The successive tax
hikes introduced on residential property and the lack of a clear Brexit scenario looms
heavily over the UK.
Transactions have fallen by 2.6% in 2018 and now stand at just over 1 million.
This compares with HM Land Registry data for 2018, which reports a 4% fall. On
a more granular level, HRAD transactions, i.e. those which include the 3%
additional duty, have been hardest hit, with a fall of 4.6%.
Naomi Heaton, CEO of LCPcomments:
"The 2.6% fall in transactions reported in HMRC's 2018 SDLT report reinforces
the surfeit of statistics, showing buyers now holding back. The febrile
political climate around the UK's departure from the EU and
stagnating prices, have brought ever growing uncertainty to the
residential market, following several years of increased taxation".
Heaton adds: "Receipts have followed suit with transactions, which have fallen
8.5% overall. The receipts from the 3% additional duty (HRAD) have suffered the
largest drop, falling 14.2%. This has been the result of dwindling numbers of
second home and rental purchases. The total revenue for HMRC amounted to
£8.669bn, a fall of almost £1bn on 2017. Even if the amount of tax claimed
under First Time Buyers' Relief, which the Exchequer would see as a ‘tax
giveaway' was added back, the total take would still be down 3.6%."
First Time Buyers' Relief was an initiative introduced to help many struggling
to get on the housing ladder and amounted to £517m in 2018. This represents a
saving for the average purchaser of £2,374 at a crucial time when they are
saving for their first deposit. However, take up appears to be plateauing,
with 60,700 transactions claiming FTBR in Q4 2018, compared with 59,000 in Q3;
a rise of just 2.9%.
With the housing market in such a parlous state, it can only be hoped that
Chancellor Philip Hammond will not implement an additional levy of 1% on
non-residential purchasers, proposed in the last Budget. This would seem to be
particularly imprudent in light of the UK's need to build on global investment
as it exits the EU.
Foreign investors represent a significant proportion of buyers, particularly in
new build developments. The December LCPAca Residential Index recorded a 20.8%
premium in Greater London for new build versus older stock. With developers
currently struggling and scaling back projects, this new tax would not be
welcome as the higher end stock enables developers to build out much needed
affordable housing. It is also unlikely to have a material impact on tax
revenues, given the recent trend of falling receipts, alongside steadily rising
tax rates.
Heaton concludes: "HMRC's 2018 stamp duty statistics do not paint a rosy
picture of the UK housing market, with neither the buyer nor the Exchequer
winning out. Until the government has a clear road map for Brexit, we are
unlikely to see increased transactions and therefore increased revenues."
For further information contact: Naomi
Heaton, CEO, naomi@londoncentralportfolio.com
Business Advice for all UK firms from starting a business to flotation
London Central Portfolio (LCP) has analysed HMRC’s Stamp Duty Land Tax (SDLT) statistics, just released for 2018.
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Post Date: February 1st, 2019