SDLT transactions fall to lowest level since pandemic

The latest stamp duty land tax (SDLT) statistics, showing the number of property transactions and related SDLT revenues in England and Northern Ireland between 1 January and 31 March 2024, have been published by HMRC. Wales and Scotland have similar but devolved property tax stamp regimes so are not included in the figures.

The statistics paint a bleak picture, with the number of residential property transactions falling to their lowest level since the coronavirus pandemic. The provisional figures show there were only 192,500 residential property transactions in the first quarter of 2024. The level of quarterly residential property transactions has not been this low since Q2 2020, when it fell to 132,900 following the property market slump caused by the pandemic.

The provisional figures for the entire 2023/24 tax year show the lowest number of residential property transactions in a tax year since 2008/09.

A troubling aspect of this for the Treasury will be the associated loss of SDLT tax receipts. The first quarter of the year, before the usual spring upturn in residential property sales, can often see lower SDLT receipts, but there has clearly been a sustained drop off in such receipts as interest rates have increased.

In Q1 2022, buoyed by property price increases, SDLT receipts were £3.475bn but two years later these have fallen to £2.455bn. Those higher prices and receipts in 2022 may have been partially fuelled by the SDLT holiday that ran for the period from 8 July 2020 to 30 September 2021, and helped light a fire under the property market which only later receded.

With rumours that the chancellor is considering an SDLT cut as a pre-election giveaway, and uncertainty as to how any new government might look to re-stimulate the residential property market after the forthcoming general election, it is important to bear in mind that such a tax cut can potentially benefit the Treasury as much as homeowners. A temporary cut in SDLT rates could create an artificial bubble of demand and in turn, increased underlying property prices, which might take a significant bite out of any potential SDLT savings for buyers. So, whilst some prospective buyers might want the new chancellor to go further, a more sustainable and long-term approach to increasing SDLT thresholds might ultimately leave them better off.