by Mark Johnston
While the property market in general is in poor shape across the world, it seems that the super rich continue to spend massive sums of money on new homes.
The high value property market did however go quiet for a while after the 2008 financial crisis as the rich fretted about their investments, but they also decided to bide their time until they could pick up a good bargain.
The thing is with the high value property market is that it very rarely sees sales falling through as with other parts of the market, this in fact is mainly due to sellers not having to worry about time wasters as all potential buyers of these particular properties are thoroughly vetted by the agents.
Although it can be much harder to gain a true picture of the high value market as many of the homes are transferred through third parties, which therefore means that many do not show up on public record. There are in fact a lot of these properties that therefore go ‘under the radar’.
Data has shown that there are an estimated 80,000 homes in Britain worth £2 million or more.
However, when George Osborne, the chancellor, decided to end the first time buyers stamp duty holiday at the end of March this year, he also decided to impose a 5% stamp duty on property over £1 million and 7% on property over £2 million. This meant that those paying the new rate of stamp duty will therefore be facing bills of at least £14,000.
At the time many estate agents warned the government that some property chains would crumble as a result and that the chancellor risked “killing the goose that lays the golden egg”.
Property experts also warned that the new stamp duty on higher value homes could also affect all other home owners and buyers by triggering a slowdown in the areas of the property market which have been vital in supporting prices.
Some analysts felt that with the property market still far from healthy, the government needed to support activity at all levels rather than adding yet another tax burden.
James Wyatt, of Barton Wyatt estate agents stated “I doubt that the rise in the stamp duty in this part of the market would put off a serious buyer”.
George Osborne defended his decision to push forward with the new higher stamp duty rate, despite warnings, by stating “it is fair when money is tight and so many families could do with help that those buying the most expensive homes contribute more”.
Current data from June 2012 has revealed that sales of top end homes have plunged by 40% and the Land Registry figures also show the number of homes sold for more than £2 million has dropped from 205 last year to 124 this year.
Recent statitics have also shown that the new top end rate of stamp duty will overwhelmingly hit London buyers in particular.
Therefore even though figures for completed home sales in the capital on average properties showed an increase of 2.6%, the sale of £2 million and above properties dropped from 162 last March to just 98 in March this year.
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