UK house prices fall as new landlord tax starts to bite

UK house prices fell more sharply than expected last month after the introduction of a new tax on the purchase of rental properties.

The market might also be entering a cooler phase, lender Halifax said.

House prices fell by a monthly 0.8% in April after a 2.2% leap in March.

Compared with the same period last year, house prices rose by 9.2% in the three months to April, the slowest rise since November and down from an increase of 10.1% in the three months to March.

Rival lender Nationwide has also previously reported a slowdown in house price growth in April.

Separately, Nationwide announced it was raising the maximum age limit for its mortgages from 75 years to 85 to reflect Britain’s ageing population with many workers putting off retirement. Halifax raised its age limit to 80 last week.

UK finance minister George Osborne announced in November that landlords acquiring buy-to-let properties, as well as people buying second homes, would pay a new 3% surcharge from April 1 in an attempt to help first-time buyers who have struggled to cope with the sharp pace of house price growth.

Martin Ellis, an economist at Halifax, said the persistent shortage of homes on the market, combined with low mortgage rates and rising earnings mean house prices would continue to rise in the coming months.

Reuters