Transaction levels stay muted – although first-time buyer numbers hit highest for decade

Residential transactions remain stagnant despite mounting evidence of an influx of new first-time buyers, according to the latest figures from HMRC.

HMRC found that there were 102,610 transactions in the UK in January, according to provisional seasonally adjusted figures.

That was 0.1% lower than the same month last year, once the figures were seasonally adjusted.

HMRC also found that residential transactions increased by 1.3% on December on a seasonally adjusted basis.

Last month, the number of non-adjusted residential transactions was about 23.3% lower compared with December.

The number of non-adjusted residential transactions was 2.6% higher than in January last year.

The figures come too early to reflect a return of first-time buyers to the market.

Earlier this month, UK Finance reported a decade-long high in the number of first-time buyers (365,000) in the market last year.

Haart also declared week month that first-time buyers were back in the market in a “big way” thanks to the cut in Stamp Duty, more stable house prices and low mortgage rates.

Commenting on yesterday’s figures from HMRC, Nick Chadbourne, chief executive of LMS, said: “January saw steady improvement in the housing market according to HMRC’s latest figures.

“Record numbers of first-time buyers are helping to drive activity and 2017 saw the highest number of first-time buyers in more than a decade which is reflected in our own conveyancing volumes.

“Help-to-buy, affable interest rates and the Chancellor’s recent easing of Stamp Duty have all helped first-time buyers make their first step on the property ladder.

“However, with asking prices rising by an average of £2,400 in January alone, and suggestions that the Bank of England will look to increase base rates at least once in 2018, there is no room for complacency and more can still be done to keep prices competitive and maintain demand.”

Paul Smith, chief executive of haart, said: “Today’s data shows that the number of property transactions across the country remained stable on the month in December, as the market shows no sign of faltering.

“Last week Rightmove announced that it experienced record activity at the start of the year, which chimes with our own data which shows new buyer registrations jump up 11% on the month, and viewings by 5%.

“However addressing problems of unaffordability, and the lack of stock, would really see the market soar.

“Our own data shows that the average age of our first-time buyers has reached 33 for the first time.

“It is now taking buyers four more years to buy their first home than it did in 2015.

“This gap is even starker in comparison to the 1990s, when the average first-time buyer was just 27.

“For the first time a generation is growing up worse off than their parents, rents are gobbling up incomes, and home ownership is moving further out of reach for the majority.

“Until these barriers are addressed, and Theresa May rethinks how pressure can be eased off young people, the market cannot reach its full potential.”

Richard Sexton, director of e.surv, said: “Property transactions have remained stagnant for quite some time now.

“Although our latest research showed one-fifth of mortgage approvals went to first-time buyers last month, if we are to see a real boost in numbers and overall market activity, we need to address our country’s limited housing supply which is acting as a roadblock.

“While the Government has certainly shown a clear commitment to helping first-time buyers onto the property ladder through the exemption of Stamp Duty, we still need to see greater initiatives resolving the supply side of the problem.

“By working more collaboratively with developers and local authorities to build more affordable housing, this will hopefully provide the Government with the support needed to create a long-term plan for housebuilding.”


* Separately, NAEA Propertymark has made a series of recommendations on what can be done to encourage more first-time buyers to enter the property market.

It said that despite figures showing that the number of first-time buyers had reached its highest level in a decade, more could be done to help more people into the market.

Among its suggestions were: longer fixed-rate mortgages; incentives for first-time sellers who can’t currently afford to move up the property ladder to move on; more affordable housing; discounted surveyors’ costs and a Government grant to subsidise solicitors’ fees; and less stringent mortgage criteria.

NAEA Propertymark chief executive Mark Hayward said: “The Government’s announcement to abolish stamp duty for first-time buyers has helped buyers feel like the process is more affordable.

“First-time buyers are struggling, particularly when it comes to saving for a deposit, and this needs to be addressed.

“Positively however, FTBs are being practical.

“Since the stamp duty reforms we have seen evidence that outside of London in particular, they are delaying their search until they have more money saved, in order to purchase a bigger property.

“This means they’ll be able to stay in the property for longer, making the most of the stamp duty saving and helping their money go even further.”

Taxman to update guidance on ‘confusing’ Stamp Duty surcharge

HMRC is set to update its guidance on the higher rate of Stamp Duty, which has been branded so confusing that it has caught out solicitors and estate agents.

Since the Government’s additional 3% Stamp Duty was applied to second homes in 2017, there have been more than 15,700 individuals wrongly paying the charge who were eligible for a refund, according to HMRC figures.

Last month, EYE reported how even an experienced estate agent nearly fell foul of the rules.

David Poole, a partner at Michael Poole estate and letting agents in Teesside, bought a property with his wife Emma.

The couple were moving out of rented accommodation and it never crossed their minds that they would have to pay the surcharge. Poole had sold an earlier home over ten years previously.

However, they were told that because Emma owned two buy-to-let properties, they would have to pay an extra £14,160.

He and his wife ended up paying almost £28,000 in Stamp Duty but David Poole continued to believe they should not have paid the surcharge and was eventually proved right.

Now HMRC has indicated that it will update its guidance.

A spokesman for HMRC told FTAdviser: “[We keep] all guidance under constant review, including taking legal developments into account.

“HMRC is working to update its guidance on the higher rates of stamp duty land tax.”

The news comes after the Law Society criticised a “lack of clarity” in the guidance.

Sarah Dwight, a member of the Law Society’s conveyancing and land law committee, said: “It is a very complex area and the guidance does not give conveyancing lawyers much clarity.

“HMRC seems to have thought the guidance it issued was going to be sufficient, but there are so many different types of scenarios that arise when people are seeking to buy and sell a property, that not everyone fitted into HMRC’s boxes.”

‘Just 12% of agents understand Anti Money Laundering obligations’

Estate agents continue to be at risk of fines from HMRC for non-compliance with the Anti-Money Laundering regulations – with widespread confusion in the industry as to requirements.

Latest research from agency supplier Landmark shows worrying gaps in understanding when it comes to AML.

Just 12% of those surveyed scored 100% in a multi-choice survey relating to the existing regulations and changes introduced as part of the 4th Money Laundering Directive (4MLD) last June.

4MLD introduced the requirement to undertake checks on purchasers in addition to vendors, but only just over 50% of respondents correctly identified that checks on purchasers are required when the buyer’s offer is accepted by the seller.

One of the areas of most concern is understanding the importance of demonstrating a risk-based approach.

Estate agents are required to have a process in place to identify the level of risk posed by the individual to the business from an AML  perspective. Each client should be assessed individually and an appropriate level of check applied.

The research shows that while management and business owners demonstrate a good understanding of this, it is not being disseminated to front-line staff.

Ben Robinson, director of agency services at Landmark, said: “Irrelevant to their own knowledge and understanding of the regulations, business owners and management who are not training their staff will be identified and targeted.

“When HMRC first contact an agent, they will be asking relatively straightforward questions, such as who is the Money Laundering Reporting Officer (MLRO), to whoever answers the phone.

“If that person doesn’t know the answer it’s not too much of a stretch to assume you may have them knocking on the door soon after.”

The survey also showed:

  • 13% of respondents believe a PEP to be a “Property Exempt Professional”
  • 10% of agents believe Trading Standards police the AML, while a concerning 7% believe the Office of Fair Trading does – although the OFT has been defunct since March 31, 2014

Over 200 agents have so far responded to the survey, which is still open.

You can test your knowledge at

Meanwhile, firms offering anti-money laundering (AML) checks are increasingly expanding into the agency sector amid reports of firms facing rising fines.

SmartSearch, which initially focused on the legal and accountancy sectors, has told EYE it has signed up more than 300 agents to its services.

It partners with data suppliers such as Experian, Equifax, Dow Jones and Companies House to verify identities.

While it is possible for a firm to check each of these sources individually, SmartSearch said this can take many hours.

It does not disclose how much the service costs as it depends on how many checks and the types of bundles a company purchases, rather than them paying a monthly fee.

Martin Cheek, chief executive of SmartSearch, said: “Estate agencies are particularly vulnerable as many of the checks they are now subject to are completely new to them, especially as they now need to conduct money laundering checks on both vendor and buyer.”

It comes after identification verification company Credas was chosen by The Guild of Property Professionals as its anti-money laundering verification partner. Guild members will get access to the services that include facial recognition technology.

Last month, EYE revealed that HMRC could start naming and shaming non-compliant businesses.

Meanwhile, Mark Hayward, chief executive of NAEA Propertymark, said there had been a “ramping up of compliance activity” but that the level of fines was not being publicly revealed.

Identity of estate agents fined under anti-money laundering regulations could soon be revealed, HMRC warns

The identity of estate agents slapped with penalties for failing to adhere to anti-money laundering regulations — currently kept secret — could soon be revealed.

That was the warning from HMRC, which said it was reconsidering its policy on the issue.

At present, HMRC doesn’t reveal which estate agents have been fined, nor the size of the penalty they have been made to pay.

However, that could all change “shortly” as the taxman gears up to publicise details of certain offenders.

An HMRC spokesperson told EYE: “Under the new Money Laundering Regulations, HMRC is developing a policy to publish details of those not complying with the MLRs.

“On a case-by-case basis, HMRC will consider whether publishing would be disproportionate or if the penalty is of a minor nature and this will inform whether we publish penalty information with full identity details, anonymously or not at all. This policy is due to be implemented shortly.”

The revelation came to light following a report by Business Insider on Monday, which claimed that estate agents were being hit with secret six- or seven-figure penalties for failing to complete anti-money laundering checks properly.

Figures obtained by EYE from HMRC have cast doubt on whether the fines are actually anything like this big.

Quoting Mark Hayward, chief executive of NAEA Propertymark, Business Insider said there had been a “ramping up of compliance activity” but that the level of fines was not being publicly revealed.

It also quoted Hayward as saying that the “business busting” penalties ran into six or seven figures and that the “huge cost” of failing to comply with the new regulations and increase in enforcement action meant the “fear factor” was growing.

However, when EYE contacted HMRC to confirm the story, it revealed that the 886 penalties it issued to companies across all sectors of the economy last year together totalled just over £1.1m.

HMRC would not break down the penalties it issued further, nor say how many related to estate agency businesses, but it works out at an average of just over £1,290 per penalty.

The biggest fine an estate agency is known to have received for failing to comply with money-laundering legislation was the eye-watering £169,000 sanction issued by the now-defunct Office of Fair Trading to Jackson Grundy in 2014.

At the time, it was a fine 17 times larger than any previous penalty imposed on an estate agent but Jackson Grundy won its appeal against it in 2016 and had it reduced to just £5,000.

Mike Day, who runs Integra Property Services and is a regular EYE columnist, confirmed that HMRC is conducting regular visits and spot checks.

He said: “Mostly they are arranging to go and see an agent and then they are effectively conducting a bit of an audit. I have not heard of any huge fines.

“The biggest case I heard about was Jackson Grundy, which was £170,000, but that was reduced on appeal.

“There have been fines of £30,000-£50,000 which I know about.

“There was an interesting report recently from the National Crime Agency, which is who you should be making Suspicious Activity Report to if you suspect there is something dodgy happening.

“They produced a report that said that over the last 18 months only 0.2% of Suspicious Activity Reports had come from estate agents. The inference of that was quite clearly that estate agents aren’t treating this as robustly as they should do.

“I have had a number of clients contacted by HMRC. It is London-centric but it certainly isn’t exclusive to London. I have a client in Shrewsbury who had a visit from HMRC in Manchester.”

When contacted by EYE, Mark Hayward said: “All estate agents must be registered with HMRC for anti-money laundering purposes and are required to adhere to its systems and procedures.

“HMRC are making spot and random checks among agents, and failure to comply with anti-money laundering regulations will result in substantial fines. Due to the remit within which HMRC operates, it is currently unable to make public the names of those who have been fined, and the value of such fines.

“The case of £170,000 is historic and nearly four years old, before HMRC took control of the sector. As all other comments are anecdotal we cannot comment further, as they’re not in the public domain.”

HMRC did not provide a timescale to indicate when it may start naming and shaming firms that have been fined under anti-money laundering regulations.

EYE’s Freedom of Information requests show collapse of self-build market despite claims

A Freedom of Information request by EYE to HMRC has revealed the astonishing shrinkage of the self-build market and highlights the uphill struggle of spin docors to make it meaningful in the context of the 1m new homes a year promised by the main parties.

We asked the question because of attempts to talk the market up – particularly to the Government which has in the last couple of years made reference to the potential of self-build as a contributor to solving the housing crisis.

However, the reality is that the self-build sector has collapsed.

Always small, it has roughly halved in the last 20 years and is now so tiny as to look discountable in terms of the 1m homes a year now promised by the main parties.

The Government appears, however, to be unaware of its own figures.

Individual self-builders and people converting non-residential properties into homes can reclaim VAT on materials.

There are two HMRC schemes enabling them to use this – one for builders of new homes, Notice 431NB, and the other for converters, Notice 431C.

The schemes are available not just for people physically building their homes, but for those who have their homes built for them and who might buy only some – and in some cases, just a very few – of the materials, for example paving slabs.

In the nineties, there were between 10,000 and 14,000 self-builders and converters reclaiming their VAT each year.

However, in each of the past two years there have been around only 6,500 reclaims.

In the financial year 2015/16, there were 5,278 self-builders reclaiming VAT, and a total of 1,086 converters – a combined total of 6,364.

In the financial year 2016/17, there were 5,477 self-builders and 1,068 converters reclaiming VAT – a total of 6,545.

These totals compare with claims that the self-build and custom build sector is growing at 6.25% a year, and that there will be 16,500 completions by 2020. The claims were made in a report which itself cost £750 plus VAT.

If correct, then these forecasts would be reliant on sharp growth in the custom-build sector – where buyers have some input, which can be very limited, into the design. Custom-build is also un-trackable.

The totals obtained by our FoI request also compare with claims that the sector has a strategic role to contribute to the Government’s house building targets.

Last week, housing minister Alok Sharma opened the UK’s first ‘plot shop’ in Bicester, Oxfordshire. It says it will sell up to 1,900 plots of land based on demand for self-build and custom-build.

Sharma said: “We need to get creative with how we build our housing in this country, to deliver more of the right homes in the places people want to live.

“With the opening of the UK’s first ‘plot shop’, the journey to building your own home can now start on the high street.

“As confirmed in our housing white paper, we are committed to doubling the number of custom and self-build homes by 2020 – so that anyone who wishes to design their dream house can do so.

“Through diversifying the housing market in this way, we can give people greater choice over the homes they live in – whether that’s buying on the open market or by commissioning and building their dream home.”