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Sector comments on HMRC UK Property Transaction Statistics

Tuesday 22 August 2017

HMRC has released their latest property transaction statistics and the property sector has responded.

The number of residential transactions climbed by 1.3 per cent in July, 8.3 per cent higher than the corresponding month last year, according to new statistics released by HMRC. Figures for the month show seasonally adjusted transactions rose for the second month in a row, from 103,450 to 104,760.

An uptick in property transactions is encouraging, especially off the back of the political and economic upheaval we have seen in recent months, so this could be an indication that buyers and sellers are beginning to feel more confident.

However HMRC warned that year-on-year comparisons should be viewed with caution as the General Election in June may have led buyers to change their behaviour.

The data comes in contrast to a number of recent indicators pointing to a slowing housing market. Rightmove recently reported a 0.9 per cent drop in asking prices in August, while figures from Your Move and Halifax revealed annual growth had reached a four-year low in July.

Brian Murphy, Head of Lending for Mortgage Advice Bureau said:

"The total seasonally adjusted figure for July transactions shows a year on year increase; healthy by anyone’s reckoning.

“When we take all into account in terms of current political and economic climate, the data today surely reassures those who were concerned about consumer sentiment regarding the property market, as it’s clear that although some predicted a ‘summer slow-down’, transaction volumes have remained in good health with public confidence in bricks and mortar undeterred. The figures are particularly welcome given that many of these transactions would have been initiated either before or just after the General Election, therefore again suggesting that buyers and sellers have maintained a ‘keep calm and carry on’ approach to their move, with their individual circumstances proving to be the main motivation in their decision to purchase.

“We need to bear in mind...that available stock...continues to remain low which will inevitably have an impact on the amount of completed transactions reported, with this situation potentially continuing for some time. The issue with the current stock shortage is that it’s become a vicious cycle, as with fewer properties on the market available there is less choice for discretionary movers to perhaps peruse and ‘tempt’ into selling their existing home in order to buy something else, which means that those currently moving are doing so because they have to move, rather than choosing to move as we’ve seen in previous years. In any event, it would appear that consumer confidence in bricks and mortar still remains strong and that movers still want to move wherever possible, particularly given that affordability is being assisted due to the record low mortgage deals available and the opportunity to fix in for two, five or even ten years in some cases at ultra-competitive rates, meaning that providing that the current direction of travel for the market is quite likely to continue for the foreseeable future.”

Andy Sommerville, Director at Search Acumen, commented:

“Viewing the uplift in property transactions as a turnaround in the market is a position of false confidence. With the market returning to the same levels as 2015, it is clear the government’s initiatives to get people onto and moving up the housing ladder have proven to be a false start. Many Britons are yet to make it off the starting block.

“Too many hurdles are in the way for first time buyers and prospective buyers and sellers to create a winning housing market, namely a critical lack of supply which continues to drive up prices to unreachable heights for many. The government needs to start building if it’s to see a fluid property market emerge once again.”

North London estate agent and Former Royal Institution of Chartered Surveyors (RICS) residential chairman, Jeremy Leaf said:

“While the seasonally-adjusted HMRC numbers are nothing to get particularly excited about, they do show a relatively stable market and reflect what we are seeing on the ground. Realistic buyers and sellers are getting on with moving and were doing so even at a time when things were relatively uncertain because of the general election.

“The figures compared with last year are misleading, however, because this time last year the market was in the doldrums following the imposition of the stamp duty surcharge. Looking forward we are expecting more of the same with buyers and sellers negotiating hard to get sales through. Those who aren’t prepared to see the reality of the present market will be left behind.”

Legal & General Mortgage Club director Jeremy Duncombe says:

“With a lack of new stock coming onto the market, property transactions have remained flat for quite some time now. The recently published Lloyds Homemover report revealed homemovers now account for just over half of the housing market, compared to 64 per cent a decade ago. Rather than selling their house, families are deciding to stay put in their current homes and paired with today’s result, this highlights the effect that a chronic lack of housing is having on the UK’s housing market.

“The UK property market is unlikely to grind to a halt, as low interest rates continue to keep demand high, but ultimately the Government needs to address the ongoing issue of supply. We need a long-term solution by building more homes allowing a greater number of affordable properties to come onto the market. This will not only provide more choice for second and last-time buyers, but also free up additional housing stock for first-time buyers to secure homeownership.”