Autumn Statement 2014: Shares in the biggest developer of luxury London homes dropped following an overhaul of the stamp duty system by the chancellor this week.
Berkeley Group shares fell by almost 3% after George Osborne confirmed that buyers of £1.5m- plus homes would be hit with a new tax rate of 12%, raising fears the measure could deter the overseas investors which have underpinned London’s luxury housing market.
Faisal Durrani, international research and business development manager at Cluttons, said: “This is the third successive statement that has delivered a hit to international investors.”
Research from Cluttons shows that the average house in Chelsea, SW3, will pay an additional £35,000 under the reforms, which remove slab rates in favour of a sliding scale that will apply new rates to each part of the property price that falls within that band.
Durrani added: “This tinkering with the tax regime is a huge irritant for overseas investment, especially as it comes with no forewarning. Overseas money was crucial to the recovery, so anything that deters investment is bad for London and the UK.”
The new rates introduce a 10% tax on sums in excess of £925,000 and a 12% rate on sums above £1.5m. In practice all properties valued in excess of £937,500 will pay more.
The result is that the buyer of a £5m home will now pay £514,000, up from £350,000.
Knight Frank head of UK residential research Grainne Gilmore said that in the short term the tax would “weigh on activity at the high end of the scale, which could have an adverse impact on the Treasury”.
The move is expected to head off the Labour Party’s proposed mansion tax.
