MortgagesFeb 1 2019

Stagnating house prices cause stamp duty receipts to fall

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
Stagnating house prices cause stamp duty receipts to fall

Dwindling numbers of house purchases have taken a toll on HMRC's tax take from stamp dut.

Data from HMRC, analysed by residential property adviser LCP, showed transactions in England, Wales and Northern Ireland fell 2.6 per cent in 2018.

This compared with figures from HM Land Registry that reported a 4 per cent fall.

The fall in transactions translated to a fall in revenue for HMRC of almost £1bn, to £8,669bn in the year.

Naomi Heaton, CEO of LCP, said: "The febrile political climate around the UK’s departure from the EU and stagnating prices, have brought ever growing uncertainty to the residential market, following several years of increased taxation.

"Receipts have followed suit with transactions, which have fallen 8.5 per cent overall.

"The receipts from the 3 per cent additional duty (HRAD) have suffered the largest drop, falling 14.2 per cent. This has been the result of dwindling numbers of second home and rental purchases."

Meanwhile first time buyers have saved more than £500m since a purchase relief was introduced in November 2017.

HMRC's stamp duty land tax statistics showed 217,800 buyers claimed first time buyers’ relief (FTBR), amounting to £517m.

In the final quarter of 2018, 21 per cent of residential transactions claimed the relief, a 3 per cent increase when compared with the previous three months and at a value of £144m.

Ms Heaton said: "Even if the amount of tax claimed under first time buyers’ relief, which the exchequer would see as a ‘tax giveaway’ was added back, the total take would still be down 3.6 per cent."

FTBR was introduced to help those struggling to get on the housing ladder and the overall saving of £517m represents an average £2,374 saving for the purchaser.

According to analysis of the figures by LCP, however, this appeared to be plateauing, with 60,700 transactions claiming the relief in the fourth quarter of 2018, compared with 59,000 in the third quarter.

Heaton concluded: "HMRC’s 2018 stamp duty statistics do not paint a rosy picture of the UK housing market, with neither the buyer nor the exchequer winning out.

"Until the government has a clear road map for Brexit, we are unlikely to see increased transactions and therefore increased revenues."