According to the latest figures from the Land Registry, new tax legislation changes that were announced earlier this year are slowing down London’s prime property market.
The data shows that sales of property in the capital fell by almost 9 per cent in the third quarter of this year compared to the same period in 2011. However, this fall is in contrast to other areas, where transactions have increased by over 3 per cent.
Despite this, average prices in the Prime London Central area (PLC) have reached a new high of £1.3m, which is more than five times the average property price of almost £250,000 in England and Wales.
Residential investment experts, the London Central Portfolio (LCP), blame the tax changes announced in the Budget for the fall in transactions in PLC, as the Government increased stamp duty to 7 per cent for people buying property over £2m in their own name and to 15 per cent for companies.
Since 77 per cent of properties valued at over £2m are based in the capital, the LCP lays the blame squarely at these measures and says that the Land Registry data reflects the consequences of these tax changes on both the domestic market living all over the capital and foreign investors who focus their attention on Prime London Central properties.
Sales of properties under £2m in Greater London held fairly steady in the last quarter but sales of properties between £2m and £5m dropped by over 50 per cent quarter-on-quarter.
Investors appear now to be waiting for further clarification on stamp duty to be announced in the Autumn Statement before they commit to buy to let, which accounts for around 50 per cent of purchases in the PLC area.