March activity followed by steep April drop amid tax shift and economic uncertainty
Residential property transactions across the UK dropped sharply in April following adjustments to Stamp Duty thresholds, according to the latest figures from HM Revenue & Customs (HMRC).
Seasonally adjusted residential deals fell by 64% to 64,680 in April, compared to 177,440 the previous month. The sharp decline follows a surge in March activity, as buyers rushed to complete purchases before the new Stamp Duty Land Tax (SDLT) rules came into effect on April 1.
HMRC noted the dip follows a spike in transactions in March, likely driven by buyers bringing forward purchases to avoid higher tax charges.
On a non-seasonally adjusted basis, residential transactions fell by 66%, marking the steepest monthly drop since records began for this metric.
The non-residential sector was also affected, with seasonally adjusted transactions down 16% compared to March. Year-on-year, non-residential activity was 9% lower. On a non-adjusted basis, April saw a 21% fall in non-residential transactions month-on-month.
“Today’s figures demonstrate the challenging journey many who approached the buying and selling process were experiencing just prior to the Stamp Duty threshold changes before April,” said Nathan Emerson (pictured left), chief executive of industry body Propertymark. “These challenges have escalated to this day thanks to a delicate global economy, inflation currently sitting at 3.5%, whereas that inflation figure was 2.6% during the timeframe of today’s figures, and the Bank of England rightly displaying caution regarding any lowering of the base rate. These factors added together appear to have dented the confidence of many potential home movers.”
Andrew Lloyd (pictured centre), managing director at property data and technology provider Search Acumen, however said there was still strong demand despite the end of the SDLT incentives.
“The long Easter break marked an end to the Stamp Duty holiday and the surge in transactional activity that kicked off the year,” he said. “But across the market we are still seeing a strong appetite for deal flow and a demand for bricks and mortar that will continue to resonate throughout the upcoming months.”
Lloyd also noted that commercial property has performed well, particularly retail, aided by rent increases and easing lending conditions.
“However, as we begin to feel the shockwaves of recent global economic headwinds, the next few months will be an inflection point for market confidence,” he said. “Getting transactions over the line is a complex and at times fragile process.”
Phil Lawford (pictured right), national account manager at Saffron for Intermediaries, described April’s slowdown as a natural pause.
“A slight dip in transactions during April is not unexpected as the market adjusted to the recent Stamp Duty changes,” Lawford pointed out. “Some buyers may have paused to reassess their position, particularly given the backlog to complete purchases ahead of the March deadline.
“Despite the slower numbers, there are plenty of reasons to be optimistic. We’re heading into the typically busy summer period, and government reforms to support housebuilders offer a fresh hope for increasing supply and revitalising the market – making it simpler and quicker for SMEs to build homes - these reforms improve choice and affordability for buyers.”
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