Stamp Duty cited for increased April transactions

The most recent analysis from HMRC has revealed that property transactions dipped slightly during April – dropping by 3.2% in comparison to March.

HMRC’s data reveals that the provisionally seasonally adjusted UK property transaction count for April 2017 was:

• 99,910 residential
• 9, 980 non-residential

These figures were 20.3% higher than in the same month of last year.

Stamp Duty

However, HMRC have quickly moved to state that direct comparisons of residential transactions between April 2017 and April 2016 should be avoided for one specific reason. This was due to the introduction of the 3% Stamp Duty surcharge being introduced in April 2016.

Stephen Wasserman, Managing Director at West One Loans, observed: ‘The property market will take a while to fully recover from the jitters caused by stamp duty hikes and economic uncertainty. On top of this, the result of the upcoming General Election is likely to have an impact over the coming months. Nevertheless, we’re confident the sector will bounce back. Although the market is resilient, during times of prolonged economic uncertainty it is important that borrowers are aware of the range of financing available. Flexible borrowing options, such as bridging loans, can help to speed up the transaction, enabling buyers to move faster and capitalise on opportunities in this uncertain environment.’[1]

Shaun Church, Director at Private Finance, also noted: ‘While residential transaction levels are significantly higher than a year ago, the changes to stamp duty for second homebuyers in March 2016 render an annual comparison pointless. Homeowners and investors rushed to beat the deadline last year, which led to an explosive March followed by a quiet April for the residential market. Today’s market remains slightly sluggish, with the number of seasonally adjusted transactions dipping between March and April.’[1]

‘The upcoming election is unlikely to be having a significant effect on property transactions, particularly as the residential market took last year’s Brexit vote in its stride. The main reason behind weaker transaction figures remains the changes to stamp duty, which have particularly limited activity towards the upper end of the housing market.’[1]

Steady Progress

Jeremy Leaf, former RICS residential chairman, commented: ‘At first glance one might think these figures are hugely disappointing but when you consider what was happening this time last year and what has happened to property transactions in the past few months, they represent steady progress for the housing market. Transaction numbers are really key to what is going on in the market – how many people are actually getting on with the business of moving – and these numbers suggest some resilience.’[1]

‘What the HMRC figures do show is the huge impact that changes to stamp duty can have, not just on property transactions but the wider economy bearing in mind how many people are dependent in other trades on people moving home.’[1]

[1] http://www.propertyreporter.co.uk/finance/stamp-duty-cited-as-cause-of-slow-april-transactions.html