The goverment’s decision to tax luxury properties more heavily is paying off as home values surge and more buildings change hands.
Stamp duty, a real estate transaction tax, raised 879 million pounds ($1.5 billion) in May, 36 percent more than a year earlier, according to data compiled by the Office for National Statistics.
Chancellor of the Exchequer George Osborne raised stamp duty to 7 percent from 5 percent for properties priced at more than 2 million pounds in 2012 and last year introduced a 15 percent rate for empty U.K. homes owned by companies. London house prices rose at the fastest pace since July 2007 in the 12 months through April and values gained 9.9 percent across the U.K.
The tax on company-owned homes worth more than 2 million pounds that are left vacant raised five times the amount forecast in the fiscal year through March as the government found significantly more properties liable for the tax than expected.
“The sharp increases in prices in London and the southeast over the last 12 months are particularly relevant, as it is these areas where the biggest burden of stamp duty falls,” said Grainne Gilmore, head of U.K. residential-property research at Knight Frank LLP. “Only 1 percent of Londoners escape paying stamp duty when they buy a home.”
More than 62,000 homes were sold in England and Wales in February, almost 40 percent more than a year earlier, according to the Land Registry.