The total number of Stamp Duty Land Tax transactions in the last quarter of 2020 was up 43% on Q3 2020, according to the latest HMRC stamp duty statistics.
The figures also show that total SDLT transactions in Q4 2020 were 14% higher than in Q4 2019.
According to HMRC, the increase in transactions have likely been impacted by the introduction of the SDLT holiday for residential properties, alongside the continued release of pent-up demand within the property market.
Residential property transactions in Q4 2020 were 44% higher than in Q3 2020 and 16% higher than in the corresponding quarter in Q2019.
Nick Leeming, chairman of Jackson-Stops, commented: “With transactions in Q4 2020 16% higher than the same time last year, and the numbers of buyers exempt from SDLT exempt up by a huge 127%, the data demonstrates how the government’s SDLT holiday, alongside a huge shift in lifestyle aspirations, has contributed to the active property market we have seen since the summer.
“As highlighted by members of parliament this week, what we must avoid now, for the property sector and the wider economy, is a cliff edge where all economic support suddenly drops away, especially as we have not yet seen the full economic impact of the virus.”
Given that the current lockdown has created a logjam in the market, exacerbated by procedural delays with mortgages and conveyancing, Leeming points out that vast numbers of buyers are at risk of missing out on SDLT relief “through no fault of their own”.
He continued: “That won’t just impact individuals, but buyers throughout chains, putting a significant number of transactions at risk. Removing support suddenly would also have a ripple effect beyond the property market, as retailers, moving companies, tradespeople and countless others suffer from a reduction in market activity.”
The total SDLT receipts – including non-residential property transactions – in Q4 2020 were 47% higher than in Q3 2020, although there was a 16% fall year-on-year.
Leeming added: “The figures clearly show the positive impact the SDLT holiday has had for the property sector and the UK economy since its introduction. I would therefore urge the government to consider a more gradual approach to paring back SDLT relief. Doing so will allow transactions to complete as planned in an orderly manner, giving buyers the security they need and ensuring the property market and other interconnected sectors of the economy don’t suffer a sharp shock during one of the most challenging and uncertain periods of the pandemic.”
The data from HMRC also shows that since the introduction of first-time buyers’ relief up until the end of Q2 2020, there have been over 540,900 claims that have benefited, and the total amount relieved by these claims is £1,294m over the period.
Furthermore 61,800 transactions were liable to Higher Rates on Additional Dwellings (HRAD) in Q4 2020 with the 3% element generating £333m in receipts, an increase of 34% from the previous quarter, and a fall of 19% compared to 2019 Q4.
The percentage of residential receipts from HRAD transactions has remained similar at 48% when compared to both Q3 2020 and Q2 2020.
Rob Barnard, director of intermediaries at Masthaven, added: “The latest statistics from HMRC show there has been a sustained increase in SDLT transactions in Q4.
“The restrictions placed on the industry in Q2 2020 due to the pandemic meant a near hiatus in activity, but the stamp duty holiday appears to have achieved its intended result, with market activity accelerating and a rush of transactions late in the year.
“However, the fast-approaching deadline for the end of the tax holiday has created a cliff-edge as buyers hurry to complete transactions while bottlenecks in the process continue to slow down property sales.
“Following the debate in Parliament this week, there have been renewed calls to extend the holiday and many are wondering why the government is choosing to take its foot off the accelerator now, while there is still so much pressure on the wider economy.
“Whatever decision is made, it should be made as early as possible and clearly communicated so that everyone can plan accordingly.”
Comments (6)
The Chancellors answer to the SDLT issue and indeed the wider economy may well have been announced today by the Bank of England who have put the commercial banks on 6 months notice to prepare for negative interest rates.
If the stimulus of the SDLT holiday has been as positive as it has then why would Government seek to kill it off? Perhaps a more measured, tapered approach could give all of us the best of both worlds. Tax receipts begin to climb without dealing a financial shock to the wider market.
The Government from the outset and have continued to say the measure was to act a stimulus for. defined period of time. This is reflected in the Q4 figures. It is, however, loss of Tax Revenue.
If SDLT was to be removed, how would the loss of an average of £12b tax be funded?. This would be equivalent to raising the basic rate of income tax by 2p or increasing VAT to 22.5%
The Headline as always doesn’t reflect a positive impact on the UK economy at all.
(Just a small point but Scotland has its own tax which at a higher rate and covers commercial property. Perhaps PIE has an exclusive, Scotland has left the UK?)
What the article shows is simply the number of transactions and the tax receipts.
Looking at the whole fiscal year, the “Positive Impact’ looks very different. “in Q4 2020 were 47% higher than in Q3 2020, although there was a 16% fall year-on-year.” and on HRAD, (Mr Jackson’s market) “an increase of 34% from the previous quarter, and a fall of 19% compared to 2019 Q4. The figures also do not contain how much of the Q4 increase in revenue was accountable to house price growth.
“since (November 2017) the introduction of first-time buyers’ relief up until the end of Q2 2020, there have been over 540,900 claims that have benefited, and the total amount relieved by these claims is £1,294m over the period. (representing just over 11% of an average year of transactions)
Not quite so impressive when quantified into perspective.
Without doubt, the SDLT has been good for those involved and associated with the property market who have gained financially during this period. When the whole UK economy however is considered, this holiday has benefitted around 1.5% of the adult population. It is cost that may have to be met by 100% of the population.
I’m not trying to be argumentative and it sounds like you have a better grasp of the figures involved than me but…
Would you not say the stimulus is still required ? – not just the immediate directly property related industry like agents but the wider linked industries.
Few people are talking about SDLT total removal. Is it not better to have a reduced level of tax income, but a steady flow of that income, rather than have the tax take drop like a stone?
The figures are virtually impossible for most of us to calculate – but I dare say H M Treasury have all the numbers at their finger tips. The 2 main figures are tax-take foregone and the revenue from the wider implications of the stimulus. Even the FTB relief has a wider outcome. So the government loses out on the SDLT on transactions up to £300k (outside London) which would have been £5,000 at that top figure. I suppose the argument is would that £5,000 saving have encouraged more FTB’s to buy? Extra corporation tax if they bought new from a developer, small builders get a revenue increase as buyers get improvements/repairs carried out, furniture sales (VAT + Corp Tax), floor coverings (VAT + Corp Tax), Estate agents (VAT + Corp Tax). Money flows to individuals who pay income tax on the cash they earn and then spend it in the wider economy. If you go to lock down then businesses fail and this causes unemployment. Is it better to have a lower tax take and keep people employed than to take the tax and spend it on unemployment benefit? The pandemic won’t end at the 5th April 2021 and it is a crying shame this is all going to cost so much money but anything that keeps the merry go round turning rather than stopping has to be the lesser of all evils?
I am a little more cynical about this top industry report. We all watched the same Government debate and can all guess this is what they might do! Then we might sound rather important by suggesting it on Pie as ‘our’ idea ! Tomorrow someone else will pipe up exchanges prior to March end and completions within 6 months.
🙂
Leeming counselling with wise words .Fine chap with an air of Prince Charles about him .
Good to see that the quintessential nature of Jackson Stops and Farts has not changed all that much despite moving with the times and not wholly relying on the brand name above the door .There must have been much humming and haaing when they took the bold decision to drop poor old Staff;s name from the end of the firm’s title . Comforting like a pair of old slippers.
No cut price fees just cut glass accents.
I wonder what their senior partner a generation or so back would have thought of engaging in PR?
Language often steeped in another era quaintly referring to the essential people in the moving machine as “tradespeople” upgraded no doubt in a politically correct sort of way from “tradesmen”
Sat at the same table as Knife Fork & Cutlery ,Lane Fox ,Humberts , Strutt & Parker ,Savills as the go to agent for country houses with high end properties and jolly nice staff with a Head Office in Mayfair
Their established Chester office handling some delightful period properties ,country estates in a town blessed with properties of a similar kind The location of their office strangely situated in an ugly 60s office building sat facing the busy inner ring road adjacent to a Kwik Fit depot seemingly decidingly at odds with their image and the properties they sell
Fuctionality winning the day
Long may they continue