The increase stamp duty, from 4% to 5%, on properties selling £1million and above takes effect on 06 April this year. It is creating demand for completions, according to leading estate agents Winkworth.
‘The impending increase in stamp duty has generated impetus on the demand side and we are currently negotiating on four properties priced between £2 to 3 million, all with buyers looking to complete before 05 April. In these cases, the new stamp duty levy would incur an additional £20,000 to £30,000 in taxes,’ said Alex Thompson, director at Winkworth Notting Hill.
Adrian Philpott, Sales Manager, Winkworth West End, adds that the additional duty at these price levels is not likely to deter buyers. ‘Although buyers have occasionally mentioned the stamp duty increase, we don't expect it to be a deciding factor for many of them of this calibre,’ he explained.
'The increase in duty may have a marginal effect around the £1million mark, but once you enter the £2million plus market, the extra £20,000 or so in tax is not the deciding factor. Currently, there is a shortage of quality stock on the market, so if someone finds a property they really like, they will buy it a price they're prepared to pay regardless of the additional tax,’ he added.
On the supply side, it is unlikely there will be any significant increase of property to the market, although, according to Thompson, there are some sellers who will be looking to beat the stamp duty increase. ‘We have recently taken on a property which the vendor had initially planned to market in June, and have brought forward with the aim of achieving a sale before 06 April,’ he added.
The stamp duty rise will mostly affect homebuyers in the South East, and central London in particular. In January 2011, almost 30% of sales agreed in Winkworth's central London offices were in the £1million plus bracket.
