Currencies

China capital curbs reflect buyer’s remorse over market reforms

Last year the reformist head of China’s central bank convinced his Communist party bosses to give market forces a bigger say in setting the renminbi’s daily “reference rate” against the US dollar. In return, Zhou Xiaochuan assured his more conservative party colleagues that the redback would finally secure coveted recognition as an official reserve currency […]

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Capital Markets

Mnuchin expected to be Trump’s Treasury secretary

Donald Trump has chosen Steven Mnuchin as his Treasury secretary, US media outlets reported on Tuesday, positioning the former Goldman Sachs banker to be the latest Wall Street veteran to receive a top administration post. Mr Mnuchin chairs both Dune Capital Management and Dune Entertainment Partners and has been a longtime business associate of Mr […]

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Banks

Financial system more vulnerable after Trump victory, says BoE

The US election outcome has “reinforced existing vulnerabilities” in the financial system, the Bank of England has warned, adding that the outlook for financial stability in the UK remains challenging. The BoE said on Wednesday that vulnerabilities that were already considered “elevated” have worsened since its last report on financial stability in July, in the […]

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Currencies

China stock market unfazed by falling renminbi

China’s renminbi slump has companies and individuals alike scrambling to move capital overseas, but it has not damped the enthusiasm of China’s equity investors. The Shanghai Composite, which tracks stocks on the mainland’s biggest exchange, has been gradually rising since May. That is the opposite of what happened in August 2015 after China’s surprise renminbi […]

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Financial

Hard-hit online lender CAN Capital makes executive changes

The biggest online lender to small businesses in the US has pulled down the shutters and put its top managers on a leave of absence, in the latest blow to an industry grappling with mounting fears over credit quality. Atlanta-based CAN Capital said on Tuesday that it had replaced a trio of senior executives, after […]

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Categorized | Property

Stamp duty receipts top pre-crisis high


Posted on September 30, 2015

The amount of stamp duty raised from British home sales has hit its highest level since the financial crisis — but is set to fall next year.

The government raised £7.5bn from the tax in 2014/15, according to figures released on Wednesday, topping the previous record of £6.7bn in 2007/08.

    This is widely expected to be the high point for the tax take. A government reform last December has exacerbated the slowdown at the top end of the London housing market, which generates more than one pound in every five raised by stamp duty.

    The reform, which replaced the previous slab structure with a sliding scale, means that purchasers of properties below £1m pay less tax than previously — but those buying more expensive homes now pay considerably more.

    Chancellor George Osborne in last year’s Autumn Statement said the move would tackle “a badly designed tax on aspiration”.

    In response, the Office for Budget Responsibility reduced the amount it expected the government to make from the tax by £1.7bn in 2015/16 and £2bn by 2016/17 — 17 per cent of the forecast total receipts in that year.

    Britain’s property market boom pushed sales of the most expensive homes to a record level last year. Some 19,000 properties worth more than £1m were sold in 2014 — up from 15,000 the previous year and for the first time topping the 16,000 level reached in 2007.

    But house prices in London’s most expensive areas have begun to fall for the first time since the financial crisis, as the tax rise curbs demand and triggers fears that the capital’s luxury market has peaked.

    Prices in central London’s most expensive areas such as Westminster and Kensington & Chelsea fell by 4.6 per cent in the year to September, according to figures from estate agent Savills.

    Across London’s pricier districts — including outlying areas such as Richmond and Hampstead — there was a sharp difference between the performance of cheaper properties and more expensive ones. Homes worth under £1m actually increased in value by 3 per cent in the past year, while those above £2m fell by 2.6 per cent.

    Lucian Cook, head of residential research at Savills, said the tax rise was likely to continue to constrain the top end of the market.

    “Many buyers are expecting a discount on last year’s prices at least equivalent to the additional tax,” he said. “By contrast, stamp duty changes have benefited properties in lower tiers of the prime market, which have performed more strongly.

    He added that it was questionable whether the OBR’s reduced forecasts for stamp duty receipts would be met.

    “Receipts have become increasing reliant on the top end of the housing market, where activity has been most subdued post stamp duty reform,” he said. “The cut in stamp duty for the majority of the housing market has failed to stimulate any significant additional market activity.”