London estate agent Stirling Ackroyd has urged the government to cut stamp duty in next week’s Autumn Statement on November 23.
Its own research reveals that house prices have fallen in the top 25% of the London market because of changes to the tax.
In the year to Q2 2016 prices have fallen by 12.3% in West Kensington, 9.6% in Notting Hill and 6.2% in Kensington High Street.
In December 2014 the government changed stamp duty from a ‘slab tax’ system to a ‘tiered system’, which charged more tax for homes worth more than £925,000.
And in April the government launched a 3% stamp duty surcharge on buy-to-let purchases and second homes.
Nick Davies, head of residential development at Stirling Ackroyd, said: “George Osborne’s reforms were flawed and his Notting Hill neighbours certainly won’t be impressed with his stamp duty legacy.
“We have also seen a shift towards the east of the city, particularly Islington and Hackney where prices are rising significantly, putting even more pressure on first time buyers who want to stay in the area.
“With the new Chancellor Philip Hammond busy working on his Autumn Statement, the government should take the opportunity to think again on the stamp duty surcharge, and should also look at cutting the cost of stamp duty across the board as the tax serves only as a disincentive to moving home.”
He added: “Targeting top end buyers of properties valued at over £1m might have been good politics at the time, but the policy is crippling Prime Central London, with potentially damaging consequences for the capital’s property market down the road.
“Most Londoners are unlikely to weep for wealthy second home buyers, but the reality is that without movement at the top, the middle and lower end of the chain are being blighted by a shortage of available properties, leading to intense competition and spiralling prices.
“Higher income families are holding on to their homes rather than move up, while buy-to-let investors have all but disappeared, which in time will have a similar effect on the rental market.”