The government's reform of Stamp Duty rates has apparently fuelled "a surge of property deals" as rich buyers have somehow rushed the lengthy process to avoid paying more before the imposed deadline.
Estate agents based in expensive regions such as central London and the south east of England have claimed that their customers have "panic bought" luxury homes, as also claimed by The Telegraph.
Trevor Abrahmsohn of upmarket London estate agents Glentree said after the Autumn Statement: “I’ve had 15 calls in the last five minutes from concerned clients. One of my clients said if he doesn’t finish tonight then he is not going to buy.”
Under the new rates that came into effect at midnight, new owners of homes costing more than £938,000 would have to pay an additional duty of £30 on top of the £37,520 tax, however the amount gets much higher the more expensive the house gets.
In pictures: Chancellor George Osborne delivers his Autumn Statement
Homes costing £1 million would come with a tax of £43,750 (+£3,750) and those costing £1.5 million would carry a charge of £93,750 (+£18,750).
Those who can afford homes costing more than £2 million will need an extra £153,750 (+£53,750) and buyers of properties costing £3 million and up would have to shell out £273,750 (+£63,750) to the Treasury.
Deals part-way completed could also have been sped up through negotiations with property solicitors in order to save tens of thousands going towards the public purse.
The Coalition government's shake-up of Stamp Duty challenges Labour's pledge of a "mansion tax" which leader Ed Miliband announced would raise £2.5bn a year for the NHS under plans by shadow chancellor Ed Balls.
However, the Stamp Duty reform is reported to potentially cost the government £800 million in revenue although it will provide savings for 98 per cent of buyers in a bid to increase the amount of homeowners nationwide, Huffington Post UK reports.
This comes after the announcement that house prices are "softening" and this is believed to be caused by stricter lending rules. However it is also suspected that lower Stamp Duty rates for homes under £938,000 will drive them back up as buyers compete for the best value for money.
The biggest reduction in the tax is for homes between £251k and £275k for which the duty will reduce by £4,980 down to £2,550.
On the other hand, asking prices for homes worth more than £1 million could be reduced by sellers holding high equity who are desperate to move and are prepared to lower them to accommodate the increase in Stamp Duty to attract potential buyers.Reuse content