New data released by Her Majesty’s Revenue and Customs (HMRC) reveals a significant decline in stamp duty tax receipts for the months of April and May. According to the figures, the tax receipts amounted to £2.4 billion, marking a substantial £1.1 billion drop compared to the same period in the previous year.
The report from HMRC’s official customs body attributes the majority of this decline, amounting to £900 million, to a combination of lower transaction numbers, a reduced rate of taxation, and the implementation of a more generous relief program for first-time buyers that was introduced in September of last year.
This revelation follows recent data provided by the Bank of England, which indicated a decrease in mortgage approvals for the month of April. The number of approved mortgages stood at 48,700, representing a decline compared to the previous month’s figures.
Further analysis of the Bank’s data reveals that April’s mortgage approvals figure is also lower than the 51,500 approvals recorded in March. These findings suggest that the housing market is experiencing a decline after two months of meagre growth. However, there was a slight increase in the number of approvals for remortgaging, rising from 32,200 to 32,500 during the same period.
Helen Morrissey, the head of retirement analysis at Hargreaves Lansdown, commented on the situation, stating, “After years of flying high, stamp taxes took a dive, dropping by £1.1 billion compared to the same period last year. The introduction of more generous relief measures may have played a role, but a significant portion of the decline is attributed to the woes facing the housing market.”
Morrissey continued, “A toxic mix of the cost-of-living crisis and surging mortgage rates has dampened demand in this once surging market. With interest rates on the rise and mortgage deals being withdrawn, there is little chance of witnessing a bounce back in demand anytime soon.”
Anticipating the future direction of interest rates, the Bank of England’s Monetary Policy Committee is widely expected to announce an increase in the base rate, potentially by 25 basis points, or even as much as 50 basis points, from its current level of 4.5%. This decision is expected to be made tomorrow, reflecting the ongoing challenges and uncertainties within the housing market.