The Penalty For Living in London–it’s called Stamp Duty

First and second quarter figures for Stamp Duty Land Tax (SDLT) receipts were released last week, showing that – overall – transactions that triggered SDLT on residential properties increased from Q1 to Q2 this year, having picked up in every category with the exception of transactions of £2 million and over.

With that in mind, independent lettings and sales agent Benham and Reeves looked into regional Stamp Duty data from 2008-2018 and the result is a revealing and rather stark contrast between that paid by Londoners and everywhere else.

For example, while the total number of transactions on residential property in London (125,000) accounted for 11.3% of the overall total (1,106,000), SDLT receipts in the capital at £3.6 billion made up a disproportionate 39.2% of all SDLT receipts for residential property (£9.2 billion). And although the estimated residential property value of properties sold in the capital (£73.1 billion) represented 23.2% of the residential total for all regions (£315 billion), the receipts were again disproportionate relative to other regions’ sold value. A mismatch. An imbalance.

In the South East, the total number of transactions (178,000) accounted for 16.1% of the overall total and Stamp Duty receipts (£1.9 billion) made up 21.5% of all such receipts on residential properties. The estimated residential property value (£64.1 billion) was 20.3% of the residential total for all regions; the figures were much more balanced across the board than in London.

There was also a skew when comparing statistics for London from 2018 to those from 2008; the number of transactions on residential properties dropped from 186,000 to 125,000 – a change of -32.8% – but receipts increased from £1.9 billion to £3.6 billion, which is a rise of 86.4%.

Finance Director of Benham and Reeves, Vidhur Mehra, commented:

“Stamp Duty is a tax penalty disproportionately aimed at London. Despite representing approximately just 1.3% of England’s landmass, the capital is responsible for one third of all property taxes by way of Stamp Duty!

And this is not just because London is a more expensive part of the country, but also because at higher values the levy is now designed to penalise that sector harder in relative terms.

It’s also a tax on aspiration, choking the upwardly mobile who happen to live where many of the UK’s jobs and transport infrastructure are provided.”

Stamp Duty Land Tax data for Residential Property

Notes:
Stamp Duty data collected from Gov.co.uk.