Arcadis calls on Osborne to suspend stamp duty

Arcadis has called on Chancellor George Osborne to offer temporary stamp duty relief to new build homes planned before the tax was hiked in December 2014, after the consultant’s latest report showed buyer demand for prime properties has plummeted.

In its latest Prime Residential Pipeline report Arcadis said the drop in demand from buyers meant developers who had committed to schemes before the tax rise were being forced to discount prices or resort to ‘stamp duty paid’ deals to ensure sales.

These deals have in turn hit developers’ margins by up to 4% on ‘prime’ homes and by up to 7% on ‘super prime’ homes.

Mark Cleverly, head of commercial development at Arcadis, warned: “In short, stamp duty is becoming a tax on development, not on wealthy buyers.”

A number of London schemes have introduced discounted sales prices in recent months, including some in Nine Elms, south London, while stamp duty paid deals are being offered at prime developments including Barratt’s Fulham Riverside and Hadley Mace’s Greenwich Square.

Arcadis’ report found that some developers have opted to delay construction starts or are re-working schemes to ensure viability, which is having a knock-on effect on construction of affordable homes – planned as part of the original developments - with some being suspended.

Cleverly added: “The Chancellor has to act on prime property tax. Despite initially encouraging investment in prime housing, the government since changed its mind and attempted to stem demand through ongoing tax increases and new fiscal regulations.

“This has prompted a drop in buyer interest at the very top of the market, creating a big problem for developers who had already committed to schemes and meaning affordable housing allocations are not delivered.”