Oh how the wealthy doth fall!

Oh how the wealthy doth fall!

Actions upheld by the Government to support UK home buyers has resulted in a boost in property stock value. This has reportedly affected large housing suppliers including Barratt Developments and Taylor Wimpey.

However brokers and industry analysts are warning the initial benefits could come under strain from the long term impact of the tax reform. Stamp duty cuts for the majority could result in transactions being hindered in the vital high-end market.

According to Trevor Abrahmsohn from luxury property agency, Glentree, the level of stamp duty on properties valued at over £500,000 is up to 65% higher within the new system. Although the reductions will have a positive impact on the wider property market, the wealthy will take the hit.

The residential market above the £5 million threshold is now said to be experiencing its own recession, says Abrahmsohn, with prices now plummeting by up to 15%.

However, both Barratt and Taylor Wimpey have reported substantial gains in shares, which are said to be up by 20-30% in 2014. Strong figures in recent months were used to reassure investors in the stability of business during the overall cooling of the property market.

Though these are seemingly positive times, problems could be in the horizon where support from wealthy buyers in the capital could be stirred.

Investment in the UK property market from overseas, particularly in London, has been a great focus for housing development business and is an increasingly crucial element of the sector. Significant levels of sales are made within this region that bring in a vast percentage of the profit for housing suppliers. However higher stamp duty rates could lead to a reduction in the value of the most expensive properties, leading to damage to the already weakening market within the capital.

That said, the reduction in property prices will allow purchases of existing properties to become more accessible, meaning there is likely to be less demand for new developments.​

Georgia Owen

Georgia is the Content Executive and will be your primary contact when submitting your latest news. While studying for an LLB at the University of Liverpool, Georgia gained experience working within retail, as well as social media management. She later went on to work for a local newspaper, before starting at Today’s Conveyancer.

Leave a Reply

Your email address will not be published.