The Office for Budget Responsibility’s (OBR) Economic and Fiscal Outlook suggests that residential property transactions will fall from 1.23 million to 1.05 million in the 2023-2024 tax year. Transaction levels are not expected to recover until the 2026-2027 tax year.
This drop in market activity will follow a record high for stamp duty receipts in the current tax year. The OBR predicts receipts will rise by £1.9bn or 12 per cent to £17.3bn for 2022-2023.
Coventry Building Society’s analysis of the data found that as transactions fall by 183,000 next year, stamp duty receipts will decline by a value of £4.7bn. As well as a drop in market activity, this will also be due to the temporary tax break which waives the stamp duty levy on properties up to a value of £250,000 until March 2025.
Stamp duty revenue is also expected to rebound in the 2026-2027 fiscal year.
Ignored in the Budget
Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “If the OBR’s forecast is correct almost 200,000 fewer homes are going to be purchased over the next year. That should have been a wake-up call for the Chancellor, but instead, he chose to overlook homebuyers and the property market.
“A more active and ambitious approach to property tax is sorely needed. We all saw what the stamp duty holiday in 2020 and 2021 did to inject life into the market, and tax revenues still remained healthy. These forecasts show a period of lower transactions and lower tax revenues is on the cards – a lose/lose scenario.”
He added: “There’s no shortage of credible suggestions, from incentivising energy efficient home improvements, to allowing one off waivers for downsizers, to fluid thresholds which move in line with inflation. It was hugely disappointing that stamp duty wasn’t even mentioned and the current thresholds remain temporary.”
