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Official figures from HMRC confirm that there was a large increase in property sales in the UK in March 2016 which was associated with stamp duty change. House sales were 77% higher than March 2015 and 75% up month on month and the HMRC report states this must be directly linked to a rush to buy ahead of the new 3% stamp duty charge for additional homes. There has been plenty of anecdotal evidence that buy to let investors were rushing to beat the 01 April deadline and this is now confirmed. However it is likely that sales in April will fall considerably as a result of the frenzy. Even the seasonally adjusted estimate shows that the number of residential property transactions increased by 41.5% between February 2016 and March 2016 and increased 69.7% compared to March 2015. ‘The large increase in transactions for March 2016 is likely to be associated with the introduction of the higher rates on additional properties in April 2016,’ the HMRC report says. ‘Additional non-tax factors may have played a role as well, for example the Bank of England's plans to curb buy to let mortgages resulting in a rush to purchase,’ it adds. The HMRC figures also shows that for March 2016 the number of non-adjusted residential transactions was about 74.8% higher compared with February 2016. Lucian Cook, Savills head of residential research, pointed out that even on a seasonally adjusted basis volumes were up 40% on February 2016 against a backdrop of economic uncertainty, the forthcoming referendum on the future of the UK in the European Union referendum and no loosening of mortgage lending criteria. He also pointed out that the latest data from the Council of Mortgage Lenders shows mortgage lending was 43% higher in March compared to February, and 59% higher than March 2015. ‘This suggests that while borrowing to support this uplift in sales volumes has been significant, there has also been a notable weighting towards cash buyers. All these figures confirm a frenzy of buying activity before the 01 April introduction of the 3% stamp duty surcharge for additional homes purchases,’ Cook explained. ‘It underscores the significant distorting effect that stamp duty changes can have on the housing market. This is clearly a one off event and such volumes are unsustainable against a backdrop of economic uncertainty and the prospect of an increased regulatory environment for buy to let borrowing,’ he added. ‘We’d expect a significant fall in transaction levels in the second quarter of the year to offset the March activity and the stamp duty surcharge to act as a longer term drag on housing transactions,’ he concluded. Doug Crawford, chief executive officer of My Home Move, said that March was the busiest month the business has ever seen with a record number of transactions. The busiest ever day for completions was 31 March, reaching a total of 1,120 in the single day. ‘The new stamp… Continue reading →