Covid-19: property transactions slump by half

The estimated number of residential property transactions in April was 53.4% lower than April 2019 and 46.1% lower than the previous month this year, as coronavirus restrictions brought the housing market to a halt, HMRC statistics reveal

HMRC says there were 38,060 transactions, as property sales fell to levels last observed during the 2008 global financial crisis, reflecting impacts from government measures introduced to limit transmission of the virus.

The precipitous drop is set to have a sharp impact on Treasury finances, at a time when coronavirus support schemes have seen government spending shoot up, as there will be a corresponding decline in stamp duty land tax (SDLT) and capital gains tax (CGT) receipts.

However the coronavirus lockdown guidance may not be the only factor behind the sudden decrease in selling activity.

Since 6 April, individuals who sell a second home must pay the CGT due within 30 days of the transaction rather than via than self assessment.

In addition some of the previously available tax reliefs for home owners have been trimmed. This may be one of the factors which has contributed to this decrease, with many sellers aiming to get sales over the line pre 6 April 2020 before the changes were introduced.

Whether or not the property market recovers to pre-Covid-19 levels will depend on how much disruption there is to peoples’ incomes and financial security, if people are concerned about job security and are worried that price falls may leave them with negative equity, a rebound may be slow.