The EU referendum and changes to Stamp Duty for landlords have caused uncertainty in the housing market, which could lead to a fall in house prices and property sales, according to the Royal Institution of Chartered Surveyors (RICS).
For the first time since 2008, more property professionals are expecting sales to drop rather than rise in the near future, says the latest monthly report from the RICS.
Prices and Sales May Fall Due to Stamp Duty Changes and EU Referendum
The expected decline in activity comes after a busy start to the year, as buy-to-let landlords rushed to complete sales ahead of the 3% Stamp Duty surcharge on 1st April. The RICS reports that agreed sales have increased for the fourth consecutive month as a result.
The organisation says that most UK regions experienced house price growth in March, while property prices have increased every month for the past three years on a national level.
However, London has not followed the trend, with prices falling in some areas. The RICS believes that uncertainty over the EU referendum and the London mayoral election will continue to contribute to decreasing prices. Of the surveyors working in central London, 38% more predict that house prices will fall rather than rise in the next three months.
The Chief Economist at the RICS, Simon Rubinsohn, says: “Elections inevitably bring with them periods of uncertainty in the market, and our figures would suggest that May’s devolved elections are no exception. Likewise, the EU referendum is likely to be an influence in terms of the damper outlook, for London in particular.”1
John King, of London-based estate agent Andrew Scott Robertson, reports that activity picked up ahead of the Stamp Duty change. He comments: “The outcome is likely that we will see a slowdown in sales occurring while outside events surrounding currency rates and employment levels undermine confidence.”1
The latest Credit Conditions Survey from the Bank of England found that banks and building societies are also expecting buy-to-let mortgage lending to drop significantly in the coming months.
Additionally, the Council of Mortgage Lenders has reported that buy-to-let landlords seeking to complete purchases before being hit with the higher tax rate boosted activity in the first three months of the year.
Property sales in England and Wales were at a nine-year high in March, says LSL Property Services. It is therefore unsurprising that sales levels will come down from this peak in the coming months.