Stamp Duty liable properties fall in Q1 but revenue up

The number of residential property transactions liable to pay Stamp Duty fell by 5 per cent in Q1 this year on a non-seasonally adjusted basis, according to statistics from HMRC.

However, the number of liable residential transactions was 1 per cent higher in the financial year 2016 – 2017 compared to the previous year.

The estimated total taken in Q1 2017 was £1,995m from residential transactions, 16 per cent higher than Q1 of 2016. For the financial year 2016-17, the estimated receipts are 17 per cent higher than in 2015-16. The residential transactions receipts since Quarter 2 of 2016 include those from transactions paying the higher rate of SDLT on additional properties.

The number of liable transactions valued between £250,000 and £500,000 was 10 per cent lower in the first quarter of this year than Q1 of 2016. For the financial year 2016-17, the number of transactions was 2 per cent lower than in 2015-16. The number of liable transactions with transaction value over £500,000 in Quarter 1 of 2017 was 14 per cent lower than Quarter 1 of 2016. For the financial year 2016-17, the number of transactions is 3 per cent lower than in 2015- 16.

Private Finance director Shaun Church says: “It is entirely unsurprising to see fewer residential property transactions liable for Stamp Duty in the first quarter of 2017 compared to a year earlier. The introduction of the surcharge on second properties in April 2016 was pre-empted by a huge spike in transactions as investors sought to beat the deadline and avoid four or five-figure tax penalties. In comparison, transaction levels were always going to look more modest in Q1 2017.

“However, the statistics make it clear that the upper-end of the market has unfairly borne the brunt of land tax reform. While the number of liable transactions with a value of less than £250,000 is practically unchanged from a year ago, there has been a 14 per cent fall in transactions with a value above £500,000. A healthy property market needs movement and fluidity at all levels and across all tenures, but it appears that the changes have unfairly targeted the upper-end of the market – which does little to help the cause of first-time buyers.

“While this high-end slowdown is bad news for the health of the housing market, there is a silver lining for would-be buyers and investors. The slower growth of high-value property prices has had a positive impact on affordability in this segment of the market.”