Highlights
- Sales of properties worth more than £5m in England fell 14 per cent in the 18 months after the October 2024 Budget, according to Knight Frank.
- Estimated stamp duty revenue from those transactions declined by £541m, despite an increase in the surcharge on additional properties.
- The figures have prompted calls for a global investor visa, although the government has yet to confirm any such scheme.
Sales of properties worth more than £5m in England fell 14 per cent in the 18 months after Rachel Reeves’ October 2024 Budget, with estimated stamp duty revenue from those transactions dropping by £541m, according to analysis by property consultancy Knight Frank.
The figures have renewed calls for the government to make the UK more attractive to wealthy overseas investors as Chancellor John Healey prepares his next Budget.
Knight Frank compared transactions in the 18 months before and after October 30, 2024, when Reeves increased the stamp duty surcharge on additional properties from 3 per cent to 5 per cent and outlined changes to the UK’s non-domiciled tax regime.
After adjusting for house price movements, the number of sales above £5m fell from 2,569 to 2,208, based on data from HM Land Registry, LonRes and Knight Frank.
Estimated stamp duty revenue from those transactions declined by 16 per cent, from £3.395bn to £2.855bn.
The analysis assumes that half of buyers paid both the additional-property surcharge and the 2 per cent surcharge applicable to overseas buyers. The higher additional-property rate generated an estimated £201m in extra revenue during the second period, but this was insufficient to offset the overall decline.
Knight Frank estimates the net shortfall at £541m.
High-value property market shows signs of stabilisation
The slowdown comes amid a challenging environment for the UK’s prime residential markets, with tax uncertainty and higher mortgage costs adding to pressures associated with the Middle East conflict, which began in February.
London’s prime property market has nevertheless shown some signs of stabilisation. Prime central London recorded quarterly price growth of 0.3 per cent in September, its first positive quarterly reading in four years, according to Knight Frank.
Transaction volumes also improved. Sales in prime central and prime outer London fell by 2.5 per cent in the year to September, compared with an annual decline of 14 per cent in March.
The country market, covering urban and rural properties worth more than £750,000 outside London, remained subdued. Average prices fell 4.2 per cent in the year to September, marginally better than the 5 per cent annual decline recorded in June.
The number of exchanges in the country market was 2 per cent lower in the third quarter than in the same period last year.
Calls grow for a global investor visa
Foreign Investors for Britain (FIFB), a lobby group campaigning for a new investor visa, said the stamp duty figures highlighted the potential economic cost of making the UK less attractive to international investors.
“The stamp duty loss is one of many indicators that show what happens when Britain is not competitive on a global stage in attracting overseas investors,” said Leslie Macleod-Miller, chief executive of FIFB.
Prime Minister Andy Burnham has ruled out a stamp duty cut in the forthcoming Budget. However, speculation has grown that Healey could consider a new visa scheme for wealthy international investors following several high-profile departures from the UK, including hedge fund manager Chris Rokos.
The debate has also focused on the replacement for the non-dom regime. Reeves introduced a system under which qualifying new arrivals can benefit from an exemption on foreign income and gains for their first four years of UK residence.
James Quarmby, head of private wealth at law firm Stephenson Harwood, has estimated that the changes could cost the Exchequer up to £4bn annually in lost tax revenue. That contrasts with the government’s original estimate that the reforms would raise close to £3bn.
One proposal reportedly under consideration is FIFB’s global investor visa plan, which would require a minimum investment of £2.5m and an annual flat-rate tax payment of £200,000 for up to 15 years.
The proposed scheme would also provide a route to indefinite leave to remain. FIFB estimates it could attract more than £225bn in inward investment over a decade, although that is the lobby group’s projection rather than a confirmed economic outcome.
