Some 43 per cent of all stamp duty comes from buy to let investors and holiday home purchasers – and almost half of that is accounted for by the three per cent stamp duty surcharge on additional homes, introduced two years ago.
Analysis by the investment consultancy London Central Portfolio shows that as a whole, residential Stamp Duty receipts increased £1.3 billion in 2017 compared with 2016, reaching a record £9.5 billion in total.
However, around a fifth of it was accounted for by the additional homes surcharge and without this the Stamp Duty take for 2017 would have been about the same as 2014.
In addition the LCP analysis shows that the most expensive 10 per cent of properties contributed around 60 per cent of all Stamp Duty receipts and that – unsurprisingly – Greater London contributed about 39 per cent to total revenue.
Two boroughs alone, The Royal Borough of Kensington and Chelsea and the City of Westminster, contributed in excess of £0.6 billion – by contrast, the basic rate of Stamp Duty paid by buyers across England and Wales as a whole was £7,161 on average.
With UK residential transactions largely static, up 1.1 per cent to 891,600 across the year, LCP says it is clear that the stamp duty surcharge was the main driver for increased revenue.
The government needs to be careful with further policies targeting landlords, says Naomi Heaton, chief executive of London Central Portfolio.
“Contributing a huge amount towards the Exchequer’s tax take, landlords have been under increased public and government pressure over the last five years. New lettings listings are now down five per cent to February, according to a recent Knight Frank report” she says.
“Reliance on the Stamp Duty take from second properties, which pay an additional rate of three per cent, to prop up the market is therefore a dangerous gamble. Representing almost half of all tax take, any new deterrent could start eating away at the public purse.
“Unless the Government can start to stimulate property transactions again, which according to Land Registry have fallen 29 per cent in England and Wales over the last decade, the outlook for future Stamp Duty revenues looks fairly grim”