Is this the stamp of approval?
Stamp duty changes have become a contentious point of government policy. But what do the numbers really prove is happening to residential markets?
Policy changes
• Removal of slabs: In November 2014, then chancellor George Osborne announced a shift from the previous “slab” system of duty to a more incremental system. For houses over £925,000 it was more expensive.
• 3% for second ownership: Announced in November 2015, the changes were then clarified to include larger scale institutional investment. They came into force in April 2016.
Stamp duty changes have become a contentious point of government policy. But what do the numbers really prove is happening to residential markets?
Policy changes
• Removal of slabs: In November 2014, then chancellor George Osborne announced a shift from the previous “slab” system of duty to a more incremental system. For houses over £925,000 it was more expensive.
• 3% for second ownership: Announced in November 2015, the changes were then clarified to include larger scale institutional investment. They came into force in April 2016.
Transaction numbers
According to the Treasury’s own numbers, the 2014 changes led to a 1.7% annual drop in transaction volumes, and a 7.5% drop in stamp duty receipts in 2015. However, this was not universal across price bands and transactions only slowed in the sub-£250,000 price bracket. Analysis of Land Registry Price Paid Data gives an indication of the number of transactions, and their value.
The tax take
By 2016, the number of transactions and the tax take from those was well above 2014 levels – despite the referendum and 3% surcharge. In fact, the government’s tax take rose 17.3% to £8.3bn, a £1.2bn increase on 2015, while transaction numbers were up 7.2% – though still down for properties worth less than £250,000.
The £925,000 threshold
For deals at the cut-off point of being more or less expensive, the number of sub-£925,000 transactions slowed after the 2014 changes, then rose until the referendum. Sales over £925,000 seemed less affected by the 2014 change, being buoyant in 2015, then slowing dramatically before the vote. Both have since recovered, though accurate Q4 figures are not yet available.
Total transaction values
Taken on an annual basis, there has been an 11.2% increase in the value of sub-£925,000 transactions, and a 1.4% increase in the number between 2014 and 2016. There has been an 11.7% increase in the number of £925,000-plus sales, and a 2.5% increase in the number of transactions, though there was a slowdown going into 2016.
• To send feedback, e-mail alex.peace@estatesgazette.com or tweet @egalexpeace or @estatesgazette
