If you think increased taxation on high end properties doesn’t affect you, then think again. We should all be grateful that the Budget didn’t further raid one of the nation’s biggest piggy banks, because when the top end of the property market suffers, it has a trickle down effect; pretending otherwise is a dangerous exercise in head-burying.
Figures over the last few years have confirmed that those who have property here spend a lot in their local area and have a major impact on businesses beyond just those associated with property. Recent figures from the Office for Budget Responsibility show a projected reduction of £600m in stamp duty land tax (SDLT) take this year, £1.7bn next year and £2bn less in 2016/17. If you assume that the top one per cent of taxpayers contribute over 25 per cent of the total amount, it’s not rocket science to extrapolate that these reductions will be coming from the lack of transactions at the top end of the market.
No one is saying that the property industry can’t contribute more, but I lament that divisive “class” rhetoric coming from the left – and sometimes even the right – has blinded politicians to more sensible ways of raising revenue. This all came from the misguided notion that London is being bought up by “foreigners” who leave their properties empty. This is demonstrably not the case; most rent them out or use them regularly. The small number of “billionaires in £140m apartments” have been blown out of all proportion by Ed Balls, leading to unnecessary paranoia. There simply aren’t enough super rich buyers out there to turn Chelsea into an empty fortress.
Overseas buyers live here and they are spending their money here; you only have to walk down the King’s Road to hear the kaleidoscope of accents. My own feeling is that all these extra taxes have pushed Prime Central London beyond the tipping point and are starting to make these huge contributors to our economy feel unwelcome. Once the election is over, let’s hope there’s a return to a more balanced debate.
City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.