London's Elite Property Market Ended The Year With A Frenzy Of Buying To Avoid New Taxes

In December’s Autumn Statement, Chancellor George Osborne made some massive changes to stamp duty. That’s the tax paid during the sale of a property. The changes Osborne made sent sales of luxury, high-end properties surging that day, according to the Financial Times, as buyers scrambled to avoid the new higher tax rates.

The basic change is that all houses for about £900,000 or less now either get taxed less on sale, or taxed about the same amount. The “slab” system that existed before meant sudden, large jumps in tax when the property price went over certain levels.

Here’s how the stamp duty system now: 

The new system means things are smoothed out, but also that stamp duty keeps going up for the most expensive properties. So when Osborne announced the change, people looking to buy or sell a high-end property knew that they had just the rest of the day (3 December 2014) to finalise. From the FT, here’s what happened:

In parts of the capital such as Knightsbridge, Chelsea and Belgravia, more homes changed hands on the day of the Autumn Statement, when the stamp duty reform was announced, than on any other day in the past decade, according to research by Lonres and Dataloft…

Buyers rushed to exchange contracts in the hours between the announcement and the midnight deadline, with estate agents’ offices staying open until the end. One in six of all homes sold in London’s most expensive areas in the last three months of the year changed hands on December 3, Lonres and Dataloft found.

The FT says that the sales rush was the largest in a decade for the extremely expensive end of the London market, but others went further: Simon Rose, an estate agent at Strutt & Parker’s Chelsea office told the Daily Mail the last similar period he could remember was the rapidly climbing interest rates around Black Wednesday in the early 1990s, and that it was his busiest day in 25 years.

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