Stamp Duty should be reduced by a third to give the property market a much-needed boost.
Jackson-Stop & Staff claims that Stamp Duty is stopping people from moving, particularly in prime central London, which in turn is causing a blockage for the rest of the market.
Toby Whittome, sales director at Jackson-Stops & Staff London, warned that prohibitive levels of Stamp Duty are preventing the settled domestic market from buying and selling, although overseas buyers are still attracted to purchasing property in London due to the weak pound.
Based on Land Registry data, he said transactions in Kensington & Chelsea have fallen to around 120 a month, three times less than its peak in 2014.
He said: “Potential buyers in central London used to approach us about their next home move, driven by factors like a growing family or need for a home with more bedrooms or a bigger garden.
“These are the ‘old reasons’ for moving, from before December 2014. Our purchaser registration numbers are up, but the fluidity of the market has diminished hugely.
“When buyers are looking at 20% transaction costs including stamp duty, solicitor’s fees and moving costs, the attitude becomes: ‘We’re better off staying where we are’.”
Nick Leeming, chairman at Jackson-Stops & Staff, said the national market would get a much-needed boost if Stamp Duty levels weren’t causing so much harm to higher end homes in the £1m-plus bracket.
Leeming said: “I think we would see the health and fluidity at the lower to middle end of the Greater London market spread to the higher end too.
“One recommendation is a UK-wide reduction in Stamp Duty levels of around a third, which should boost the property market at all levels, particularly at the £1m-plus level.
“It is worth remembering that in central London typical family homes will likely be worth £1m or more and, with Stamp Duty levels preventing these homes entering the market, it means that families are unable to move up or down the property ladder when they need to.
“Aggregate prices remain stable against a backdrop of economic uncertainty and low transaction levels, demonstrating that demand is sufficient to keep prices supported.”
Meanwhile, transactions may have slowed but the number of mortgage approvals for house purchase returned to levels seen early this year during July, the Bank of England figures show.
Mortgage approvals had slipped in May and June but increased to 68,689 in July, up from 65,318 the previous month.
This is also above the previous six-month average of 66,505.
Commenting on the data, Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “These figures are encouraging because they are reflecting what we have seen on the ground – in other words, even after the uncertainty of the general election result and the beginning of serious Brexit negotiations, buyers and sellers are shrugging off concerns and getting on with moving.
“We have noticed, however, that deals are not being done unless sellers are prepared to be realistic and accept that they may receive only one or very few offers on their properties compared with perhaps several 12 months earlier.
“Looking forward we anticipate much the same – no rapid improvement or decline, but as our customers return from holiday they will hopefully return to home buying and selling mode sooner rather than later.”
Other agents are also making calls for reform of Stamp Duty.
Simon Gerrard, managing director of London agents Martyn Gerrard told EYE he was considering proposals he could make to the Government on how to reform Stamp Duty, which he said could get the housing market moving.
He said Stamp Duty stopped people making purchases, affecting agency as well as the wider economy such as removals and conveyancing sector as there is less business.
Gerrard added: “The Government should think about Stamp Duty and how important the property market is for the wider economy.”