Jonathan Samuels, chief executive of Dragonfly Property Finance, said closing stamp duty loopholes was fair enough but said the 15% rate on homes over £2m bought through a company could cause “extensive collateral damage”.
He said: "Many genuine investors and developers invest in the UK property market via corporate entities.
“Taxing them at 15% is going to send them running which will hit the UK property market hard.”
The Chancellor yesterday announced clampdowns that included charging 15% stamp duty on UK residential property worth more than £2m when it’s bought by a company; the application of capital gains tax on residential properties bought by offshore envelopes and a 7% rate of stamp duty on property worth more than £2m from midnight tonight.
Many bridging deals are arranged through offshore trusts and companies to minimise tax paid by investors and there is a risk deals will fall through as borrowers will need to find more cash to pay the increased rate of tax.
Lucy Hodge, director of Vantage Finance, said many investors using such schemes would have been mindful that pending transactions may be affected to some extent.
She added: “For many wealthy individuals the use of one of these schemes would not be the be all and end all but rather a means to make a deal more profitable so hopefully the fall out will not be too great, although no doubt there will be some disgruntled investors today.”
Steven McColl, partner at Soho Corporate, agreed and said: “Prime property deals in central London are rarely about short term gain and are about long term prime real estate investment strategy.
“There is limited supply of prime stock and it is thought that billions of pounds sit on the sidelines waiting to buy prime target UK real estate asset.
“So whilst today's developments will have some impact, the overseas trust and special purpose vehicle purchasers are about long term rather than short term gain. In short, the prime £2m+ market is not about to die.”
Alan Cleary, managing director of Precise Mortgages, said the 7% rate of Stamp Duty on prime property would only hit the top end of the bridging sector.
He said: “Our average bridging loan is around £400k so it won't affect the typical bridging market. Multi-million pound deals are few and far between and whilst they make good headlines most bridging lenders and brokers will feel little effect if these taxes come in.”
