Stamp duty receipts lifted 6.5% to £18bn between April and February in England compared to a year ago, HMRC data shows, but property professionals say this figure is already easing amid a slowing housing market and the prospect of higher tax thresholds.
Revenues from the house sales tax rose by £1.1bn in the period, which HMRC says “can partly be attributed to the economic impact surrounding the pandemic in 2020 to 2021.”
It adds that these figures also include the measure to permanently exempt all properties sold under £250,000 from stamp duty in former Chancellor Kwasi Kwarteng’s tax-cutting mini-Budget in September.
However, current Chancellor Jeremy Hunt reversed this move in his November Autumn Statement, saying that the exemption would only last until 31 March 2025.
Also in this period, mortgage approvals fell by 33.5% in the final three months of last year compared with the previous quarter, according to Bank of England data.
SelfEmployedMortgageHub.com founder Graham Cox says: “The mini-Budget caused a catastrophic fall in consumer confidence, which the mortgage market is only slowly recovering from. However, mortgage rates are no higher now than they would have been without the [former Prime Minister Liz] Truss fiasco.
“Ten consecutive base rate rises are the primary driver of the market slowdown, though it’s possible we’ve seen the last hike after the events with Credit Suisse and Silicon Valley Bank.
“So-called affordability, or more accurately, buyers’ ability to borrow enough to pay the overinflated prices properties are on the market for, has been severely hit. Lower house prices are what’s required to make property truly affordable again.
“If mortgage rates remain at current levels, that’s virtually guaranteed. The only question is how far they fall.”
Homebuyers paid £846m in stamp duties in February, £19m more than the month before, according to Coventry Building Society’s analysis of HMRC figures.
But the mutual adds that the tax is set to fall by around £4.7bn next year due to threshold changes and lower transaction estimates.
Coventry Building Society head of intermediary relationships Jonathan Stinton says: “The Chancellor missed a trick in the Spring Budget by not touching stamp duty.
“We think it’s time for a wider more creative reform to stamp duty – such as incentivising energy efficient home improvements – as just one of the ways the government should be helping homebuyers. This would also begin to align policy around attaining net zero by 2050.
“The current thresholds aren’t doing enough; they haven’t moved in line with house price inflation, the bill is disproportionately high in some areas of the country, and they’re not delivering the changes to the housing market that are clearly needed.”
Hargreaves Lansdown head of retirement analysis Helen Morrissey points out: “Stamp duty receipts started the tax year strongly but have quickly run out of steam as the property market slows dramatically.
“The cost-of-living crisis has hit our budgets hard and means more people are having to shelve the prospect of buying a new home for the time being. These receipts are up to February and likely relate to sales agreed late last year as the market was starting to unwind the chaos caused by the mini-Budget.
“Added to this, changes to stamp duty will have also had a dampening effect on receipts. We’ve seen mortgage rates come down since then, but they remain higher than many people are used to, and this will likely put them off dipping a toe in the market for now.”
