UK property sales remained sluggish in May, falling below 2015 levels, following the surge in purchases earlier in the year by buy to let investors wanting to beat the 1st April stamp duty surcharge deadline.
The latest figures from HM Revenue and Customs (HMRC) reveal that a total on 84,300 homes were sold in May 2016, compared to 97,820 sold in May 2015, representing a drop in annual sales of 14%.
Sales peaked in March 2016 at 171,220, ahead of the introduction of a 3% stamp duty surcharge on buy to let and second homes.
Since then the number of properties being sold has fallen significantly and has not yet regained momentum. 74,590 sales were recorded in April 2016 compared with 86,970 in the same month a year before.
Commenting on the figures, HMRC said:
“The large increase in transactions for March 2016 followed by the substantial reduction in April is likely to be associated with the introduction of the higher rates on additional properties in April 2016.”
However, the department also added that while April and May are lower than the corresponding months in 2015, the total property sales for March to May is still higher than the corresponding period last year.
As from 1st April 2016, anyone buying a home in England, Wales and Northern Ireland, that is not their main residence, is now subject to a 3% surcharge on stamp duty.
The equivalent tax in Scotland, the Land and Buildings Transaction Tax (LBTT), has also been raised.
Subsequently, March 2016 was the busiest month for property sales in a decade.
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."
You may also be interested in: