Buyers rush to beat new stamp duty tax resulting in record number of properties bought in March
The number of properties sold and completed in March 2016 hit a new high of over 161,990 up 77% on March 2015 and beating the previous high of 150,000 in 2007 before the last house price crash. The Council of Mortgage Lenders also found mortgage lending was up 59% on the previous March hitting £25.7bn.
Mohammad Jamei, a CML economist, said: “Against a backdrop of a recovering market, the substantial jump in lending in March was significantly influenced by a late surge of activity to beat the government’s stamp duty change on second properties, which came into effect at the start of April.
“The distortion caused by this stamp duty change appears to be larger than any previous stamp duty change we’ve seen.”
Jamei said the market was now expected to slow down. “We expect there will be about 10,000 fewer mortgaged transactions each month in the second quarter of 2016 than would otherwise have been the case, offsetting the increase in activity seen in March.” he said.
Lucian Cook, head of residential research at property firm Savills, said the figures confirmed “a frenzy of buying activity” before the 1 April tax changes, and underscored the significant distorting effect that stamp duty changes can have on the housing market.
He added: “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.
“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.”
A Treasury spokesperson said: “The new higher rate of stamp duty on additional properties will help double the affordable housing budget and support even more first time buyers fulfil their ambition of owning their own home. We think that’s fair. It was right to consult on this policy to make sure it worked fairly and to allow buyers time to plan effectively.”