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The disproportionate level of SDLT (Stamp Duty Land Tax) paid by London property buyers and investors when compared to the rest of the UK property market has been highlighted new research.
The research by independent lettings and sales agent, Benham and Reeves, found that while the 125,000 property transactions in London last year represented 11.3 per cent of the 1,106,000 national total, in the same year London property buyers paid £3.6 billion in SDLT, a huge 39.2 per cent of the total £9 billion paid overall.
This SDLT bill for London is a financial penalty that has grown over time despite a reduction in transactions as a result of market uncertainty. The latest data shows that transactions in London have dipped by -33 per cent in the last decade from 186,000 in 2008 to 125,000 in 2018.
However, even with prices dropping in recent months the amount paid in SDLT by London property buyers has jumped 86.4 per cent in the last decade from £1.9 billion to £3.6 billion.
To put this into perspective, the next largest SDLT bill paid last year was in the South East at over £1.9 billion. While this still accounted for 21.5 per cent of the total bill nationwide, it is almost half that paid by London despite the South East accounting for the highest level of transactions at 16.1 per cent.
The North West accounted for the second largest percentage of transactions last year (12.3 per cent) but paid just the fifth largest amount into the SDLT pot at 4.9 per cent.
Finance Director of Benham and Reeves, Vidhur Mehra, commented: ‘Stamp duty is a tax penalty disproportionately aimed at London. Despite representing approximately just 1.3 per cent of England’s landmass, the capital is responsible for one-third of all property taxes by way of stamp duty.
‘This is not just because London is home to the highest property prices in the nation, but also because at higher values the levy is now designed to penalise that sector harder in relative terms.
‘Stamp duty is not only an outdated, archaic practice but a tax on aspiration, choking the upwardly mobile who happen to live where many of the best jobs and transport infrastructure are provided.’