to save their clients vast sums of money.
Beauchamp Estate Agents said it pushed through sales on homes worth a combined £100million between the delivery of the Autumn Statement and midnight.
Those who failed to exchange contracts on their property before midnight now face hefty stamp duty bills. A £2million home will cost £53,000 more than it would have two days ago. One buyer buying a £7.5million home in Knightsbridge faced huge disappointment after attempts to rush through a sale before midnight failed, costing them £ 288,000, according to Rokstone estate agents.
But many more were successful. Mark Pollack, of London’s Aston Chase estate agents, said his team managed to get three multi-millionpound deals through before midnight. He said: ‘The last time I can remember a day of so much anxiety was when interest rates went up to 15 per cent in the 1980s.’
Stuart Rose, of Strutt & Parker’s Chelsea office, said it was the busiest night that he could remember for 25 years, rushing through four sales of multi-million homes at the last minute.
Trevor Abrahmsohn, of Glentree International, said sales of luxury homes would fall because of the 12 per cent stamp duty on homes over £1.5million. Instead, there would be a ‘boom’ in basement conversions as the rich chose to extend their homes rather than move.