Stamp duty surge shows signs of weakening says HMRC

Transaction totals took a tumble last month for the first time since last summer as HMRC figures suggest the stamp duty frenzy is ending. 

There were 98,830 residential property transactions last month, according to the Revenue's provisional estimate of UK residential transactions - a relatively strong figure in itself but 25.2 per cent down on December 2020.

On a seasonally-adjusted basis, the HMRC data shows 121,640 residential transactions last month - that's a 2.4 per cent drop compared to the previous month. 

Iain McKenzie, chief executive of The Guild of Property Professionals, says: “It comes as no surprise that residential transactions were down slightly in January, but what is unusual is the fact that transactions are up by almost a quarter compared to the same month last year. Property sales have had a rollercoaster year, but the peaks and troughs almost cancel each other out. What we’re left with is another strong year of sales and a reminder of the enduring strength of the UK housing market.”

He says the figures bolster further the case to extend the stamp duty holiday, which is currently set to end on March 31 but may be extended (see here).

“The Chancellor has a big decision to make about the end of the stamp duty holiday next month, and a short extension or gentle phasing out of the scheme could help avoid the cliff edge in transactions that the market fears” says McKenzie.

And Mike Scott, chief analyst at online agency Yopa, says: “We expect that the number of purchases will remain very high until March, and then drop off for a few months before returning to normal. The year as a whole is likely to see a higher number of purchases than in recent years, perhaps as high as 1.3m.

“The housing market has remained open during the recent and current lockdowns, but many people are still waiting for life to return closer to normal before they make their next move. After a brief slowdown in the second quarter after the stamp duty holiday ends, we anticipate a very active housing market in the second half of this year.”