Brexit blamed for fall in stamp duty revenue in England, Wales and Northern Ireland
Tax receipts on property sales in the first quarter of 2019 in England, Wales and Northern Ireland fell by 26.2% compared to the previous quarter, an analysis of stamp duty figures shows.
They now stand at £1,757 million a drop of £623 million since the fourth quarter of 2018.
Transactions in England, Wales and Northern Ireland fell 21.4% to 237,240, the analysis by London Central Portfolio (LCP) also shows.
Receipts from the additional 3% stamp duty on buy to lets and second homes, fell by 24.6% to £372 million and transactions dropped by 14.7% to 54,160.
The figures also show that first time buyer relief transactions fell by 23% as just 46,800 claimed relief amounting to £110 million, a fall of £34 million. Overall in 2018 stamp duty tax take has fallen by almost £0.75 billion.
According to Naomi Heaton, LCP chief executive officer, seasonality will have played a part as it traditionally takes a few weeks for buyers and sellers to get going after the festive period. ‘However, there is no doubt which external force is having the most destructive impact on the UK housing market, and that is Brexit,’ she said.
She believes that the fall in receipts will make uncomfortable reading for the Exchequer, as the continued downward trend of falling receipts will be creating an ever growing hole in the UK’s balance sheet.
‘The fall in transactions for additional homes suggests that both foreign investors and multi-property landlords are withdrawing from the market as continued political uncertainty gnaws away. The lack of a clear road map post-Brexit is leaving the UK housing market in limbo,’ she pointed out.
She explained that the number of transactions claiming first time buyers’ relief has fallen for the first time since its introduction. ‘Despite softening prices, it also appears that first time buyers are willing to wait and see what the rest of the year will hold before they make their move. This will be a blow for one of the Government’s flagship initiatives,’ said Heaton.
She also pointed out that since LCP’s last report the Chancellor confirmed his intention to introduce an additional 1% levy on purchases for overseas buyers. ‘One would have thought that with Brexit looming he would be doing everything within his power to emphasise the fact the UK is open for business to the overseas investor,’ she said.
‘It appears that he has not learnt from the previous Chancellor’s mistakes that continued increases to residential taxes has the knock-on effect of both suppressing transactions and revenue for the Exchequer. It seems short sighted to hit the property market, at such a low ebb, with a tax apparently designed to appeal to the popular vote,’ she added.
‘With the recent extension to the UK’s departure from the European Union, it is unlikely that we will see any material change to the status quo until our politicians can start pulling in the same direction, whichever way that might be,’ she concluded.