Stamp Duty Land Tax (SDLT) has decreased by more than £1 billion in the past year according to statistics revealed by HM Revenue and Customs (HMRC).
For the financial year 2017/18, the government amassed £12.9 billion in revenue from SDLT receipts. However, in the past year, as the market slows amidst Brexit turmoil, this number has dwindled by 8% to £11.9 million.
Recent statistics from NAEA Propertymark suggested that the additional dwelling surchage attributed to SDLT had led to reduced income from additional dwellings as many landlords left the market.
According to an NAEA Propertymark and their subsidiary firm LCP report in February, SDLT receipts for England, Wales and Northern Ireland have plummeted considerably when compared with 2017’s figures. £8.7 billion was generated from tax receipts in 2018, this was viewed as an £802 million decrease from the year before.
The falling tax on Higher Rate for Additional Dwellings (HRAD) surcharge suggests fewer people are purchasing additional dwellings as the £285 million fall in taxes equated to a 14.2% reduction from 2017. The figures also revealed a 4.6% fall in second home or additional dwelling transactions in 2018.
In 2017, 21.1% of all SDLT tax take was made up from HRAD receipts. However, this had shrunk to 18.8% in 2018.
With STLT receipts falling, many are calling for an overhaul to a system that is failing to help the entire property market. Whilst first-time buyers may prosper, the majority of other property owners on the ladder are deterred from selling because of the tax. The surcharge on additional property could also spell disaster to powerless tenants with a perceived reduced housing stock restricting their choices.
John Phillips, Group Operations Director at Just Mortgages and Spicerhaart, commented:
“Stamp duty tax makes up such a huge proportion of the cost of moving that many of those who want to upsize are choosing to extend instead, creating a plethora of houses all the same size and nothing in between. While at the other end of the scale, older people are staying put rather than paying to downsize and are being criticised for taking up all the family homes.
“There is an argument that of course stamp duty brings in valuable income for public spending, about £8 billion a year, which sounds like a lot. But what about the costs associated with people not moving because of stamp duty costs? For example, older people living in homes unsuitable for their needs which adds extra pressure to health and social services.
“I supported the cut in stamp duty for first time buyers as it was a start, but said at the time, if you only help first time buyers, property prices will be forced up as sellers try and add the money saved onto asking prices, to help them cover their own stamp duty costs and this is what we have seen, to some extent.”
David Smith, Residential Landlords Association member, said:
“The government are now in the last chance saloon to reconsider tax policy and seek to promote positive growth rather than seeking short-term gains.
“The people who will really suffer as a result of this fatal loss of supply are tenants, including a significant number of families who are reliant on private landlords for homes, as well as young buyers.”
How should the housing market restructure this tax to create a fairer system for all? Do you think that the STLT system needs reconsidering? What does this recent decline suggest about the property market?
