SDLT transactions fall to lowest level since pandemic

The latest stamp duty land tax (SDLT) statistics have been published by HMRC which show the SDLT revenues generated from property transactions in England and Northern Ireland. Wales and Scotland have similar but devolved property tax regimes so are not included in the figures.

The results paint a bleak picture with the number of residential property transactions falling to their lowest level since the pandemic. The provisional figures show there were only 192,500 residential property transactions in the first quarter of 2024. From a quarterly perspective, the level of residential property transactions have not been this low since the Q2 2020, when the residential property transactions fell to 132,900 following the property market slump caused by Covid-19.

The provisional figures for the entire 2023-24 tax year show the lowest amount 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 can often be a bit lower due to the time of year but there is clearly a sustained drop off in receipts as interest rates have increased.

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

With rumours that the chancellor is considering an SDLT cut as a pre-election giveaway, it’s important to bear in mind that such a cut can potentially benefit the Treasury as much as homeowners. A temporary cut could create an artificial bubble of demand and in turn, increased property prices might take a significant bite out of any potential SDLT savings. So, whilst some taxpayers might want the chancellor to go further, a more sustainable and long-term approach to increasing SDLT thresholds might ultimately leave them better off.