According to the study by property data company Lonres and analysts Dataloft, the double impact of tax rises and fears over the introduction of a so called ‘mansion tax’ are affecting sales of homes worth £2m ($3.225m) (EUR1.25m) or more.
The findings reveal that in the last six months to the end of June, over half of all properties listed in London’s most exclusive areas have been taken off the market.
People looking to purchase homes worth over £2m have been hit with a 7% stamp duty charge.
Before the changes, the rate with which properties were withdrawn from the market settled between 20% and 30%. The increase to 50% is the high point of consistently increasing withdrawal rates since the increase in stamp duty.
The MD of Lonres, Anthony Payne, told the FT:
“The £2m stamp duty and mansion tax threshold remains a sticking point in the market.”
The market for high-end properties in the UK capital has been slowing down for some time now. However, the rate of slowdown seen at the moment could be set to increase exponentially.
With the general election slated for May next year, both the UK Labour Party and the Liberal Democrats have announced plans for a so called ‘mansion tax’. Under the plans, the annual levy will see the owners of high-value homes mandated to pay additional charges on their properties.
Mr Payne continued to explain:
“A raft of taxes aimed at the upper price thresholds, the strengthening of sterling, talk of a mansion tax, increased stability in the global economy and the upcoming general election have all combined to affect sentiment [of buyers].”
With the slowdown seeing discounts on many houses of 10% or more, the most luxurious postcodes in London seeing the highest rate of withdrawals and the tax increase affecting social mobility rates for many families, industry analysts are warning of more withdrawals.