According to the latest figures from the HMRC, the tax break had caused two recent peaks in UK residential transactions. One in March 2021 due to the original deadline for the stamp duty holiday as well as nil rate band expansion for land building transaction tax in Scotland and land transaction tax in Wales.
There was also another peak in June 2021 due to the reduction of the stamp duty threshold to £250,000 and the ending of the land transaction tax nil rate band policy.
The HMRC therefore warned against comparing these figures against previous years as forestalling action would warp results.
However, this month’s seasonally adjusted figures are low compared to previous years, with the only time transactions have gone below 80,000 in July since 2012 with 76,030. This is excluding last July where seasonally adjusted transactions came to 70,790 as it was in the height of lockdown.
Debate around demand
John Phillips, Just Mortgages national operations director, said: “While transactions were always going to dip in July, the number of moves shows the market was not entirely driven by stamp duty savings.
“We are still on track for the most transactions in a calendar year for over a decade, and while some of the urgency to move may have faded, the desire is still there. Our brokers are reporting strong interest still, and since the stamp duty holiday has ended, more first-time buyers may look to jump on the ladder as competition reduces somewhat.”
He noted that prices were still high, and as there were around 15 buyers for every property it would spur bidding wars. He added it was time for brokers to focus on mortgages and protection as there would be £5bn of mortgages maturing before the end of the year.
Anna Clare Harper, chief executive officer of property consultancy SPI Capital, said: “This huge monthly fall in transactions is no surprise or concern, as it reflects the stepping down of the temporary reduction in stamp duty. Investors, homeowners, solicitors and banks pushed hard to get transactions done in time for buyers to complete before the end of June to make the most of this temporary relief.”
She added that transactions were likely going to slow down as low interest rates meant lower mortgage repayments so homeowners would be less inclined to sell. This would also mean further shortage of housing, so prices will continue to rise.
MT Finance’s director Tomer Aboody added that although there was a reduction in sales, there were still as “significant level” compared to previous years.
He said: “It is inevitable that there would be a shift in sentiment from buyers as the initial shock from not being able to take advantage of the stamp duty break takes its toll. But these same buyers will still be looking to purchase and are likely to forget all about the saving they missed out on in the next month or two. Cheap mortgages will inevitably help many continue to push ahead with a purchase.”
He said the fall did show that stamp duty was a barrier and therefore it needed to be adjusted, either via complete removal or adjusted for downsizers, to help more properties come to market.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said whilst the tax break sharpened the minds of buyers already keen to move, cheap mortgages also played a vital role and would continue to do so.
He said: “Mortgage pricing continues to trend downwards, with a growing number of sub-one per cent products. But it is not just the deposit-rich who are benefiting from cheaper rates – those borrowing at higher loan to values (LTVs) are also seeing rates fall, with even 95 per cent LTV deals now to be had at sub-three per cent.”