Prime London buyers could see discounts of upto £500k
Prime London buyers could save half a million pounds in Reeves tax overhaul, with seller tax taking 15 years to equal current upfront costs.
The latest research from Jefferies London shows that whilst the average London buyer stands to save £16,250 on Stamp Duty Land Tax (SDLT) should it be removed, those purchasing at the very top of the capital’s market would see the cost of buying reduce by almost half a million pounds in some postcodes.
Jefferies London analysed price paid data from the Land Registry covering prime London transactions completed in the past 12 months to reveal where removing SDLT could essentially hand prime buyers the largest discount.
Across the 69 prime postcodes analysed, the average buyer stands to save £55,000, considerably higher than the wider London average of £16,250.
At the very top of the market, the W1K postcode of Mayfair and St James’s leads the way, where the average sold price of £4.5m equates to an SDLT cost of £453,750 in the current market, presenting a huge potential saving to prime London homebuyers should the tax be scrapped.
Chancery Lane’s WC2A postcode ranks second at £249,750, followed by Knightsbridge and Belgravia’s SW1X at £213,750, Pimlico and Victoria’s SW1E at £192,750, and WC1A around New Oxford Street at £144,450.
Completing the top ten postcodes that could see prime London buyers bag the biggest SDLT saving are SW1W (£132,750), W1G (£119,550), W8 (£105,750), WC1B (£96,750) and W1J (£92,750).
Of course, it is those at the higher end of the market that Reeves is taking aim at with her potential new homeowners tax, with current estimates putting the charge at 0.54% annually on the portion of a property worth £500,000 to £1m and 0.81% on £1m plus. It is also rumoured this levy could replace council tax, meaning owners would pay an annual charge based on property value, although the details are far from confirmed at this point.
Further analysis by Jefferies London shows that in W1K, with an average house value of £4.5m, this would result in £2,700 per year charged on the first £500,000 threshold and £28,350 annually on the secondary threshold above £1m, creating a total annual tax bill of £31,050.
Even so, it would still take more than 14 years of paying the proposed annual homeowner tax to reach the same cost currently required upfront in stamp duty.
Similar dynamics play out across other prime postcodes. In WC2A, a £2.8m home would attract £17,280 per year, while in SW1X Knightsbridge & Belgravia, the figure would be £14,850. These sums, while notable, remain far below the immediate SDLT bill currently faced by buyers in these markets.
Damien Jefferies, Founder of Jefferies London, commented:
“Scrapping stamp duty would act as a significant incentive for homebuyers at all levels of the property ladder, but nowhere more so than in the prime London market, where this archaic tax grab equates to as much as half a million pounds on the average cost of a home in the capital’s most prestigious postcodes.
It remains to be seen whether the government will really remove it, given how much revenue it generates, and if they do, what will replace it.
Taxing property values annually sounds messy to say the least, not least because house prices do not remain static from one year to the next. That said, the removal of stamp duty would undoubtedly be a huge incentive to attract buyers back into the prime London market.”
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