The collapse of the London sales market has helped blow a £9.5bn black hole in earlier Treasury estimates of its take from Stamp Duty Land Tax.
The Office for Budget Responsibility has said in its latest economic and fiscal outlook document: “Receipts were notably weaker at the top end of the residential and commercial markets, particularly in London.”
The OBR, which says that transactional weakness has been “concentrated at the top end of the market”, estimates that receipts from Stamp Duty will be £11.3bn in the current financial year – £1.6bn less than expected – and next year will be £12.2bn – £2bn less than predicted.
Sales in the capital have almost halved since the Leave vote in June and at the top end of the market by some 70%, although the large majority of agents blame George Osborne for Stamp Duty hikes, rather than Brexit.
They say the slowdown goes directly back to Osborne’s 2014 Autumn Statement, which introduced higher Stamp Duty rates for purchases over £937,000. In April this year, Osborne also introduced a 3% Stamp Duty surcharge on the purchase of second homes.
Someone buying a £1m property now pays £43,750 in Stamp Duty, or £73,750 if it is a second home. For a £2m purchase, the bill is £153,750, or £213,750 for a second home.
Trevor Abrahmsohn, of Glentree Estates, told the Evening Standard that the rates are a “war on London”.