The latest Halifax House Price Index noted that London will experience the greatest impact from the one percentage point increase in stamp duty land tax on properties worth more than £1 million, which took effect today.
Stamp duty has now risen from four to five per cent on properties costing over £1 million, which effectively means that a £1 million home will now cost £10,000 more in tax.
“Just 1.1 per cent of residential property sales will be affected by this month’s increase in the stamp duty rate from four per cent to five per cent for homes worth over £1 million,” Halifax said.
However, with 4.7 per cent of those transactions taking place in London, the effect on the capital’s market could prove more pronounced.
One bright spot for portfolio investors is the decision to charge stamp duty based on the average cost of a home in their bulk purchase, rather than the total valuation.
This means, for example, that five properties worth £200,000 each will be charged at one per cent stamp duty, rather than the five per cent that would apply if they were valued together at £1 million in total.
But estate agent Savills pointed out that portfolio investments in premium properties – for example, ten £2 million homes – will still incur the five per cent rate as their average value will pass the £1 million threshold.
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