Hundreds of prospective housebuyers in Islington will be hit hard by a tax hike on high-end properties.
In yesterday’s budget, Chancellor Alistair Darling revealed plans to raise stamp duty on homes sold for more than £1m from four to five per cent. Housebuyers in Islington will now have to pay at least £50,000 in tax when buying properties costing more than £1m.
Bridget Fox, a local Liberal Democrat parliamentary candidate, said the plans showed that “Gordon Brown and AlistairDarling don’t understand London”.
Islington will be one of the areas most affected by the tax grab. House prices have bucked trends by continuing to increase and the average price for four-bedroom houses in N1 is now more than £1m. Canonbury and Barnsbury have some of the most expensive streets in the country.
Property website RightMove.co.uk currently has 84 houses listed for sale in the area over the £1m threshold. The most expensive is a six-bedroom house on Lonsdale Square, on the market for £3.9m.
Estate agents and local politicians have labelled the rise as a “stealth wealth tax” and a “double whammy” for buyers.
Anne Currell, owner of Islington-based Currell Estate Agents, said the rise would be another hit for people in the borough who are already the focus of high taxes.
“It’s quite punitive, particularly because in the more expensive areas you don’t get a lot for your money,” she said. “It’s now £50,000 in tax on top of buying a £1m house, which is a lot of money.
“It’s hitting the same people that the 50 per cent tax will hit, so it’s a double whammy for people earning a decent wage and looking to buy houses of over a million in the area.
“It’s another stealth wealth tax. It is a tax but it looks different. Calling it stamp duty makes it sound like something else but it’s still taxation.”
Fox, a parliamentary candidate for Islington South and Finsbury, agreed voters might be alienated.
Ms Fox said: “There are a lot of people in Islington going to be hit by this who won’t be very rich people. The very rich tend to escape stamp duty.
“You might not be a millionaire living in Islington, and you might not have £1m. The problem with stamp duty is that it can affect first time buyers. It seems to be unfair.”
Nicholas Leeming, commercial director of property website Zoopla.co.uk, said: “Taxing the rich makes a good headline, but it won’t raise money for the government’s fiscal black hole. It is a cynical move by the government to tax home buyers who tend not to be their core voters.”
However, Paul Convery, Labour councillor for Caledonian, defended the new tax. “People might think there are a lot of homes over £1m in Islington. There are some and they are very visible, but they are a tiny fraction of homes in the borough. If you can afford to pay £1m for a house you can afford five per cent stamp duty,” he said.
The rise will come into effect next April, which could see a “local blip” for property sales as the changes come in, according to estate agents.
Anne Currell said the change would affect buying habits: “What tends to happen when there are changes is that you get a little rush on transactions. April will be a push to rush through sales. There will be people who stand back and people who try to put property on the market for just under £1m.”
Speaking yesterday, Mr Darling said the rise will pay for the scrapping of stamp duty on homes below £250,000 for this year and next.
He said: “The housing market has stabilised and has begun a slow recovery. But many first-time buyers, particularly those without large deposits, will still find it hard to get a mortgage.
“I want to help them, but do so in a way that is properly funded.”