Estate agents are braced for a slump in demand and cooling prices for houses and flats as a new stamp duty tax on investment properties and second homes knocks the wind out of Britain’s buy-to-let boom.

Buyers raced to complete deals ahead of Friday’s introduction of a 3 per cent surcharge on additional homes, leading to a 71 per cent surge in home sales by value to £17bn in the two weeks leading up to the deadline compared to the same period last year, according to estate agents Countrywide.

But a sharp slowdown is expected to follow the rush to buy, weighing on house price growth — especially in London, where the changes add £16,000 to the cost of buying the average home as an additional property. New purchases agreed by landlords and developers were already down in March, said Countrywide.

“Lower levels of investor demand will lead to a rapid slowing in house price inflation,” said Richard Donnell, research director at Hometrack.

Noble Francis, economics director at the Construction Products Association, said: “We are likely to see a big distortion in property transactions — a big spike in the first quarter and consequently a sharp fall in the second and third quarters. The question is how major an impact will it have beyond that.”

The British have become landlords in their millions since buy-to-let mortgages were first launched 20 years ago, doubling the size of the private rented sector in the past 12 years. But the boom has helped to fuel house price inflation and prompted fears at the Bank of England that an interest rate rise could trigger a mass buy-to-let sell-off, in turn causing a plunge in house prices.

Among measures to avert such a threat, landlords also face the removal of higher-rate tax relief on mortgage interest repayments, to be implemented over three years from 2017 as the Treasury seeks to tilt the market back towards owner-occupiers. Meanwhile, the BoE this week proposed new affordability checks and interest rate “stress tests” for buy-to-let mortgages to rein in lending.

The higher costs of owning an investment property will cause buy-to-let lending to “flatline” and send some investors in search of higher yields to cheaper areas, Mr Donnell said. “There will definitely be some net disinvestment in places like London,” he added.

Sophie Chick, associate director of residential research at Savills, said: “Landlords are likely to rationalise their portfolios. You will see underperforming assets being sold, while it will limit the ability of new landlords to come into the market.”

Second home buyers, including buy-to-let investors, developers and holiday home purchasers, made up 55 per cent of the housing market in March, up from 20 per cent a year earlier, and saved a total of £275m in stamp duty by completing before the deadline, said Countrywide. Conveyancers reported “chaos” as they hurried to implement detailed rules on the new charge that were only released on March 17.

Simon Gammon, managing director of mortgage broker Knight Frank Finance, said the company had seen record levels of activity in the past three months but a slowdown was now “inevitable”.

Mr Noble said buyers would seek to negotiate price cuts equivalent to the surcharge, while Henry Pryor, a buying agent, said this would happen even where the extra is not payable. “Any buyer with any guile will leave the seller and their agent with the impression that this is their second home and therefore could be costing an extra 3 per cent,” he said.