Fiscal Policy & Economic Backdrop
Autumn 2018

The Treasury netted £3.63 billion in SDLT across London in the financial year 2017/18, up 6.6% on 2016/17, despite a fall of 6% in sales volumes. Over a quarter (27%) of London sales were subject to the additional 3% Higher Rate for Additional Dwellings (HRAD) tax. However, with sales volumes remaining muted the Office for Budget Responsibility predict total receipts for 2018 will be 9% lower
than forecast.
Foreign buyers are set to incur an additional 3% levy on residential property purchases, over and above all other charges, under plans unveiled by the Government. The proposed charge would apply to both individual and corporate buyers if they are not registered to pay tax in the UK. It is estimated that 44% of all UK foreign owned real estate is located within Greater London.

The UK economy grew by 0.7% in the three months to August, continuing its rebound from the spring, according to figures released by the Office for National Statistics. Over the same period wages rose by 3.1%, their fastest level in nearly a decade and outpacing inflation (2.5%). While interest rates rose to 0.75% in August, economists are predicting no further rise until mid-2019 and lending rates to remain low, which is positive news for households. However, the Office for Budget Responsibility and EY ITEM Club both forecast GDP growth for 2018 of just 1.3%, its lowest level since the global financial crisis, warning it could fall further if transition terms for Brexit are not agreed.