According to figures from the HMRC, transaction levels were also 15 per cent lower than the same period in 2020.
Despite this drop in transactions, the residential receipts for stamp duty land tax (SDLT) rose by 19 per cent on a quarterly basis to £2.9bn in Q4, and surged 63 per cent on the last quarter of 2020 when £1.8bn was collected.
HMRC said this was due to the lowered threshold on which the SDLT was liable, as the end of the tax break brought this back down to £125,000 in Q4 compared to £250,000 in Q3 2021 and £500,000 in Q4 2020.
Andrew Montlake, managing director of Coreco, said: “Even though residential transaction volumes were down in the fourth quarter of last year compared to the previous quarter and same quarter of 2020, they were still high.
“Activity levels have been massively skewed by the stamp duty holiday. Receipts rebounded in the final three months of the year as stamp duty was back at its normal levels. The government will be pleased, if nobody else will.”
In Q4 2021, 66 per cent of residential transactions were liable for SDLT, compared to 34 per cent in Q4 2020.
Liable transactions rose by 11 per cent between Q3 and Q4 last year from 166,400 to 184,300. Compared to the year before, this was a 65 per cent increase.
Some 37 per cent of residential transactions which were liable to pay SDLT were valued at under £250,000. Transactions in this band increased 62 per cent from 42,100 to 68,200 annually in Q4 2021, likely due to the end of the stamp duty holiday.
Liable residential transactions valued between £250,000 and £500,000 jumped by 267 per cent from 21,800 to 80,100 while liable transactions on properties over £500,000 fell by 24 per cent from 47,500 to 36,000.
Additional property tax
There were 60,500 transactions liable to pay higher rates for additional dwellings (HRAD) in Q4, an extra three per cent on top of SDLT for transactions above £40,000.
The three per cent surcharge generated an estimated £439m in receipts in Q4, up six per cent on the previous quarter and a drop of seven per cent on the same period in 2020.
The total value of receipts for transactions liable to pay HRAD rose by 14 per cent from 1.1bn in Q4 2020 to £1.3bn in Q4 2021. Compared to Q3 2021, this was a 15 per cent increase.
When factoring in all residential receipts, the proportional intake from HRAD transactions fell from 44 per cent in Q3 2021 to 42 per cent in Q4.
HRAD refunds available to those who sold their previous main residence within 36 months of paying the higher rate totalled 9,200 at a value of £154m.
The two per cent surcharge on the purchase of residential properties made by non-UK residents, which was introduced on 1 April last year, has resulted in 8,500 transactions paying £86m so far, HMRC said.
Karen Noye, mortgage adviser at Quilter, said the tax on non-UK residents was introduced to deter overseas buyers from purchasing UK properties as an investment and leaving them empty while pricing Londoners out.
She added: “Clearly in its first full year in force there remains interest in property from overseas buyers even despite the global pandemic and the restrictions on travel. With the UK being one of the first countries to emerge from the pandemic London property may soon become attractive again if overseas buyers can stomach the additional tax.
“However, with house prices remaining very high it may be one step too far for this type of investor for the time being.”
