Both the country house market and the London market saw a flurry of activity this week in the last few days before the Stamp Duty changes kicked in. Knight Frank says it completed on £333m of transactions in the three weeks leading up to the 5th April 2011, compared to £74m in the same period of 2010.
Liam Bailey, head of residential research at Knight Frank, said: ‘This 350% increase is reflective of the huge rush to transact prior to the introduction of the new 5% £1m+ stamp duty rate.’
Rupert Sweeting, head of country department at Knight Frank, added: ‘We saw an unprecedented rise in the number of exchanges and completions before the end of the 2010/11 tax year, which was solely down to buyers keen to avoid paying an extra 1% in stamp duty. This is entirely understandable, as on a £3m purchase a buyer saves £30,000.
‘We even had buyers completing before April 5th and, under a rental/licence agreement, the vendors were allowed to stay living in the property to give them time to find a new house. In one case, this period is a year!
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‘Going forward buyers have accepted that, in the grand scheme, it is an amount that they can and will swallow. It would have caused a lot more distress had the £1m stamp duty been bumped up by 3% or more. Given the stamp duty on a £3m home purchase is now £150,000, I imagine that stamp duty avoidance schemes will become more popular, as buyers try to avoid paying such a significant amount to the government.’
The midnight deadline before the introduction of the new 5% stamp duty on Wednesday caused a real frenzy in the prime London market also, according to Savills where some £200m worth of sales have completed in the last week to beat the deadline, of which £90m took place yesterday.
Moreover, there are signs that this is not a blip. New applicants registering for properties over £2.5m in the country this March are back up to 2006 levels and some 10% up on the same time last year, so the signs are looking good, add Savills. Viewings are up 30% on last year and up 78% on 2007.
Crispin Holborow, head of Savills country house team said: ‘This level of activity should bring confidence to the market and suggests that the spring market is getting going. We have a great pipeline of new launches coming to the market through April (including over 30 that will launch in Country Life on 20th) which will really put the market to the test.’