Stamp Duty Receipts Decline With UK Residential Transactions
Quarter one Stamp Duty Land Tax (SDLT) statistics have rubber stamped the long-held belief that property transactions are falling in the UK with residential transactions decreasing by 5% when compared with the figures from a year earlier.
Following the usual increase in activity as house buyers look to get into their new home before Christmas, there was a significant decrease in transactions between Q4 2018 and Q1 2019. Overall, UK transactions in the opening quarter of this year totalled 253,900 residential sales which represents a 21% decline from the 316,200 at the end of last year.
Whilst the decrease corresponds with similar declines across previous years, the 253,900 UK transactions remains the lowest recorded figure for quarter 1 in over five years. Although the figures show a modest fall of 5% from 2018’s figures, the fall in Q1 transactions since 2014 is around 18%.
The outlook remains fairly similar for non-residential property transactions with the 28,500 sales for the opening quarter marking a 6% fall from the previous year’s Q4 statistics. This also represents a 3% decline from 2018’s Q1 figures.
In terms of stamp duty paid, HM Revenue and Customs were able to excrete £2.65 billion from Q1 SDLT tax receipts. However, the government will be disappointed with the 19% fall from Q4’s 2018 haul. In addition to the decline in transactions, other financial losses were attributed to a 26% decrease in residential receipts and 3% decline in non-residential receipts.
Additionally, 46,800 of the 253,900 residential transactions in the Q1 data represent first-time buyers (FTBs) claiming stamp duty relief. This means that over 18% of total transactions were exempt from the SDLT. Since the SDLT relief was offered to FTBs in 2017, 288,300 properties have claimed the relief, saving this section of the housing market over £690 million.
However, many other sections of the market are feeling forgotten and even victimised by increases in their contributions. In total, SDLT from additional dwellings amassed £811 million in the opening quarter of this year, making up 47% of the residential SDLT total. The 3% surcharge applied to additional dwellings or Higher Rate for Additional Dwellings (HRAD) continues to drive landlords out of the lettings market as well as deterring further investment. The figures indicate that year to year, HRAD receipts have fallen by 6% and 23% compared with Q4 statistics.
What do these reduced transactions suggest for the conveyancing sector? Are you beginning to notice a reduction in client numbers during the opening quarter of 2019?