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UK’s residential property transactions at lowest level in 11 years

First-time buyers are struggling to get onto property market

Provisional estimates from HMRC show that in the 2023/24 financial year, only one million, one hundred residential property transactions took place, the lowest number since 2012/13.

Joe Neal, Tax Manager said:

Residential property sales (with value over £40k) in the UK are their lowest level in 11 years. HMRC’s figures show the effects of the increased interest rates, with property transactions down 17.8% compared to last year and 27% the year before that.

People are not looking to move houses as that would mean switching to a new higher-rate mortgage. Additionally, with inflation and the cost of living running high, first-time buyers are struggling to build enough deposits to get themselves onto the property market. Both these factors combined are resulting in the sharp downturn in the number of property transactions.

The Government are now in a predicament where their Stamp Duty Land Tax (SDLT) takings have decreased by nearly £4bn in the last 12 months. However, increasing the SDLT would cause the market to freeze up even further. Another SDLT holiday would likely cause house prices to spike, leading people to ask for higher wages and increasing inflationary pressures. If this is coupled with the Bank of England reducing interest rates, the disparity between wages and house prices will likely increase, making it even harder for first-time buyers to get onto the property market.

Part of this slowdown can be attributed to the previous SDLT holiday announced by Kwasi Kwarteng in October 2022. At the time, people were spending less money and, therefore, had more savings than ever before. The SDLT holiday pushed prices up and led to people getting bigger mortgages at higher multiples of their earnings.

This was okay when mortgage interest rates were low, but now they have rapidly increased, and people are wondering how they are going to be able to make these payments. Homeowners are finding themselves stuck between trying to hold on to their properties, paying higher mortgage payments, or putting their property on the market and cutting their losses.

Would you like to know more?

If you have any questions about the above or would like to discuss your specific circumstance, please get in touch with your usual Blick Rothenberg contact or Jo Neal using the form below.

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