It's Not Just the Ultra Wealthy Who Will Be Tempted by Stamp Duty Loopholes

The latest gossip coming out of the London property market suggests that there’s an increasing distinction between the fat cats and the obese cats.

Take Osborne’s stamp duty hike. UHNWs are already investigating schemes to sidestep the 7% rate such as purchasing automatic renewal leases instead of freeholds, but London professionals also hooked by the £2m threshold are yet to react.

Ask the buying agents and they’ll tell you that it’s a rich man’s world. ‘The stamp-duty increase will be a very real chunk of money to conjure from nowhere for the middle market in prime Central London,’ a top insider told me this week, ‘and so the professional classes will be tempted to distort sales contracts or enter complex stamp-duty savings schemes that they don’t understand. In contrast, life will continue as normal for the ultra wealthy.’

By that, you can infer booming. Knightsbridge and Belgravia lead the march of desirable locations while there are great expectations for Mayfair over the next five years. Elsewhere, developments such as The Lancasters north of Hyde Park and the former Middlesex Hospital site in Fitzrovia show promise too.

These UHNW locations exemplify the polarisation of the rich in another field too. ‘When it comes to credit,’ says leading mortgage broker Wayne Coleman, ‘the ultra wealthy are increasingly in the most advantageous position to benefit from all-time low interest rates. Whereas most retail mortgage lenders are raising their rates, the margins over cost of funds in the private client sector have fallen.

‘Prior to the crisis,’ he continues, ‘they were typically 1%. They have since increased to an average 2-2.25% however well advised UHNWs can achieve margins as low as 1.25%.’

Assuming this continues, the great rift in UK property will no longer be between the capital and the cut-off, but rather the prime and the super-prime in central London.

Read more by Freddy Barker