The stamp duty hike for additional properties came into force on 1 April, and it had a huge impact in the months beforehand. Landlords were compelled to complete sales of new buy-to-let (BTL) properties before the 3% surcharge came into force, and the figures show just how keen they were to buy…
HMRC's latest seasonally-adjusted figures estimate that 165,480 residential transactions took place in March 2016, an increase of 41.5% from February (116,930) and up a considerable 69.7% year-on-year (up from 97,490 in March 2015). On a non-adjusted basis the increase in transactions is even starker, with the provisional total for March being 74.8% higher on a monthly basis and 77.1% higher than in March 2015.
"These official figures show the huge scale of desperation for buy-to-let investors and holiday home buyers to beat the new 3% stamp duty surcharge," commented Doug Crawford, CEO of My Home Move. "The 40% monthly increase also shows just how well the industry pulled together to help push property purchases over the line, with whole chains of purchases depending on successfully completing before the end of the month."
My Home Move's own figures back up these findings, with Doug pointing out that March was the busiest month the firm had ever seen: it saw a record number of transactions during the month, including the busiest ever day for completions on 31 March, with it reaching a total of 1,120 in that one day.
The value of mortgages lent during the month provides further evidence of the pre-April rush, with figures from the CML putting gross lending at an estimated £25.7bn in March, up 59% on an annual basis and an increase of 43% in a single month. It's also the highest March figure seen since 2007, when it reached £30.9bn, and puts gross lending for the first three months of 2016 at an estimated £62.1bn, a full 39% higher year-on-year.
CML economist Mohammad Jamei viewed the "substantial jump" in lending as a direct consequence of the stamp duty hike, despite the figures being "against a backdrop of a recovering market" at large. However, no-one really expects this level of activity to continue – the increase is thought to be only a short-term feature of the market, as Mohammed explains:
"The distortion appears to be larger than any previous stamp duty change we've seen. As a result, 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."
Doug Crawford agrees: "The new stamp duty surcharge was turbo-charging the property market by bringing forward purchases. We anticipate that property transactions over the coming months will slow as housing activity cools off from these dramatic levels."
Essentially, the market will probably return to normal in the coming months, but this doesn't mean that activity will flatline altogether. Indeed, the market remains strong, with or without external influence, and for that reason you'll want to take action as quickly as you can.
Desirable houses don't stay on the market for long, and nor do the best mortgages, so if you're thinking of taking the plunge, now could be a great time to do it! The reduction in competition from landlords could mean it's slightly easier to secure your dream home, too, and if you can find the right mortgage deal (by checking out our best buys), you've got the perfect combination.
Compare the top mortgages
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.