Major UK tax does not deter the rich amid growing sales of luxury homes
In May, Britain sold 113 houses and apartments that were worth over 2 million pounds, while in the same month last year, 45 were sold.
The British government’s plan to increase a tax on the purchase of luxury housing, led estate agents rushing to close deals before the March deadline. They needn’t have worried.
Sales of homes valued at 2 million pounds, more than doubled in May compared to the same period last year, according to the latest data from the Land Registry. After a decline of 40 percent in April, sales recovered as foreign investors took advantage of the condition of Britain’s retreat from the economic and political crisis.
“The money leaves the Euro zone and is spent in a safe haven,” said Matthew Pointon, an economist and analyst at Capital Economics. “The safe haven flows to exceed the tax increase.”
The luxury homes have retained their value better than the cheaper residential properties in Britain due to the scarcity of prime properties online for sale, especially in London. That has led to record prices paid by households in the districts of Mayfair, Kensington and Knightsbridge.
The annual budget of Chancellor George Osborne, said the purchase of luxury homes will help to reduce the record deficit of Great Britain, for which it increased to 5-7 percent tax on transactions, known as the stamp duty tax on homes that are sold for more than 2 million pounds.
In May, Britain sold 113 houses and apartments over 2 million pounds, while in the same month last year, 45 were sold, according to the Land Registry. In London sales jumped from 40 to 97, led by investors from continental Europe and the Middle East.
The price of homes valued at £ 10 million or more rose 2.9 percent in the three months after the tax increase to the stamp duty by the conservative coalition led by Prime Minister David Cameron, according to estimates from Knight Frank LLP, headquartered in London. The housing prices in the most expensive areas of London have risen 49 percent from the low in March 2009 and are now 14 percent higher than during the prior boom in 2008, the property operating company said in a report of 3 September.
“In London, great activity has prevailed,” said Yolande Barnes, head of residential analysis of the operating firm Savills Plc, in a telephone interview. “This was a record quarter, but the market already had great strength before that.”
It is unlikely that small increases in taxes will deter the extremely rich to buy luxury homes in central London, according to Charles Leigh, a director of the operating company CB Richard Ellis Group Inc. “A small percentage is not a major threat,” Leigh said in an interview. For more great news and information, check out thecheapaccountant.co.uk.