Although both were brought in for different reasons, additional property stamp duty to dissuade buy to let investors from purchasing and allowing more properties to come to the market for first time buyers, and mansion tax to penalise the ‘perceived’ wealthy who own properties in excess of £1m (Labour did champion something that differs from what conservative brought into fruition, but a ‘mansion tax’ nonetheless) neither has had the intended effect. Instead, for the previous two years has increased tax revenue for HM Revenue and Customs, in the short term both taxes will have a detrimental effect on the market when compounded by numerous political changes which were not factored in at the time the government were addressing the issue of a “hot market” in 2014, but due to the increase in tax revenue the fact that the market is no longer “hot” will be ignored.

When reviewing data on property purchases for the periods from 2014 until 2016, you would not see anything too out of the ordinary, property transactions were similar in England (2014-2015: 1,050,630, 2015-2016: 1,054,750), this also meant an increase in stamp duty revenues. The reality of the stamp duty changes is that properties over the threshold, stall in value, or often reduce in price to cover the difference. Moreover, for that person who wants to upsize from the property worth £1m, to a property worth £2m+ (paying an extra £53,000, or passing this cost on to another party in the chain). At first glance this sounds like an acceptable compromise given the changes made to the rest of the way Stamp duty is calculated which was welcomed and largely overdue.

We now come on to the additional property stamp duty change, as of September, receipts from Stamp duty will be nearing £16bn far exceeding previous years; for this reason, it will not be removed any time soon. There is one fatal flaw in the increased figures, the additional stamp duty allows the HMRC to claim revenue of £16bn+ for this fiscal year to count towards their budget, however, it is estimated £10m per month is being refunded to buyers who are eligible for the additional 3% refund; this is only going to increase, providing for more accounting discrepancy.

The backdrop to this and the worrying issue, which I will not labour as it has been done to death including speculation and educated guesses, is the wider decline in property transactions in London and the South East. This started to naturally correct itself, as all functioning markets do, however, with the addition of both tax changes we saw a decline in property transactions in 2016-2017 to 986,410, this will be exacerbated by the first referendum (any major political event creates a slowdown for the months preceding) which was followed by a general election, triggering article 50, and now this limbo where we wait for trade negotiations to being. The UK leaving the EU is a monumental event, and thus the handling of it by all parties has left the property market in paralysis.

The reason the trade negotiations has such a detrimental short-term effect on the London and South-east market is due to the financial services, the service industry makes up 80% of the UK GDP, with a huge proportion of that being both Euro and London centric. This is not to argue in the demise of the property market, it has been a resilient beast, and should continue to provide a stable place for the foreign investor.

Without one of the biggest political shifts this century, then the tax changes would have adjusted the market like the changes made in the past (first time buyer stamp duty in 2012), moreover, without the tax changes since the Brexit referendum there would have been a slow down due to uncertainty. Because of all the recent changes, despite the resiliency of the market, the need for a definitive plan on the future of the EU is needed otherwise the trend will be downwards affecting the government coffers.