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Drop in property transactions prompts call for stamp duty reform

  • 01/05/2024
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Drop in property transactions prompts call for stamp duty reform
Coventry Building Society has called for reform to stamp duty land tax (SDLT) after an analysis showed residential property transactions fell to a four-year low in Q1.

Assessing figures from HMRC, the mutual found there had been 192,500 residential property transactions since January. This was the first time the number had fallen below 200,000 since Q2 2020, when the property market was effectively closed due to Covid-19 restrictions. 

Until 2020, property transactions had not gone lower than 200,000 since Q2 2011. 

Since records began in 2008, just eight quarterly periods have seen fewer than 200,000 residential property transactions. 

Further analysis from the mutual found that the share of transactions under the current £250,000 threshold for stamp duty had fallen. 

In Q1, just 25.5% of transactions were under this level, significantly lower than the 62.5% share recorded in Q1 2014. 

Nearly half, 47.2% of residential purchases in Q1 were between £250,000 and £500,000 meaning nearly half of buyers paid the 5% tax. 

This was nearly double the level seen a decade ago when 28% of buyers were liable to pay stamp duty. 

Coventry Building Society’s research found that the average stamp duty bill had risen to £9,038. This represents an increase of nearly £3,000 since 2014 when the average tax paid was £6,065. 

So far this year, more than a fifth or 21.3% of first-time buyers have been liable to pay the stamp duty tax. 

At the same time, the mutual recorded a fall in the number of additional property transactions, such as second homes and buy-to-let properties, to 43,800 in Q1.  

This was 19.1% lower than the average number of additional property transactions during each quarter since Q2 2022, which Coventry Building Society suggested may negatively impact the rental market. 


Stamp duty changes could ‘oil the wheels of the market’ 

It has been speculated that the government is considering bringing in a stamp duty cut in the Autumn Budget this year. This would raise the threshold from when the tax applies up to £300,000, instead of its current level of £250,000. 

Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “The first part of the year tends to be quieter for property transactions, but this year has been an especially slow start. The number of people moving home was always expected to drop once the stamp duty holiday in 2020-21 was over, but the number has kept on dropping and now we’re back to 2011 levels.

“Making the right changes to stamp duty could oil the wheels of the market, but it needs to be a carefully considered reform aimed at building long-term stability rather than a sudden sharp boost in numbers. Temporary holidays and simplistic cuts are mainly short-term fixes, which don’t necessarily help buyers years down the line. The challenge is to get creative, because the same old tinkering around the edges won’t stand the test of time.” 

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