Stamp duty revenue rises in London after Osborne's reforms

Stamp duty collected for house sales in London rose by 11% in 2015-16 to £3.4bn following the introduction of new rates by the previous Chancellor of Exchequer George Osborne in 2014.

According to data from HM Revenue and Customs (HMRC) stamp duty receipts increased by £340m in the capital.

At the end of 2014, George Osborne cut the rate of stamp duty for lower-value house sales and raised it on those worth more than £1.5m in a bid to win over “aspirational” homeowning voters.

Two years on almost a third of receipts at £2.2bn came from just 10 local authority areas in London and the south-east with Kensington & Chelsea and Westminster. Each area accounted for 7% of receipts amounting to £514m and £513m respectively with buyers in Kensington paying an average of £135,000 each.

The greatest rise was in properties sold for between £1.5m and £2m where revenue increased by 26% although the number of transactions was down by 7%.

HMRC said receipts for sales of properties valued at £250,000 or less had fallen by 41% but increased for properties over £500,000.

Once figures were compared without Scotland, who devolved stamp duty in April 2015, the total tax take on residential sales was up 1% at £7.3bn.

Despite the number of transactions increasing across regions, stamp duty receipts had fallen by up to 21% according to the HMRC. Places outside London faced a fall in the amount of money collected after the new rates were introduced.

Of the total, £7.2bn was collected on 1.1m residential transactions in England with £3.4bn from London sales and £1.6bn from the rest of the south east. In contrast sales in the north east of England brought in £55m and in Northern Ireland just £20m.

Head of UK residential at property firm Savills Lucian Cook said the figures had been boosted by the rush of transactions ahead of the stamp duty change in April but expectations about the amount of duty paid on more expensive homes would fall had been proved wrong.

“There was a lot of speculation that the stamp duty take for homes over £1m would have fallen because of the changes introduced in the 2014 autumn statement. These figures will make it difficult to argue that the market has become overtaxed and that the government should cut stamp duty at the higher level,” said Cook.

He added that there was evidence of a fall in high value transactions since the 3% stamp duty rise on second homes and the EU referendum.

Jeremy Lead, former residential chairman of the Royal institution of Chartered Surveyors and owner of an estate agency in north London, said: “These figures underline the importance of London to the growth of the economy and taxation revenue. The government should be careful about trying to reduce property prices and activity in the capital as it is the engine of the national economy.”