The Government seems to have achieved an own goal with the raised rates of stamp duty. The latest statistics show that stamp duty tax receipts are down in the second quarter of this year compared with the same time last year.
Tax receipts have dropped by 13.8% – by £317 million. This means that receipts are no greater than three years ago despite stamp duty going up from 7% to 12% on top value homes and the introduction of an extra £3 for people buying a second home.
A large part of the lower tax take is because of a fall in transactions – but how much that fall is due to the increased tax is anyone’s guess. Certainly while people don’t mind so much borrowing to buy their own asset – money which they hope to get back when they sell – they don’t want to borrow money to pay over in tax, with no hope of ever recovering that layout.
The figures come from HMRC’s quarterly statistics and have been analized by LCP. They show that receipts from the second home 3% tax have fallen by 21.9% from their peak and that transactions fell by 12%.
Some 52,4000 buyers claimed first time buyers relief in the second quarter of this year – but that didn’t help Londoners much because there are so few home available in London that come in under the cut off price.
Naomi Heaton, CEO of London Central Portfolio (LCP), Residential Investments Specialists, says: “The fall in transactions UK wide recorded by Land Registry and reported by LCP in its monthly residential index, is now also reflected in HMRC’s Quarterly Stamp Duty Statistics. This must be of increasing concern to the Exchequer. Despite the introduction of a slew of residential taxes, the tax take for the Revenue appears to be tailing off, with a fall of almost a third of a billion pounds this quarter compared with last year.
“The cooling of prices as a result of these taxes, particularly amongst high value properties has not resulted in increased buying activity. Whilst greater affordability may benefit first time buyers and second steppers, it also disincentivises sellers who are not motivated to move if they see the value of their home decline.”