Stamp duty relief has supercharged property market and wiped out tax savings for buyers, says RSM

Residential property transactions in Q2 2021 were 9 per cent higher than in Q1 2021, and 175 per cent higher than in Q2 2020, as purchasers tried to complete by 30 June 2021 to avoid paying additional Stamp Duty Land Tax. Commenting on data released today, Chris Etherington, private client and tax partner at RSM, said: 

‘The Chancellor will be laughing all the way to the bank after seeing the level of tax revenues generated by the Stamp Duty Land Tax (SDLT) holiday and the new charges imposed on non-residents buying UK property. 

‘Whilst taxpayers may have thought the Chancellor was being generous when he announced the SDLT holiday last year, the real winner has been the government itself. 

‘The temporary relief from SDLT on residential property purchases has supercharged the property market with the number of residential property deals in 2021 nearly 50 per cent higher than at the same point in 2019 and 165 per cent higher than at the same point in 2020.  

‘Even with lower SDLT rates on transactions, the number of deals completed in 2021 to date and higher property prices has ensured the tax take is higher than pre-pandemic levels. 

‘Taxpayers on the other hand have been faced with an artificial spike in property prices, caused by the SDLT holiday, which has wiped out any tax savings they may have received. The latest figures from the Office of Tax Simplification show that average house prices have risen by 10 per cent in the last year, meaning many house buyers will have paid far more for the house than any tax saved. 

‘The good news keeps coming for the Chancellor with an additional £89 million of SDLT revenues received from 2,700 transactions involving non-UK residents buying properties in England and Northern Ireland. New rules were introduced in April 2021 which can result in an additional 2 per cent SDLT being due on house purchases in England and Northern Ireland by non-UK residents. However, non-resident buyers who subsequently spend sufficient time in the UK after buying a home here can claim a refund so the Treasury these funds can’t be allocated for spending plans just yet.

‘The Chancellor will be keeping an eye on whether this new SDLT charge deters overseas buyers in the future and could seek to increase the 2 per cent tax rate if it doesn’t.’