CML: stamp duty rise triggers 60,000 extra transactions

The CML says that the distortion caused by the new stamp duty rate "appears to have been larger than anything we've seen before that's associated with a tax change".

Related topics:  Finance News
Rozi Jones
9th May 2016
CML

Its analysis of new Bank of England and HM Revenue and Customs data shows that on a non-seasonally adjusted basis, property transactions reached 162,000 in March.

The CML would normally have expected this figure to have been just over 100,000, which implies a large chunk of the increase in transactions was down to the stamp duty change.

A 60,000 increase in property transactions compared to the baseline was "larger than expected", which the CML has attributed largely to a marked increase in cash transactions.

Cash-funded transactions increased by nearly as much as mortgage transactions, even though cash has on average only accounted for 35% of the market.

The CML's current best estimate is that an extra 32,000 mortgaged transactions took place in March, which means that cash transactions rose by 28,000.

Of the four categories, the largest proportionate increase was in buy-to-let house purchases, which increased by more than 180% from February. The next biggest increase was in cash transactions, which rose by more than 80%. Transactions by movers increased 60% and first-time buyer purchases increased by 28% compared to February.

Therefore buy-to-let still only made up only a third of the 60,000 increase in total property transactions.

CML analyst Mohammad Jamei said:

"Alongside the growth in transactions, there was a corresponding jump in lending. Our initial estimate was of extra lending of between £4 and £5 billion, with the data from the Bank of England showing the actual figure was at the higher end of this figure.

"We’ve now revised our initial estimate of lending in March to £26.2 billion, which was 46% higher than February. This implies just over £5 billion extra lending than would otherwise have been the case, which roughly tallies with the 32,000 or so extra mortgaged transactions, given an average loan of about £150,000 per mortgaged transaction.

"Our understanding is that approved applications that were in the pipeline were squeezed to complete before the stamp duty deadline, as opposed to seeing a big increase in new applications being approved in March. As a result, it is very likely that we will see lower activity levels in the next few months, which ties in with early data we have collected for April, showing a marked drop-off in lending."

More like this
Latest from Property Reporter
Latest from Protection Reporter
CLOSE
Subscribe
to our newsletter

Join a community of over 30,000 intermediaries and keep up-to-date with industry news and upcoming events via our newsletter.