Stamp Duty Receipts Down in Q1 Compared to Last Year

Stamp Duty receipts recorded by HM Revenue & Customs (HMRC) in the first quarter (Q1) of 2017 are down on last year, due to 2016’s rush to beat the additional Stamp Duty rates.

The provisional non-seasonally adjusted residential property sales count for Q1 2017 is 195,000 liable and 48,900 non-liable transactions.

The number of liable property transactions in Q1 was 5% lower than Q1 2016, while the amount recorded for the financial year 2016-17 was 1% higher than in 2015-16.

The amount of liable transactions with transaction values under £250,000 in Q1 2017 is similar to Q1 2016. For the financial year 2016-17, the number of transactions is 4% higher than in 2015-16.

Stamp Duty Receipts Down in Q1 Compared to Last Year

The number of liable transactions with a value between £250,000-£500,000 in Q1 was 10% lower than in Q1 2016. For the financial year 2016-17, the amount of transactions was 2% lower than in 2015-16.

The number of liable transactions with a value over £500,000 in Q1 was 14% lower than in the same quarter last year. On a financial yearly basis, the amount of transactions was 3% lower than in 2015-16.

Liable transactions in Q1 2016 were unusually high, due to many buyers rushing to purchase properties ahead of the introduction of the 3% Stamp Duty surcharge on additional properties in April 2016. As a result, year-on-year comparisons for this quarter should be made with caution.

The number of non-liable transactions in Q1 was 39% lower than in Q1 2016. For the latest financial year, the amount of non-liable transactions was 31% lower than in 2015-16. The most common reason for residential property sales to not be liable for Stamp Duty is that they fall below the £125,000 threshold.

The estimated Stamp Duty receipts for Q1 2017 is £1,995m from residential transactions and £789m for non-residential transactions. The estimate for residential transactions is 16% higher than Q1 2016. For the financial year 2016-17, the estimated receipts are 17% higher than in 2015-16.

The residential transactions receipts since Q2 2016 include those from sales paying the higher rate of Stamp Duty on additional properties.

For 2016-17, there have been 207,700 transactions of additional properties – either second homes or buy-to-let investments – accounting for a total of £3,242m in Stamp Duty receipts, of which £1,643m is attributed to the additional 3% element.

The Director of Private Finance, Shaun Church, comments on the data: “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% 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.

He continues: “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. According to our research, while last year’s Stamp Duty changes have left landlords and second homebuyers in the top 5% of the market paying £33,639 extra tax, the resulting slower growth in house prices has actually saved them £40,827.”

How has the Stamp Duty surcharge affected you?