According to HMRC and land registry transaction data, 81% of £2 million homes in the UK are based in London and a large proportion of the remaining 19% being located in the South East.
Within London’s 81% share some 40% was in Kensington and Chelsea, 20% in the City of Westminster, 13% in Camden, 4% in Barnet, and 4% in Richmond.
‘Those who own a home valued in this bracket have already paid substantially more stamp duty than other segments of the market,’ said Liam Bailey, head of research at Knight Frank.
‘This is especially the case if they have bought their home since April last year, when stamp duty was raised from 4% to 5%, increasing the bill for the purchase of a £2 million home by £20,000 to £100,000,’ he explained.
‘The latest official figures, which do not include last year’s substantial uplift in stamp duty, suggest that those buying homes worth £2 million and above paid around 17% of the total stamp duty tax revenue raised from residential transactions in 2010/11, despite making up just 0.5% of total transactions,’ he added.
He pointed out that effectively this means that all of these homeowners are paying an annual ‘service charge’ to the Treasury and this seems like a penalty. ‘This will certainly feel like the case for those living in high value homes who have modest levels of annual income,’ he said.
Also he explained that the issue of valuation is a thorny one. ‘To suggest that the value of properties has risen across the country in a uniform manner is thoroughly misleading. The last few years has seen the rise of local markets that have performed very differently across counties, let alone regions. And this ignores the fact that properties in this price bracket can fluctuate,’ he explained.
‘So regular reviews, and all the expense that is attached with that process, would have to be established. As it stands, this proposal very much looks like being an additional tax on property in London and the South East,’ he added.
