Huge drop in transactions as year gets under way

There has been a huge drop in transactions in the first quarter of this year, while the  number of first-time buyers using Stamp Duty relief has fallen for the first time since the perk was launched, analysis reveals.

There were 46,800 46,800 first-time buyer transactions using the relief in the first quarter of 2019, down from 60,800 at the end of 2018 and the lowest since the scheme was unveiled in November 2017.

The research by London Central Portfolio (LCP), also found Stamp Duty receipts and liable transactions are lower than initially revealed earlier this week once Welsh figures – which are no longer included in the data by HMRC – are added back in.

LCP said tax receipts for the first three months of 2019 in England, Wales and Northern Ireland fell by 26.2% on the previous quarter to £1.75bn.

Transactions in England, Wales and Northern Ireland fell 21.4% on a quarterly basis to 237,240, LCP said.

The slump has been blamed on Brexit and has promoted LCP to urge the chancellor Philip Hammond to do more to show the UK is open for business, rather than pushing on with proposals to introduce a further Stamp Duty rate for overseas property investors.

Naomi Heaton, chief executive of LCP, said: “The HMRC’s latest release does not bring with it good news. With the recent extension to the UK’s departure from the EU, it is unlikely that we will see any material change to the status quo until our politicians can start pulling in the same direction, whichever way that might be.

“Seasonality will have played a part as it traditionally takes a few weeks for buyers and sellers to get going after the festive period. However, there is no doubt which external force is having the most destructive impact on the UK housing market, and that is Brexit.

“Since our last report, the chancellor confirmed his intention to introduce an additional 1% levy on purchases for overseas buyers.

“One would have thought that with Brexit looming he would be doing everything within his power to emphasise the fact the UK is open for business to the overseas investor.

“It appears that he has not learnt from the previous chancellor’s mistakes: that continued increases to residential taxes has the knock-on effect of both suppressing transactions and revenue for the Exchequer. It seems short-sighted to hit the property market, at such a low ebb, with a tax apparently designed to appeal to the popular vote.”

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One Comment

  1. James Wilson

    The slump in transactions has nothing to do with Brexit. Or with Stamp Duty. Everyone (except estate agents) can see that the market is overvalued and is going to fall.  Buyers aren’t reaching to pay asking prices and so we are waiting for sellers to blink. They will, they always do. But it just takes a bit of time. And while we wait nothing happens.

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