Homebuyers are expected to pay a record breaking £17.3bn in Stamp Duty this tax year, but the figure is set to drop next year when an expected 183,000 fewer homes are purchased – according to Coventry Building Society’s analysis of Budget documents.
The Office for Budget Responsibility’s (OBR) ‘Economic and Fiscal Outlook’ shows that residential property transactions will fall from 1,232,000 to 1,049,000 in the 2023-24 tax year and aren’t expected to return to current levels until 2026-27.
Despite these forecasts the Chancellor did little to support the housing market in his Budget, missing a vital opportunity to help potential homebuyers.
The forecast for Stamp Duty receipts follows a similar pattern as house purchases, with a drop of £4.7bn in revenue expected next year due to a combination of the temporary changes to thresholds announced in September and the predicted lower number of transactions. Property transaction tax receipts should return to this year’s levels in 2026-27.
Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “If the OBR’s forecast is correct almost 200,000 fewer homes are going to be purchased over the next year.
“That should have been a wake-up call for the Chancellor, but instead he chose to overlook homebuyers and the property market.
“A more active and ambitious approach to property tax is sorely needed. We all saw what the Stamp Duty holiday in 2020 and 2021 did to inject life into the market, and tax revenues still remained healthy. These forecasts show a period of lower transactions and lower tax revenues is on the cards – a lose/lose scenario.
“There’s no shortage of credible suggestions, from incentivising energy efficient home improvements, to allowing one off waivers for downsizers, to fluid thresholds which move in line with inflation. It was hugely disappointing that Stamp Duty wasn’t even mentioned and the current thresholds remain temporary.”
