£500m of PLC resi investment lost in 6 months

£500m of PLC resi investment lost in 6 months


The Government Stamp Duty hike has put 3,000 jobs at risk and depleted the national tax coffers, according to a report by specialist fund and asset manager, London Central Portfolio ltd (LCP). 

The report also found that residential purchases over £2 million fell by one quarter in Prime London Central (PLC) since the Budget announcements were made just six months ago.

The Government increased Stamp Duty to 15 per cent for companies buying residential property over £2 million and plans to impose an annual charge of up to £140,000 per annum on properties held in these companies also emerged.

According to LCP, its statistics confirm the “…dramatic effect of these measures, not just on rich investors or the London property market but on the domestic economy as a whole.”

LCP has analysed data from Lonres, providers of up-to-date information on Central London property sales, which reveals a 23 per cent reduction in the number of property sales above £2m since the budget - equivalent to a loss of £0.5 billion worth of investment into Central London to date.

These findings have been corroborated by Knight Frank and Hamptons who record 29 per cent and 33 per cent reductions.

LCP stated: “…almost 50 per cent of private residential properties in central London are bought and held as rental investments. In other words, these are legitimate businesses which stimulate economic growth for the UK and are certainly not ‘second homes’ left empty. If the chancellor had taken a closer look he would have seen that clobbering this sector will have a devastating effect on the economy.”

A report has been submitted to the Treasury by LCP which shows that residential investment in central London contributes £1.5 billion to the UK’s economy each year, whilst topping up the national tax coffers with a further £0.4 billion through stamp duty and VAT.

The LCP believe that: “The reduction in property sales seen so far will result in a loss to the economy of £120 million over the year. This loss is equivalent to around 3,000 jobs. Over a five year period, this amounts to a loss of £715 million, or 18,000 jobs for an economy already in the doldrums.”

It continued: “This disaster continues with the potential loss in the tax take to the exchequer over the same period of £1 billion. This compares with the government’s estimated intake from their new property taxes of just £270 million. In fact, their estimate of the capital gains tax take is zero. To quote a source at the Treasury, “the CGT impact was not mentioned in the published costing note as it was judged to the negligible”. Which begs the question, why make international investment in the UK less attractive with no prospect for economic gain but rather, more economic carnage?”

Unintended consequences of proposed property taxes on residential property over £2 million, LCP:

(£ million)

2012 - 13

2013 - 14

2014 - 15

2015 - 16



HM Treasury estimates of tax inflow







Annual Charge & SDLT(NNPS)







Capital Gains Tax (Offshore NNPS)







Total gain for Treasury














LCP estimate of tax and job outflow *







Loss of tax







Loss of earnings (jobs)







Net loss for Treasury and Economy







*Assumes 23% fall in investment activity based on actual transactional data since The 2012 Budget

Naomi Heaton, CEO of LCP added: “The new taxes give a clear message that Britain is no longer 'open for business'. Investors and developers who would have previously bought for over £2 million are now considering other options and voting with their feet. It is reported that luxury property developers, Candy and Candy, are deserting London for New York. The government have failed to recognise that the central London private rented sector is a bona fide global business and if the finances don’t work, people will go elsewhere. And if they go elsewhere, jobs will suffer. Whilst turning foreigners and investors away may be a vote winner, it is quite morally corrupt to canvas votes at the expense of jobs and a reduced exchequer tax take.”

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