Nick Leeming, Chairman at Jackson-Stops & Staff, had this to say: “Changes to the way in which stamp duty is levied have gone too far. While the changes seen in December 2014 were good news for 98% of property buyers, those implemented in the last budget announcement which saw an additional 3% charge levied on buyers of second homes has resulted in a substantial decline in transaction numbers.
It is quite clear that any Government hopes of more revenue from Stamp Duty Land Tax for residential transactions has not materialised and if overall Budget tax revenue projections are to be achieved more tax rises will be needed elsewhere. The 2016 Autumn Statement urgently needs to address this shortfall by incentivising people to move home. Removing the additional 3% levy will in my opinion do just that, while further measures to support both downsizers and first time buyers must also be implemented if we are to see a true shift in overcoming the housing crisis.”
Nimesh Shah, Partner at accountants, Blick Rothenberg, said: “The latest statistics should encourage the Chancellor to urgently reform SDLT and, in particular, reverse the alarming effect the 3% SDLT surcharge has had on the housing market. The forthcoming change to the mortgage interest relief restriction (from 6 April 2017) should also be reviewed in light of the slowing housing market.”
Adding: “The Chancellor has a real opportunity to make a meaningful reform to an outdated and complicated tax system that is now acting as a deterrent to people moving or entering the property market.”
The statistics show that residential property sales have been plummeting since March and are down by nearly 80,000 over the same period in 2015 (1 April 2015 to 31 October 2015).
Paul Haywood-Schiefer, Assistant Manager at Blick Rothenberg, said: “These are the worst sales figures for the same 7 month period for the past 3 years. The actual drop in sales since April is just 630 properties short of wiping out the bumper number of extra sales in the boom month of March when people rushed to beat the 3% SDLT surcharge on second properties.
The actual SDLT increase over the last 12 months is £972 million. However, the last 6 months, when the 3% surcharge has been applicable, has only accounted for a paltry £94 million of that increase. This is about 0.017% of the total receipts HMRC has collected from all taxes in the last 12 months.”
Adding: “These statistics show that not only has the market been stunted by the 3% SDLT surcharge on additional properties, which was introduced with the intention of helping first time buyers get on the property ladder by making it more expensive for those purchasing additional properties to buy the same property, but it is not actually adding a significant windfall to the Revenue’s coffers either.
The Government should rethink their strategy if they want to get the property stock moving. They could be better off scrapping the 3% surcharge and allowing instead first time buyers an exemption from SDLT on the first £250,000 of a property’s value, for example. The removal of the 3% additional property surcharge would make more owners happier to sell, knowing they would not have to pay an additional charge on finding a replacement property, and give a boost of £2,500 to all those first time buyers buying a property of £250,000 or over, which they could use towards their deposit."
Away from property, the last 12 months to date have seen the total HMRC receipts rise by £22 billion to just short of £550 billion (£548 billion), a 4.2% rise on the previous year’s receipts buoyed by increased receipts of £4 billion (2.4%) from income tax, £4.6 billion (4.1%) from VAT and a £5.8 billion (5.2%) increase in the takings from NIC.
Paul Haywood-Schiefer added: “Clearly this growth is steady and so we would not want to see the Chancellor make too many changes to disrupt this.”
Nick Leeming concluded: “Despite record low interest rates, affordability remains one of the greatest barriers to home buyers today across the market including first time buyers, families and downsizers. The average family buying a three bed family house costing £500,000 would need to pay £15,000 in stamp duty, which on top of the sizeable deposit and other moving fees required, acts as a huge barrier. In an effort to stimulate activity, we desperately need further measures from the treasury which should include abolishing the 3% tax on second homes and implementing a stamp duty reduction for first time buyers and downsizers.”
