Design and consultancy firm Arcadis has called for the country’s chancellor George Osborne to pause housing tax on high end luxury properties or risk distorting the wider market, writes development specialist Richard Carr.
Successive stamp duty hikes has seen buyer interest drop in the UK’s high end property market at a time when there had been a 40% rise in prime properties planned for development in London.
Many projects in development for a number of years have been disproportionately affected meaning that they delivery of affordable homes could also be put at risk.
The government appears to be giving mixed messages in relation to the market; initially they encouraged investment in prime residential property, but have changed policies mid-cycle, leaving developers in trouble.
Since the end of 2014, the stamp duty for a £6m home has almost doubled from £420,000 to £810,000 when bought as a second property.
Developers have either had to offer discounts or delay construction on projects, which means that a significant number of affordable homes – planned as part of the original development – are not being built as quickly.
Others are opting to focus on properties below the stamp duty threshold of £1.5m, however this means that people looking to by family homes in this market are being priced out.
Mark Cleverly of Arcadis told propertywire.com: “To accelerate the delivery of affordable housing currently in the pipeline and ensure the construction sector remains sustainable, the Chancellor must impose a temporary reduction in stamp duty on new build properties. In tandem with this, he must better focus the debate onto ensuring acceptable levels of affordable housing are delivered as part of new developments.”
Richard Carr agrees with Mark and believes this approach would get the market moving again, which would in turn help bring more affordable home to the market. It would make schemes viable for developers again and safeguard jobs in the industry.