HMRC statistics show that Newark house sales dropped significantly in July along with the test of the UK market. House sales tumbled by almost two-thirds in July after tens of thousands of homebuyers rushed to complete their purchases in order to beat Rishi Sunak’s end-of-June stamp duty holiday deadline.
Following a record surge in activity in June, when 213,370 UK homes changed hands, transactions slumped 62% to 82,110 in July according to official data, after the government scaled back its tax break for buyers in England and Northern Ireland.
HM Revenue and Customs said it showed that homebuyers were “completing property transactions earlier to take advantage of government housing market policies”. They also said that following the changes to the rules, “an expected but noticeable decrease in sales has been observed”. Until 30 June, the first £500,000 spent on a property was tax-free, which meant a saving for a buyer of up to £15,000. However, Sarah Coles, a personal finance analyst at the investment firm Hargreaves Lansdown, said the tax break had a “powerful psychological impact … which went way beyond the actual cash buyers could save”.
On 1 July the tax break was scaled back, with the threshold at which the tax on property purchases begins falling to £250,000. This so-called “nil rate band” will return to its pre-pandemic level of £125,000 on 1 October. The stamp duty holiday has been credited with fuelling a mini boom in the property market and pushing up prices. Last week, figures from the a record surge in activity in June covering the period to 30 June showed house prices rising at their fastest rate in almost 17 years.
Despite the sizeable drop-off in sales in July, the HMRC data showed that transactions were still 1.8% higher than in July last year, when activity was still affected by the near-complete closure of the market for several months.
In July last year Newark house sales had barely got going after the first lockdown, solicitors and mortgage lenders were struggling with working from home, and Local Authorities were similarly struggling to cope with the higher demand for searches. Therefore, these statistics are quite surprising.
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