Stamp duty stampede shows its consequences

Stamp duty stampede shows its consequences

Following the surge in property purchases by buy-to-let landlords in March, purchase numbers have seen a slowdown in April and May. Nevertheless, the last three months combined still reach record sale levels.

According to latest figures from HM Revenue and Customs, a total of 84,300 homes were sold in May.

Two months earlier, in March, just before the introduction of George Osborne’s 3% stamp duty surcharge on buy-to-let and second homes, sales reached record levels of 171,220.

After that, sales dropped away slightly, which has continued until now.

“While April and May are lower than the corresponding months in 2015, it should be noted that the total for March to May is still substantially higher than the corresponding period last year,” HMRC commentary on the figures said.

Anyone who is buying a second home or investing in a buy-to-let property in England, Wales or Northern Ireland is now facing a 3% stamp duty surcharge, starting from April 1. In Scotland, a similar tax – the Land and Buildings Transaction Tax (LBTT) – was also raised.

The result of this new tax was a small drop in property sales. In April 2016 a total of 74,590 properties were sold in the UK compared to 86,970 during the same month one year earlier. During May, sales reached 84,300 in 2016 compared to 97,820 one year earlier.

Rob Weaver, director of investments at crowdfunder Property Partner, said: “What these figures really show is the continuing ripple effect of the government’s stamp duty changes on the housing market.”

“The desperation to complete before the April 1 deadline pulled forward thousands of housing transactions that would normally have happened in April or May. March recorded the highest number of transactions in a decade.”

“Transactions should slowly rebuild as the summer months are historically strong. But the dire shortage of supply is the main reason why we see house prices on a consistently upward trajectory.”

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