News

House of Cards

2nd April 2012

As Chancellor, I am surprised that George Osborne does not know more about the House of Cards.

Michael Dobbs’ thriller of the same name captured the fragility of Westminster politics. The term is also a great analogy for the property market. Take away one card and the entire house collapses.

George Osborne took away the 5% Stamp Duty card, and slapped on 7% on properties above £2 million and within hours, countless property deals fell apart in London and other prime property areas. Not just at the top of the market but with a ripple effect all the way down to first-time buyers.

If you make it more difficult for people to reach the top rungs of the ladder, it is inevitable that those at the bottom of the ladder will find their rungs kicked away.  It seems difficult to believe that the Chancellor had not grasped that by penalising The Rich, as he referred to them in his Budget speech, he would also be hitting those who need help most.

When people talk about the prime central London market being awash with international buyers using offshore vehicles, they forget that this is a tiny micro-market. Outside SW1 , W1 and SW3, most buyers are people buying a home where they want to live. It may cost more than £2 million but these people have worked hard building companies and creating wealth. They may be affluent but will still baulk at paying an additional £50,000 in stamp duty.

Instead of playing an ace, the Chancellor has produced the joker.