Stamp duty revenue collapses by over a quarter as transactions tumble

A new and comprehensive analysis of the housing market shows a jaw-dropping collapse in stamp duty revenue going to the Treasury as a result of transaction volumes falling away – and the blame is being put on Brexit.

Investment consultancy London Central Portfolio has looked at transaction numbers and stamp duty payments across England, Wales and Northern Ireland, and has drawn some damning conclusions on the impact of stamp duty and related property taxes.

Firstly, it reveals that in the first quarter of 2019 in England, Wales and Northern Ireland stamp duty receipts fell by 26.2 per cent just in three months.

They now stand at £1,757m, which represents a drop of £623m since the final three months of 2018.

Meanwhile transactions in England, Wales and Northern Ireland fell 21.4 per cent in Q1 2019 compared to the previous three months, and now stand at 237,240.

Receipts from the Higher Rate for Additional Dwellings – that’s the formal term for the additional three per cent stamp duty surcharge on buy to lets and second homes – fell by 24.6 per cent in the first quarter of this year to £372m.

This is because transactions in those additional homes dropped by 14.7 per cent to 54,160.

First-time buyers’ relief transactions have fallen by 23.0 per cent with only 46,800 claiming relief of a total of £110m, a fall of £34m for the same periods under review.

Naomi Heaton, chief executive of London Central Portfolio, pulls no punches:

”Seasonality will have played a part as it traditionally takes a few weeks for buyers and sellers to get going after the festive period. However, there is no doubt which external force is having the most destructive impact on the UK housing market, and that is Brexit.

“This will make uncomfortable reading for the Exchequer, as the continued downward trend of falling receipts will be creating an ever-growing hole in the UK’s balance sheet.

“The Chancellor confirmed his intention to introduce an additional one per cent levy on purchases for overseas buyers. One would have thought that with Brexit looming he would be doing everything within his power to emphasise the fact the UK is open for business to the overseas investor. It appears that he has not learnt from the previous chancellor’s mistakes.

“With the recent extension to the UK’s departure from the EU, it is unlikely that we will see any material change to the status quo until our politicians can start pulling in the same direction, whichever way that might be.”

Kindly shared by Estate Agent Today