The Times published a piece this morning reflecting on the fall in appetite for super-prime properties, those offered for sale in excess of £10m. The reason given is the recent change in stamp duty on such property meaning an increase in duty on a £10m property from £700,000 to £1,100,000. Popycock! No one with the means to fund the purchase of a £10m+ property will be in any way put off by an extra £400,000 in tax. Individuals with such wealth spend that on holidays and cars. The harsh reality is this is being caused by a larger malaise driven by the recent market wobbles in China.
Chinese and Russian multi-millionaires are simply seeing their wealth deminish in equity markets which is deferring their purchases or at lease redirecting them. The staggering growth in the most valuable classic cars completely undermines this argument. If the level of tax charged on property were putting the super wealthy off property purchase then the same thing would be true of other trophy investments such as classic cars.
The rise in prices of the most valuable classic cars is completely uneffected by the auction sales tax. This “buyers premium” as it’s known is, on average, around 10%, isn’t stopping people paying £10m for cars!
So to suggest a few hundred grand is stopping a Russian oligarch buying a multi-million pound crash pad for when he has to flee Moscow, when he finally falls foul of the authorities is simply wrong.