Residential property sales in the UK increased by 1.5% in May compared with April but the month’s seasonally adjusted figure is down 11.9% year-on-year. 

The latest report from HMRC suggests that the sharp rise in transactions for March 2016 followed by the significant reduction in April was primarily caused by the introduction of the 3% stamp duty surcharge for those acquiring buy-to-let and second homes in April 2016. 

The Bank of England’s plans to curb buy-to-let mortgages along with uncertainty around the EU referendum also had a major impact.

Richard Sexton, director of Chartered Surveyor e.surv, commented: “The peak in transactions driven by buy-to-let activity earlier this year made the market look artificially busy in March. And while momentum is starting to build, the property market is still finding its feet.  Too many first-time buyers are struggling to get a foothold on the property ladder as saving for rising deposits is still an almighty challenge. Small-deposit loans in May fell 5.3% to total 11,981 – an unsustainable level if first-timers are to return to the housing market in a big way.”

But while the report reveals that there was a sharp drop in transactions between April and May compared to the corresponding period last year, the total for March to May 2016 is still much high than the same period in 2015.

“Transaction figures in April and May weren’t quite at the level we witnessed for the corresponding period in 2015, but the huge spike in activity in March this year meant that the market had established something of a cushion which softens the blow. Activity in April was always likely to step back after March’s flurry and April’s improvements show a market finding its more natural level again,” said David Brown, CEO of Marsh & Parsons.

It remains to be seen how the outcome of the Brexit vote and other legislation and tax changes will impact the housing market, but Steve Bolton, founder of Platinum Property Partners, believes that regardless of whether Britain votes to remain or leave the 28-member state, property has still proven to be “a great long term-investment”.

“It just highlights that it is now more important than ever for amateur landlords, especially those who invested in property to provide an income in their retirement, to be more professional in the way they run their businesses,” he said. 

Transactions data

Source: Land Registry