According to research by the property data service LonRes, since last year’s introduction of stamp duty tax, the number of lettings costing more than £3,000, £4,000 and even £5,000 a week has dramatically increased. This has happened because foreign billionaires, who would have once shelled out £10m or more on a London home, are now choosing to rent.
Stamp duty tax amounts to 15% on properties bought via offshore trusts, and a 3% on second homes, which means that the cost this measure has introduced at the very top end is significant, as these buyers would be buying luxury homes as additional property. At the end of the day trading costs come close to 20%, which, on a £5m property, easily adds up to £1m, explaining why the interest in luxury rentals has seen such a rise.
Although this new tax has been beneficial to the government, raising a total of £7.3bn, £3.4bn from London alone, it has, without a doubt, badly affected the market.
The end result is that owners who had initially planned to list their luxury property for sale, are now choosing to let them out instead.