UK surveyors report surge in buying as investors try to beat tax rise

British property valuers reported a surge of activity last Thursday as property investors tried to beat an increase in transaction taxes on rental investments coming into force in April.

Demand for housing remains buoyant, lifted by tight supply, record employment and cheap mortgage rates, even as the global economic outlook darkens – something which prompted the Confederation of British Industry to follow the Bank of England and downgrade its economic growth forecasts on Thursday.

The Royal Institution of Chartered Surveyors said January had seen the biggest increase in sales since April 2014, and that 74 per cent of participants in its monthly poll expected buy-to-let investors to boost demand before April’s tax rise.

RICS’s headline price balance held at December’s downwardly revised level of +49, undershooting economists’ forecasts in a Reuters poll for it to rise to +52 but close to recent highs.

The body also reported an increase in the number of homes being offered for sale for only the third time in 18 months, and by the largest margin since August 2013, though this was still too little to keep up with demand.

“With buy-to-let investors rushing to get into the market ahead of the stamp duty hike, the near-term pressure on prices is if anything intensifying,” said RICS’s chief economist, Simon Rubinsohn.

UK Finance Minister George Osborne announced in November that an extra 3 per cent transaction tax would apply to properties purchased to rent from April, as part of government efforts to boost home ownership.