Stamp duty is shrinking the size of Londoners’ gardens

Garden space in London is getting smaller as stamp duty costs force mean people are adding extensions instead of moving, according to the Ordnance Survey.

Reforms brought in back in 2014 mean more tax needs to be paid on homes worth more than £937,000 – traditionally found more often in the capital than many other areas of the country.

As a result, it has made financial sense for many to stay and build further around their existing property, than move and pay higher rates of stamp duty, which can cost tens of thousands of pounds in some cases. 

This trend has been backed up by aerial photographs, collected by Britain’s national mapping agency, which shows how garden space grew by five per cent generally between 2011 and 2021 but shrunk by four per cent in London. 

Lockdown and the need to work from home saw some of that decline happen over the last 12 months, with property owners building home offices and sheds in their gardens, contributing to a further fall of 0.4 per cent.

Outside the capital, however, suburban housing estates are often built with more generous garden areas, which space constraints simply don’t allow in London.

A map graphic shows how much gardens have been built on in Harrow, north-west London over the last 10 years, which experts say is due to huge stamp duty costs on expensive properties, typically found in the capital

A map graphic shows how much gardens have been built on in Harrow, north-west London over the last 10 years, which experts say is due to huge stamp duty costs on expensive properties, typically found in the capital

A map graphic shows how much gardens have been built on in Harrow, north-west London over the last 10 years, which experts say is due to huge stamp duty costs on expensive properties, typically found in the capital 

A graph shows how the percentage of garden space in London has declined over recent years

A graph shows how the percentage of garden space in London has declined over recent years

A graph shows how the percentage of garden space in London has declined over recent years

Many homeowners are choosing to extend their properties, pictured, rather than move due to high tax costs

Many homeowners are choosing to extend their properties, pictured, rather than move due to high tax costs

Many homeowners are choosing to extend their properties, pictured, rather than move due to high tax costs

How the costs of moving and extending a home compare 

The government has extended the stamp duty holiday during the Covid crisis, meaning buyers currently pay no tax on purchases up to £500,000.

But it will then taper off, applying to the first £250,000 until the end of September, before returning to £125,000 at the beginning of October.  

If a family moved into a £1.2m three-bed home, they would have to shell out some £63,750 in tax under usual rules, though this is currently reduced to £48,750.

By contrast, if they chose to extend their current property into the garden in the capital, they would have to spend around £1,500 per square metre.

It means a 15 square metre extension, even including VAT and fees of around £10,000, would likely cost half what they would pay in tax. 

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Ordnance Survey data shows how there were 382.4145 sq km of garden space in London in 2011 – representing 24 per cent of the capital’s space.

However, over ten years this has now dropped to 367.4649 sq km, or 23 per cent.  

The government has extended the stamp duty holiday during the Covid crisis, meaning buyers currently pay no tax on purchases up to £500,000.

But it will then taper off, applying to the first £250,000 until the end of September, before returning to £125,000 at the beginning of October.  

If a family moved into a £1.2m three-bed home, they would have to shell out some £63,750 in tax under usual rules. 

By contrast, if they chose to extend their current property into the garden in the capital, they would have to spend around £1,500 per square metre.

It means a 15 square metre extension, even including VAT and fees of around £10,000, would likely cost half what they would pay in tax.  

Danny Hyam, of Ordnance Survey’s technical services team, told the Telegraph: ‘In most parts of the country, urban areas are expanding outwards at the edges. In London, there isn’t the space for new gardens – it’s all big blocks of flats because that’s what we’ve got the space for.

‘London is an expensive place to move and so people are basically extending their properties rather than buying. At the backs of gardens with alleyways behind them, we’re seeing big garages and big sheds being built.’

A house extension in Earlsfield, one of the many examples that have been built in recent years

A house extension in Earlsfield, one of the many examples that have been built in recent years

A house extension in Earlsfield, one of the many examples that have been built in recent years

While the stamp duty changes in 2014 hit those with expensive properties hard, it meant millions buying cheaper homes were able to benefit from paying less tax.

Insurer Hiscox launched renovation and extension cover after seeing a rise in demand in the years that followed and says there is a clear trend in people deciding to stay put until the housing market changes.

However, there are also fears the decline in green space will lead to more problems with flooding and fewer habitats for Britain’s native wildlife. 

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