Central London estate agents scrambled to get multi-million pound property deals over the line before the midnight deadline for higher stamp duty rates that was unexpectedly announced yesterday in the Budget.
Rachel Reeves stunned the property market in her speech by slapping an extra 2% on the stamp duty surcharge on purchases of second homes bringing it up to a total of 5% on top of the standard rates for buyers with only one residential property.
One agent described how he had to fly home from a half term break in Oman to sort out the sale of a £6.75 million 3,000 sq ft three bedroom mews house in Mayfair before midnight.
The extra stamp duty means that the purchaser faced an extra £135,000 tax bill if the deal was not completed before Big Ben rang 12 o’clock.
He said: “Both the vendor and the buyer said ‘sort it out’ even if you have to put all the remaining furniture from the house into your office.
“Now my office on Mount Street is full of lamps, sofas and a very expensive Persian rug. It feels like it has become an upmarket branch of the Harrods homeware department for a few days.
“I was supposed to be dealing with some clients in Oman but it all had to be done over zoom so I could fly back to London to close the mews house deal.”
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Other agents also reported frantic late night burning of midnight oil to get deals done.
Laura Dam Villena, head of residential agency at Cluttons, said: “The announcement on the surcharge for purchases of additional dwellings has fuelled a rush of last- minute transactions today before stamp Duty Land Tax changes are implemented at midnight.
Marc Schneiderman of prime estate agency Arlington Residential told the Primeresi property news website: “This is the 15th change to SDLT in the last 24 years, Yet again, another Chancellor has seen SDLT as a soft target and a very unfair one, taxing many who have worked hard to be able to buy a home and taxing them from tax-paid money.”
Robert Sturges, regional director for central and prime central London at Chestertons, says: “As soon as the Chancellor made the announcement, we swung into action and moved heaven and earth to assist buyers of second homes that were in a position to finalise their purchases to exchange contracts before the midnight deadline.”
The agency said it was involved in five rapid multi-million pound sales in Kensington, Hyde Park, Notting Hill and Chelsea.
Sturges added, “One of the buyers made the decision to go ahead without a survey on the basis that any minor remedial work would be far outweighed by the £65,000 additional stamp duty payment required. The property was a beautifully presented home in a recently constructed building, so the risk of significant issues from a survey was low.”
In another case, a seller and buyer agreed a lower deposit, just 1.5% rather than the usual 10%, in order to facilitate exchange of contracts.
Agents are also expecting a flood of demand from first-time buyers hoping to buy will want to push through purchases in advance of a reduction in the stamp duty threshold from £450,000 to £300,000 next April.
Currently in London, the average first-time buyer house price of £461,450 means the average first-time buyer pays just £1,822 in stamp duty.
But when the first time stamp duty threshold revert back to £300,000, the average tax bill in London will climb to £8,072, an extra £6,190.
