Residential property sales have plummeted following April’s rise in stamp duty, new government figures have revealed.
According to HM Revenue and Customs, residential property transactions in April were 45% down on the previous month.
The slowdown in the market comes after buyers brought forward transactions to beat the introduction of the stamp duty charge.
There were 84,280 completed sales of residential properties in April, down from March’s figure of 153,700. Compared with the same month last year there were 14.5% fewer transactions.
The 3% stamp duty increase, which came into effect on 1 April, is part of the government’s attempt to curb the buy-to-let market and free up property for first-time buyers. The basic rate of tax relief landlords can claim on properties is also set to fall to 20% from April 2017.
Andy Sommerville, director of Search Acumen, said: “A 45% month-on-month drop in transactions is a powerful testament to how government reform can alter forecasts and sway public attitude.
“Whilst the spike in March more than makes up for the fall in April what is worrying is that this dip is not just the consequence of buy to let landlords and second homeowners clearing transactions ahead of April. It’s also the result of people trying to find their bearings, preferably even trying to stay away from the market as Brexit speculation grows louder.
“The Chancellor, in efforts to sway voters to stay has predicted economic shock and plummeting house prices in the event of the UK leaving the EU, while others believe falling house prices could be a good thing. Either way, the uncertainty is stagnating the market. This is likely to continue well into June, with transactions picking up once there is greater clarity on the UK’s direction.”
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