SDLT Could Dip To 2004 Levels

Stamp Duty Land Tax (SDLT) receipts could dip to the levels last seen in 2004/05 because of the impact of Covid-19.

In a time prior to the emergence of coronavirus, Savills had predicted the UK property market would generate £8.6 billion in SDLT receipts as the market recovered from a flattened year restricted by Brexit uncertainty.

However, recent government advice to postpone home moves has resulted in a stalled market, increases in aborted transactions,  a reduction in mortgage products and an uncertain future.

Even the various forecasts, suggest huge variances in UK property with transaction volumes predicted to sit somewhere between lows of around half a million (566,000) and highs of 745,000.

If these estimates are accurate, it would mean SDLT levels could bottom out at £3.7 billion, which would represent a figure last seen 15 years ago.

Receipts falling by 40.5 per cent, something Savills anticipate to be a positive market outcome, would mean SDLT receipts would reach £5.1 billion, representing a five year low.

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.”

Camilla Dell, managing partner at Black Brick, 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.”

With governmental efforts to financially support the economy through this difficult time, could a rise in stamp duty be on the post-coronavirus horizon?

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