"The introduction of the surcharge on second properties in April 2016 was pre-empted by a huge spike in transactions as investors sought to beat the deadline"
The number of liable transactions with transaction value between £250,000 and £500,000 fell by 10%, while the number of properties over £500,000 fell by 14%.
However the estimated receipts for Stamp Duty in Q1 is £1,995m from residential transactions - 16% higher than the previous year.
For the financial year 2016-17, the number of liable transactions is 1% higher than in 2015-16.
Receipts from the 3% surcharge specifically amount to £454 million.
Shaun Church, Director at Private Finance, commented: “It is entirely unsurprising to see fewer residential property transactions liable for Stamp Duty in the first quarter of 2017 compared to a year earlier. The introduction of the surcharge on second properties in April 2016 was pre-empted by a huge spike in transactions as investors sought to beat the deadline and avoid four or five-figure tax penalties. In comparison, transaction levels were always going to look more modest in Q1 2017.
“However, the statistics make it clear that the upper-end of the market has unfairly borne the brunt of land tax reform. While the number of liable transactions with a value of less than £250,000 is practically unchanged from a year ago, there has been a 14% fall in transactions with a value above £500,000. A healthy property market needs movement and fluidity at all levels and across all tenures, but it appears that the changes have unfairly targeted the upper-end of the market – which does little to help the cause of first-time buyers."
Matt Robinson, CEO at Nested, added: “The Government’s strategy of raking in yet more money from Stamp Duty Land Tax is working well for them but the result is a near failure for the health of the market. The liquidity of homes in London has slowed to a worrying level and with a snap election just weeks away, the normally busy spring market is bound to suffer further uncertainty. In our most recent Market Efficiency Monitor, we highlighted that the number of transactions in London has reduced by almost a third (32%) since April 2016. In many parts of the Capital it is normal for a family home to cost upwards of £1 million and the residents who live in them are typically asset rich but cash poor, so the £50,000 or more tax liability to move is a huge barrier. Our figures show that in London, just 7% of properties priced upwards of £1 million are under offer. The Government might be taking a higher rate of tax on these home but there are significantly less of them selling so concrete solutions to get more people moving are urgently required."
