Prime London market paid 12% of all stamp duty owed in 2020

Jake Carter

March 11, 2021

London’s high-end homebuyers paid 12% of the stamp duty owed across England in 2020, despite accounting for just 0.1% of market transactions.

Research by Enness Global Mortgages showed London’s high-end homebuyers paid out a total of £368.6m in stamp duty in 2020 alone.

The current stamp duty holiday did provide some relief, with homebuyers in London’s top tier saving £4.5m in stamp duty since the holiday, although this equates to just 0.4% of the total saving made.

The current stamp duty holiday has also benefited foreign buyers.

Based on the average sold price for a prime property of £4m in 2020, non-UK residents saved £15,000 in stamp duty.

The stamp duty owed on an initial purchase reduced from an average of £393,750 prior to the holiday to £378,750 from 8 July onwards, with the tax owed on a secondary purchase reducing from £513,750 to £498,750.

However, unlike the rest of the domestic market there is no stamp duty holiday extension for foreign buyers at the end of this month and there is also an additional 2% being added for non-domestic buyers.

As a result, foreign buyers will now see the stamp duty owed increase by £95,000 as of April 1, increasing from £378,750 to £473,750 on an initial purchase and £498,750 to £593,750 on a secondary property.

Analysis also shows that across the residential property market in England, a total of £2.9bn was paid in stamp duty in 2021 on 468,929 transactions, with a total of £1.2bn saved as a result of the stamp duty holiday implemented in July.

As much as £436.4m of this was paid on transactions with a sold price of £3m or above, meaning the prime market accounted for 15% of all stamp duty paid in England.

This is despite this tax coming via just 846 property sales, accounting for 0.2% of the entire market.

Prime homebuyers across England still saved £6.1m in stamp duty as a result of the current reprieve.

However, in contrast to the wider market, this accounts for just 0.5% of the total stamp duty saved.

The large majority of these sales were for high-end homes within the capital, with London seeing 675 properties sell for £3m and above, accounting for 80% of all prime transactions, but just 0.1% of all homes sold across England.

Islay Robinson, chief executive of Enness Global Mortgages, said: “While stamp duty is often considered a financial barrier to buying for the average homeowner, the sums paid via the prime market are far more substantial.

“However, stamp duty is just one piece of the puzzle when buying a property in the UK. Any discount negotiated, the potential to add value, finance costs and currency considerations all need to be weighed up to determine the true value of a transaction.

“Looking at stamp duty in isolation won’t provide an accurate indicator of the additional costs incurred when buying.

“Of course, those transacting at the very top-end are far better placed to stomach these costs and so a stamp duty saving hasn’t been a driving factor with regard to transacting, nor has it caused the mad panic to complete that we’ve seen across the regular market.

“The prime market is arguably better off as a result and we’ve seen a quality over quantity approach continue to improve market health across the top price thresholds, as confidence returns following a year of pandemic uncertainty.

“Of course, the introduction of a further 2% stamp duty penalty for foreign buyers won’t do much to help this returning health, with high-end homebuyers from outside of the UK looking at an average cost of half a million pounds owed in stamp duty alone as of April.

“That said, a Prime London home remains one of the must-haves on any notable international property portfolio and so this increase will be viewed as a small price to pay for the serious investor.”

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