personal finance

Homebuyers liable for stamp duty at a four-year low


The proportion of property transactions liable for stamp duty land tax has fallen to a four-year low following the government’s move to free up more first-time buyers from paying it, saving them £426m since the change.

Two-thirds of residential transactions in England and Northern Ireland were liable for stamp duty in the three months to September, according to the latest figures from HM Revenue & Customs — the lowest level since the beginning of 2014.

Stamp duty relief for first-time buyers was introduced in November 2017. It means property purchases under £300,000 are not liable and those between £300,000 and £500,000 get a discount, paying nothing on the first £300,000 and 5 per cent on the portion over that threshold.

First-time buyers saved £142m via the relief in the latest quarter, up by 14 per cent on the previous three months and bringing the total since 2017 to £426m. One-fifth of all property buyers used the relief in the latest three-month period.

While the number of transactions fell by 8 per cent compared with the same three-month period in 2017, the figures have yet to show stronger evidence of any market freeze precipitated by worries over Brexit. Transaction averages conceal wide regional variations, with London and the Southeast showing a much sharper drop in activity than the Northwest and Midlands.

Separate HMRC figures for property transactions in October across the UK showed a 1.3 per cent rise compared with the same month last year.

Neal Hudson, director of market research company Residential Analysts, said: “So far it’s been very difficult to say there’s anything explicitly Brexit-related in the data but I wouldn’t be surprised if we see more coming through next year.”

The bigger Brexit effect was likely to come closer to the UK’s scheduled departure at the end of March, he said, as discretionary purchasers would then have more latitude to put a deal on ice for a month or two as they waited for any market fallout.

South/North housing divide. Chart showing annual % change in house prices in the UK

“I’m expecting perhaps to see a bit of weakness in the market activity numbers in the first quarter of next year,” he said.

Jeremy Leaf, an estate agent in London and a former residential chairman of the Royal Institution of Chartered Surveyors, said the “fairly flat” transaction numbers were “encouraging given the general prevailing gloom”.

“On the ground, we are not seeing much movement one way or another, but Brexit is not the main culprit,” he said.

Figures also released on Wednesday by UK Finance, the industry body, showed that mortgages completed by first-time buyers in London, where high prices have locked out many such buyers, rose by 2.6 per cent on the same three-month period last year.

The number of first-time buyers in the capital hit a three-year high, a trend UK Finance suggested was bolstered by the government’s Help to Buy equity loan scheme. “The recent extension of the scheme until 2023 will help even more people get a foot on the housing ladder in the years ahead,” said Jackie Bennett, director of mortgages at UK Finance.

HMRC cautioned against direct comparisons of 2018 transactions data with 2017, following the devolution of stamp duty land tax to Wales in April 2018.



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