"The number of people moving home was always expected to drop once the stamp duty holiday in 2020-21 was over, but the number has kept on dropping and now we’re back to 2011 levels."
- Jonathan Stinton, head of intermediary relationships at Coventry BS
Coventry Building Society is joining calls for stamp duty reform as residential property transactions slumped to a four year low in the first quarter of 2024, according to analysis of the latest HMRC figures.
Since January there have been 192,500 property transactions, which is the first time the number has dipped below 200,000 since the second quarter of 2020. This was right before the temporary stamp duty holiday was introduced in July 2020.
Prior to 2020, residential property transactions had not dipped below 200,000 since the second quarter of 2011.
Since records started in 2008, there have only been 8 (out of 64) quarters where residential property transactions have been below 200,000.
The analysis also shows that only 25.5% of property transactions fell below the £250,000 stamp duty threshold in Q1 this year, a huge drop from Q1 2014 when 62.5% of transactions were below £250,000.
Almost half (47.2%) of property purchases in Q1 2024 were between £250,000 and £500,000, meaning almost half of buyers paid stamp duty at 5% of the house price. This has almost doubled since Q1 2014 when only 28% of buyers were paying the 5% rate. In addition, so far this year 21.3% of first-time buyers have been liable for stamp duty.
The average stamp duty bill has ow risen by almost £3,000 over the last ten years, going from £6,065 in Q1 2014 to £9,038 in Q1 2024.
There are speculations that changes to stamp duty could be announced as part of the Autumn Statement, with rumours indicating the thresholds could increase so buyers start paying stamp duty at £300,000 rather than £250,000.
Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “The first part of the year tends to be quieter for property transactions, but this year has been an especially slow start. The number of people moving home was always expected to drop once the stamp duty holiday in 2020-21 was over, but the number has kept on dropping and now we’re back to 2011 levels.
“Making the right changes to stamp duty could oil the wheels of the market, but it needs to be a carefully considered reform aimed at building long term stability rather than a sudden sharp boost in numbers. Temporary holidays and simplistic cuts are mainly short-term fixes which don’t necessarily help buyers years down the line. The challenge is to get creative because the same old tinkering around the edges won’t stand the test of time.”
