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'Forgotten' new stamp duty surcharge imposed on 5,500 sales

A stamp duty surcharge which has been labelled ‘forgotten’ because of its low profile has nonetheless bagged £45m for HM Treasury in just five months.

A two per cent surcharge on residential properties purchased by non-residents was introduced in Apri; its launch was largely buried in terms of publicity by the dramatic effects of the stamp duty holiday applied to much of the mainstream market.

However, this ‘forgotten’ surcharge applied to 5,500 transactions in its first five months, paying £45m.

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Meanwhile in the wider housing market, covering all transactions by domestic and foreign buyers, stamp duty receipts in the third quarter of this year were buoyant, despite the SDLT holiday tapering to an end.

Residential SDLT receipts in Q3 2021 remained slightly above the third quarter average for 2017 to 2019 (£2,483m vs £2,438m) although transactions fell to 318,700 - some 13 per cent fewer than in the second quarter of the year. 

Transactions between £1m and £2m were 42 per cent higher than their average for the 2017-to-2019 period, while the over-£2m market saw 60 per cent more sales. 

Transactions in the buy to let and holiday home sectors, paying the three per cent additional homes surcharge, totalled 70,000 in Q3 2021.

This was a fall of 17 per cent compared to Q2 2021 but still 15 per cent more than the 2017-to-2019 third quarter average.

Frances Clacy, research analyst at Savills, says: “Transactions remain above normal levels for the time of year and a continued high number of agreed sales supports predictions of a bumper year for transactions, well above pre-pandemic levels. 

“This tells us that there has been more to this market momentum than just the stamp duty holiday – low interest rates and the desire to upsize have also played an important part in driving demand.

“It’s particularly promising to see so much activity at the top end of the market in the last three months, underpinned by continued demand for larger homes from domestic buyers in search of more space post-lockdown. However, now we are also starting to see green shoots of recovery in the international buyer market, both from expats and those looking for an additional base in the UK.

“As global borders gradually re-open, we expect to see more activity in the form of transactions and for the long-awaited recovery of prime central London to take hold in earnest – especially as luxury housing in prime postcodes remain good value, in a historical context.”

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