The UK tax collection agency, Her Majesty’s Revenue and Customs (HMRC), reported details of its 2014/15 stamp duty land tax (SDLT) revenue on Wednesday, revealing that residential property transactions contributed a record £7.5 billion.
The figure is 16 percent higher year-on-year. Notably, over £3 billion was generated by sales in London, while just 10 south-east boroughs contributed over £2 billion. Westminster and Kensington and Chelsea lead the surge, generating over £450 million each.
When combined, London and the south-east generated 62 percent of the SDLT last year.
“While the increased take from stamp duty reflects the growth in house prices and a pick-up in transactions, another factor has been the increases to stamp duty charges, especially towards the top end of the market,” said Grainne Gilmore, head of UK residential research at Knight Frank.
“The relative burden of stamp duty is also highlighted by the data. Londoners paid 43 times more stamp duty than buyers in the North East over the last year, a reflection of the widening of the North/South divide in terms of activity and prices, but also the higher stamp duty charges for more expensive homes.”
Last month, HMRC said that seasonally-adjusted home sales reached 106,480 in August, the highest in 18 months and the third month in a row to see more than 100,000 sales.
Meanwhile, the average house price across the UK climbed to a record £294,834 in September, research published by online real estate agent Rightmove revealed last month. London led the rally with home prices rising 2.2 percent from August to £620,003.
If London homes continue appreciating as they have, the average price could easily reach £1 million by the end of 2020, Rightmove noted.
“While we are not suggesting that this level of growth can or will be maintained, this extrapolation illustrates the desperate need for building and more affordable housing in and around the capital,” Shipside noted.
Meanwhile, buy-to-let investments have surged on the back of new pension freedoms, exacerbating the supply-demand imbalance, as first-time buyers found themselves squeezed out of the housing market.