The government must look again at the impact stamp duty is having on London's property market and consider rolling it back, London's biggest business group has said.
The London Chamber of Commerce and Industry (LCCI) has called on chancellor Philip Hammond to commit to a review of the tax, which his predecessor George Osborne raised for homes worth £937,500 in 2014, before later introducing a three per cent surcharge on second homes.
The LCCI believes the current system "disproportionately impacts London given the profile of property in the capital" and could be contributing to the current slowdown in the premium property market.
House prices will contract in London this year and next, before finally beginning to rise in 2020, a new forecast by Savills has suggested. Prices in the capital will fall 1.5 per cent this year and two per cent in 2018, then remain flat in 2019, before rising five per cent in 2020.
A third report argues stamp duty has stagnated London's housing market and pushed down prices, with sales and in some cases prices falling by as much as seven per cent as a result of the tax, according to estate agent Aston Chase.
The LCCI argues this is having a knock-on effect on business.
LCCI chief executive Colin Stanbridge said: “The reforms of late 2014 were introduced in a very different political and economic landscape. Since then we have had two General Elections and,most crucially, the decision to leave the EU.
"It is important to learn why there may be a reluctance for some buyers to enter into high value transactions.
The Treasury will be well aware that top end housing activity delivers more than just tax – there are numerous associated benefits to the wider economy with the services of lawyers, surveyors, designers and builders all experiencing significant business.
If the top end of the housing slows then a corresponding reduction in such business and commerce may result."