Figures from HMRC show that compared to the same time last year, the 205,700 transactions which occurred during the quarter surged by 24 per cent. Meanwhile, receipts rose annually by 46 per cent to £3.6bn, which is against the backdrop of the stamp duty holiday which ended in September last year.
For the same reason, the number of residential transactions which were exempt from stamp duty fell by 44 per cent to 85,100 when compared to last year. Compared to Q2, this was a 10 per cent uptick.
During the quarter, 71 per cent of all residential transactions were liable for stamp duty compared to 52 per cent last year, which HMRC said was because of the stamp duty holiday in 2021. Some 31 per cent of liable transactions were valued at under £250,000, with transactions at this level rising 40 per cent to 63,500 on 2021.
For liable residential transactions valued between £250,000 and £500,000, there has been a 14 per cent increase from 81,100 to 92,500. Transactions with a value over £500,000 rose by 26 per cent to 49,700.
Sector was ‘holding up well’
Marcus Wright, managing director of Bolton Business Finance, said the data showed the market had been “holding up well” in the months running up to 30 September.
He added: “But the impact of the mini Budget and rapidly rising mortgage rates is not yet showing in these figures and that will doubtless impact the next set of data. It’s almost inevitable that rising mortgage rates will start to erode transaction levels and receipts in the fourth quarter and into 2023.
“We are already seeing investors and businesses put off making property purchases by higher interest rates. In some cases, rates are double what they were 12 months ago and that will feed into property transactions soon enough.”
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown agreed, but said rising rates, higher bills and growing property prices would put a “dampener” on activity.
She added: “Even government moves to cut stamp duty again – usually a hugely popular move – might not be enough to coax people back into a market that has seen real chaos in recent weeks. The hope is that the market goes into slowdown rather than a full-on crash.”
Additional dwellings and non-resident purchases
Some 62,800 transactions were liable for higher rates for additional dwellings (HRAD) in Q3, which is a three per cent surcharge on stamp duty. This was a 10 per cent fall on last year but a slight two per cent rise on Q2.
Of those, 53 per cent had a value lower than £250,000. The number of transactions at this level fell by 20 per cent from 41,800 last year to 33,400 this year.
The three per cent surcharge generated £528m in tax payments, which was six per cent higher than Q2 and 28 per cent up on last year.
The two per cent surcharge on the purchase of residential properties by non-residents amounted to 3,100 transactions and £39m in receipts. The number of transactions was up by 24 per cent on Q2 and receipts were £6m higher.
This surcharge for non-residents was introduced in April last year and to date there have been 15,100 transactions generating £176m in tax payments.
The overall tax collected by HRAD transactions came to £1.4bn, a rise of a third compared to Q2. This was also up by 13 per cent on the same period last year.
The proportion of residential receipts from HRAD transactions fell by three per cent to two-fifths of sales when compared to the previous quarter.
HRAD refunds are made to people who sell their main home within three years of paying the higher tax rate and in Q3, 7,600 dwellings were eligible for a refund which amounted to £132m.
