House sales in the UK soared by a quarter in January – despite lockdown – as buyers make a ‘sprint finish’ to beat next month’s stamp duty holiday deadline.
More than 120,000 residential property sales were recorded last month, according to new figures released by HM Revenue and Customs (HMRC).
The figure is a 24.1 per cent increase compared to last January, when 97,000 house sales were made.
One property expert said the rise was likely due to buyers ‘racing’ to complete their transactions before the Government’s stamp duty holiday ends.
The scheme saw the Government move the threshold on stamp duty – a tax on the purchase of property or land – from £250,000 to £500,000.
The move, introduced last year in the wake of the first Covid lockdown to encourage people to move home, saved buyers an average of around £5,000 in taxes.
More than 120,000 residential property sales were recorded last month, according to new figures released by HM Revenue and Customs (HMRC)
Those buying properties over £500,000 could save up to £15,000. But the tax cut, which spurred a boom in property sales, is set to end on March 31.
Reports have suggested the Government could look to extend the scheme for another six weeks beyond the current deadline.
However there has bee no official word on an extension yet, with Chancellor Rishi Sunak set to lay out his March budget next week.
Though the new HMRC figures show a flurry of house buying in January when compared to the same time last year, the figure is 2.4 per cent down on December 2020.
And the market is still playing catch-up compared with previous years, according to the figures.
HMRC said that, looking at the financial year 2020/21 so far, which covers April 2020 to January 2021, transactions were at their lowest since the same period in 2012/13, when the total was 767,420.
But Jonathan Hopper chief executive of buying agent Garrington Property Finders, expects data for February and March to show a ‘sprint finish’ of transactions.
He said: ‘The number of completed transactions eased off a touch compared to December, and the lag effect of the current lockdown – which has squeezed the number of new sales being agreed – could drag down the number of completions in coming months.
‘Pushing against that is the large number of transactions still in the pipeline, in which buyers are racing to complete in the final weeks before stamp duty rates rise at the end of March.
‘The February and March data will likely see a sprint finish of transactions, so the true test of the market’s momentum will start in April.’
According to the figures, around 867,970 sales have taken place so far in 2020/21, compared with 978,530 during the same period a year earlier.
According to the figures, around 867,970 sales have taken place so far in 2020/21, compared with 978,530 during the same period a year earlier
HMRC warned that its latest figures are based on incomplete data as not all stamp duty returns had been completed when the figures were compile. It expects to make revisions in the coming months.
The housing market was effectively shut down for a period at the start of the coronavirus pandemic, but a temporary stamp duty cut in July and the reopening of the market have pushed up demand.
Gareth Lewis, commercial director of property lender MT Finance, said: ‘While the (stamp duty) saving is attractive, trying to move with social distancing, and home schooling, to contend with is not.’
Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said: ‘Renewed home-buyer and seller activity in the last few weeks seems to be directly related to the vaccine rollout and potential easing of lockdown.’
Anna Clare Harper, chief executive of asset manager SPI Capital, said: ‘Challenging economic conditions make potential home-buyers less willing and able to buy.’
| Month | Number of property sales |
|---|---|
| January 2020 | 97,980 |
| February 2020 | 99,000 |
| March 2020 (First lockdown) | 94,140 |
| April 2020 (First lockdown) | 42,150 |
| May 2020 (First lockdown) | 48,260 |
| June 2020 (First lockdown) | 62,070 |
| July 2020 | 70,710 |
| August 2020 | 81,310 |
| September 2020 | 95,470 |
| October 2020 | 107,010 |
| November 2020 (Second lockdown) | 114,780 |
| December 2020 | 124,570 |
| January 2021 (Third lockdown) – Data provisional | 121,640 |
Earlier this month it was reported that Rishi Sunak is considering extending the stamp duty holiday by an extra six weeks to stop buyers dropping out of sales if they miss the deadline.
The Chancellor fears thousands being caught in a ‘completion trap’ and is looking to extend the holiday until mid May, past the current March 31 deadline.
A cross-party debate heard earlier this month that transactions worth billions of pounds were at risk unless the tax cut was extended, with some deals already falling through.
There have been calls to implement a six-month extension but Sunak believes this would have a ‘gratuitous’ impact on tax receipts, The Telegraph reports.
A source said: ‘It is certainly the case that a lot of people would be caught in the completion trap if the holiday were to end when it is due to.’
While the scheme has boosted property sales, the buying process has been hampered by severe delays, with lockdowns, staff absences and increased demand hindering solicitors, mortgage lenders and search departments.
It has led to some buyers waiting for up to 100 days for the conveyancing process to go through.
This has added to the fears that many sales would fall through by the March 31 deadline.
Mortgage lender Paragon estimate that almost two thirds of buyers nationwide, representing sales worth £1.5billion, are in a chain where someone is dependent on completion by the end of next month.
On Thursday, the Help to Buy equity loan scheme was also extended until the end of May.
Ministers also ruled out this week introducing a new property levy to replace stamp duty and council tax after a study found it could lead to higher bills in the South East.
MPs were told last month the idea of introducing a ‘proportional’ tax based on home values was ‘under review’.
But a Government spokesman said: ‘We have no plans to introduce a new form of annual property tax.’