Safe as houses

This is despite the fact that last year saw sluggish progress on the wider housing market in general.

But the million pound-plus property market has been affected by government initiatives to claw back more tax from the wealthy and clampdown on aggressivetax avoidance.

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In 2011, the 5 per cent stamp duty was introduced for £1m-plus properties, and from March last year a rise from 5 per cent to 7 per cent on £2m properties. In addition there was a 15 per cent charge on properties owned by ‘non-natural persons’ on properties valued at more than £2m, primarily corporate structures.

Mr Challis said: “Each of these has changed the game in terms of the cost of transaction and the reality is that the market has largely absorbed these changes against the movement of house prices. People have accepted these as part and parcel of house price.”

There are now other charges in the offing. There are still questions on the stamp duty rules, and the expectation is that, given the perception that it was quite heavy-handed in its approach, the rules may be refined.

In addition there is the proposal for an annual charge on properties worth £2m upwards owned by ‘non-natural persons’, which is due to take effect from this April.

The proposed charges range from £15,000 for properties worth £2m to £5m, £35,000 for properties worth £5m to £10m, £70,000 for properties worth £10m to £20m and £140,000 for properties worth more than £20m. It is fairly certain that this proposal will go ahead, with the caveat that certain professional investors would be exempt.

Another potential change is the imposition of a capital gains tax charge on the sale by offshore companies and trusts of UK residential property worth more than £2m. Vince Cable, the business secretary, has also suggested the imposition of a ‘mansion tax’.

The idea behind these measures is to prevent people from buying residential properties through a corporate vehicle, installing an elderly relative as an occupant and avoiding tax. But the problem is that the measures and the uncertainty surrounding them have prompted a lot of caution in the market.

Mr Challis continued: “Because the government said: ‘We’re considering this but we will figure it out by Budget 2013’, prospective purchasers said: ‘It could be damaging but I will wait.’ They created uncertainty and it allowed a big chunk of the market to say: ‘Why don’t I wait until we’ve got more clarity.’ ”

Nevertheless, property is still seen as a safe haven. David Hollingworth, head of communications for London & Country Mortgages, said: “It’s where investors want their cash because they feel property is something of a safe bet. It will hold its value or continue to increase. There’s going to be winners and losers and there’s no reason to say why it won’t be London and the southeast as the main winners.”