Stamp Duty receipts could fall by as much as 56% this year as the coronavirus outbreak freezes the market and sends transactions tumbling, Savills claims.

The agent has previously warned the number of sales in 2020 could be between 27% and 45% lower than the 1.02m that it forecasted for the year.

Its initial predictions would have generated Stamp Duty receipts of £8.6bn for England and Northern Ireland, but in the worst-case scenario this could fall by 4.7bn or 56% to £3.7bn.

Based on its best-case predictions, receipts could fall 40.5% to £5.1bn.

Lucian Cook, head of residential research for Savills, said: “On the upside, households whose incomes remain stable and secure will be able to take advantage of historically low interest rates. This should support a return to stronger levels of price growth in the medium term.

“Assuming long term damage to the economy is contained, we expect the five year outlook for prices to remain similar to our November 2019 forecasts but with a different distribution of growth year to year.

“Our five-year forecast is for average UK house price growth of 15%, with prime central London the first market expected to be the first to show growth.”

Commenting on the predictions, Jeremy Leaf, north London estate agent and a former RICS residential survey, told EYE: “These sort of short, sharp shocks like coronavirus tend to have a bigger impact on transactions and hence stamp duty than on prices, at least initially.

“When we come out the other side, the Government will be looking to make up as much of its losses as possible, not just from Stamp Duty but from the furlough scheme. No doubt we will see an increase in taxes generally but I would hope that it doesn’t stifle the housing market with higher Stamp Duty.

“The more the Government penalises transactions, the more Stamp Duty will be compromised. It needs to make sure that after this is over the number of transactions rises, helping the economy as a whole. It is not just good for the property market but will help get so many trades back into work and earning and paying taxes of their own.”

Buying agent Camilla Dell, managing partner at Black Brick, added that Stamp Duty will most probably not be raised in the future to offset the losses.

She said: “If you look at past recessions and the speed of the property market recovery, we can predict that the Treasury will most likely not raise Stamp Duty to make up for this until a year or so down the line, once property prices and transactions have risen again.

“Data being used by a range of sources suggests that if we look at the 2008 financial crisis as an example, property transactions fell by 57% and prices by 19%, and it took around six years for transactions to recover properly – this could give us some rough guidance.

“Generally, I would say, ‘never say never’ to a potential stamp duty rise, after all, money will have to come from somewhere to pay for all of the money government is spending and lending, but I doubt Stamp Duty will be targeted as we are already one of the highest rates globally.”