The housing market of the United Kingdom has witnessed an upsurge in the year 2016 mainly because of the increase in the stamp duty surcharges. The average price of houses in the UK has grown by 5.3 % during the first quarter of 2016 as per Nationwide. This upsurge in the prices was the highest in the Outer Metropolitan Region across London. Here the prices of houses have increased by 11.9%. The price rise is by 11.2% in London, 8% in Outer South East, 5.4% in East Anglia and 5.5% in the South West. In North West, the price hike is 0.2%, and that in Scotland and the North is 0.5% and -1.4% respectively.
Robert Gardner, Chief Economist from Nationwide, said that there had been a good pickup in the housing market of the UK in the recent months. House mortgage and housing transaction approvals have also risen strongly. This is all due to the changes in stamp duty on the second homes bought by property investors. In this scenario, buyers have come up with more purchases for avoiding additional tax liabilities. However, he further said that this fast-paced growth in the prices of UK houses might get moderate once the changes in stamp duty come into effect from the month of April.
However, it is to be noted that there are great dangers ahead for the UK property market pertaining to the increase in stamp duty. 3% increase in stamp duty applies to the Buy-to-Let purchases. This duty has been levied on top of the stamp duty rates that are already very high. This means that the landlords in the UK considering spending around £1,000,000 for normal-sized houses for converting them into five flats will now have to pay a stamp duty of 7.4% of the purchase price or £73,750. This will be in addition to the other varieties of transaction costs.
The anti-money laundering steps will further hit the property market of London. These steps are to be taken against international property owners. The steps are quite worrying for the property market of London as a huge part of London property owners would be under close scrutiny. They would be identified for the dirty money that they have been using in the London real estate market.
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