For residential property transactions alone, the jump in stamp duty receipts collected by the Treasury was as much as 175 per cent in this period, compared to the same time last year when the stamp duty holiday was yet to be introduced.
The holiday enabled first-time buyers to avoid stamp duty land tax on up to £500,000 of a house purchase between July 2020 and June 2021.
But the Treasury said the “substantial rise” in the number of transactions completed in June - many of which still incurred the tax on properties priced above £500,000 - meant its coffers were still well endowed.
The government introduced the tax holiday to stimulate the housing market and to increase expenditure on goods and services relating to housing transactions.
But some have called for a re-think on chancellor Rishi Sunak’s short-term intentions, suggesting another holiday should be on the cards considering the government is no worse off with one in place.
“With the stamp duty holiday still in full swing in Q2, it’s clear that the market for higher value properties, second homes and rental properties has also been very strong this quarter,” said Jonathan Stinton, Coventry Building Society’s intermediary relationships head.
“This begs the question – does stamp duty need to be reinstated as it was before? The taxman is clearly still earning a very healthy amount from the property tax, so perhaps some of the financial burden could be lifted for the majority of homebuyers? Perhaps it’s time to rethink the issue of property tax rather than reverting to business as usual.”
Until the end of September, the first £250,000 of a property’s value incurs no stamp duty land tax, compared to the more generous £500,000 in place since July last year.
Then in October, the stamp duty threshold will return to its usual level of £125,000, or £300,000 for first-time buyers.
Conor Murphy, chief executive of Smartr365’s, an end-to-end mortgage and protection platform, agreed with Stinton that the government should consider permanent stamp duty reductions.
He said: “The break has created a golden opportunity for both first-time buyers and second-steppers to move onto or up the property ladder, when they otherwise would not have had the financial means to do so.
“However, with just weeks until the tax break draws to a close [all together], the government should now plan how it will support buyers in its wake.
“Permanent reductions to stamp duty will help ensure homeownership remains an accessible venture and that the market retains its buoyancy come the end of September.
“It is crucial that this period of greater accessibility and heightened demand is not just a flash in the pan.”
Tinkering with rates “unhelpful”
But not everyone is in agreement on the stamp duty holiday’s contributions to the housing market. Caroline Fleet, real estate head at global chartered accountant firm Crowe, argued the change in tax brackets has been “unhelpful”.
She explained: “Whilst the stamp duty land tax holiday may have helped to re-ignite the residential property market in the short term, it does not provide a solution to the longer term issue around the lack of housing supply.
“Tax policy tinkering and altering the stamp duty land tax rates causes these unhelpful peaks and troughs to the market."
In its report, 'Lessons From The Stamp Duty Holiday', the London School of Economics said thousands of homebuyers had been helped by the tax break but when it came to consumption the effect was not as great.
LSE distinguished policy fellow Kath Scanlon told FTAdviser in an online briefing: “I dare say there were other tax changes one could have made which would have stimulated more consumption.”
For the economy as a whole, Scanlon said the stamp duty tax holiday probably wasn’t “so much” worthwhile due to the spike in house prices, compared to how worthwhile it was for the industry and its employers. It contributed a meagre 0.1 per cent of GDP, according to LSE’s report.
“But this [the stamp duty tax holiday] was chartered at the housing market specifically and it seems to have been successful.”
ruby.hinchliffe@ft.com
