House sales slump 62% in July after stamp duty holiday deadline

Property market subdued after rush of transactions in June as buyers scrambled to take advantage of temporary tax cut

A tax cut on property purchases tapered off from 1 July causing sales to fall (Getty Images)

House sales slumped 62 per cent last month after the stamp duty holiday ended, new figures show.

An estimated 82,110 residential property sales were completed in July, down from 213,370 in June when thousands of buyers rushed purchases through to take advantage of the tax cut.

June saw the highest monthly total of property sales since April 2005 and more than double the number recorded in the same month a year earlier during the first coronavirus lockdown.

HMRC said that, following last month's stamp duty deadline, “an expected but noticeable decrease has been observed within provisional July 2021 UK residential transactions statistics”.

The stamp duty holiday in England and Northern Ireland meant that, until 30 June, buyers did not pay tax on the first £500,000 of a property, meaning a saving of up to £15,000.

From 1 July, the threshold was reduced to £250,000 and it falls again to £125,000 on 30 September.

The savings have more than been cancelled out by the rise in property prices which has been fuelled in part by the tax cut. A report from the Resolution Foundation think tank concluded that the primary effect of the stamp duty holiday had been to transfer billions of pounds from taxpayers to existing homeowners.

Jeremy Leaf, north London estate agent and former residential chairman of the Royal Institution of Chartered Surveyors (RICS), said: “These figures for the period just after the withdrawal of the full stamp duty holiday are perhaps better than expected although reflect what we have been seeing, that buyers were still keen to proceed with their purchases, even though they were saving less than they would have done before the end of June.”

RICS reported earlier this month that house hunter inquiries started shrinking in July, bringing to an end a four-month positive streak, while Nationwide's house price index showed values dropping back by 0.5 per cent in the first such fall since March.

Mr Leaf said: “The market is definitely calmer now, but many are taking advantage of staycations to keep in touch with market activity, with listings slowly beginning to rise again as prospective sellers return from holiday.”

Mike Scott, chief analyst at estate agents Yopa, said: “Given the number of sales that were brought forward, this is a high number and suggests that the dip in the number of sales following the removal of many of the tax savings will be short-lived.

"We expect another very strong month in September, before the new deadline for the remainder of the stamp duty holiday, followed by another short-lived dip.”

A Treasury spokesperson said: “Our temporary stamp duty cut helped protect hundreds of thousands of jobs reliant on the property market by bringing forward house moves.

"Those who missed the deadline in June can still benefit from the £250,000 stamp duty holiday until the end of September, smoothing the transition back to the normal thresholds."