House sales were down by 40% year-on-year in March, HM Revenue and Customs (HMRC) figures show.
The plunge compared with a year earlier is likely to be due to a stamp duty hike for people buying second homes, including buy-to-let investors, which was imposed on April 1 2016.
Estate agents reported seeing a rush of landlords snapping up properties last year before the deadline, prompting a spike in sales.
HMRC’s report said home sales figures for March 2016 had been “unusually high”. It also said non-tax changes, such as the EU referendum last summer, may also have caused changes in the property market.
Some 102,810 home sales took place across the UK last month, according to HMRC’s provisional figures, marking a 40.9% decrease compared with the 173,860 transactions recorded in March 2016, but up by 0.5% compared with February 2017.
HMRC’s report said: “The large increase in transactions for March 2016 followed by the substantial reduction in April is associated with the introduction of the higher rates on additional properties in April 2016.”
Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said the HMRC figures showing sales that have taken place reflect what was happening in the housing market a few months earlier.
He said: ” It will take a while for the hiccup in the market caused by the stamp duty surcharge introduced this time last year to ease, but overall the market seems in good health and unlikely to be swayed too much by the general election at this stage.”