Our previous blog looked at the early Autumn housing spike and the burst of activity as buyers and sellers looked to move pre-Budget. But what’s happening now that they’ve had time to digest the impact of Labour’s first budget since coming to power, and how will the changes impact what they do next?
The impact so far
In reality, it will be a few more weeks before we see the full impact of the Budget on buyer and seller sentiment. Rightmove’s latest House Price Index for October 2024 showed that market activity remained strong ahead of the budget announcement. However, it warned of muted prices as buyer choice and seller competition rose. The number of agreed sales was up by 29% year-on-year, but Rightmove cited budget jitters for some market hesitation as house price rises slowed.
Reasons to be nervous
Those jitters weren’t surprising. While the expected capital gains tax rises swerved the property sector, Rachel Reeves’ announcement included unexpected increases in stamp duty which could impact demand.
Stamp duty increases
This is being immediately felt by landlords and second-home owners who saw stamp duty rise the day after the Budget. The rate payable rose from 3% to 5% adding significant costs to those wanting to invest in additional properties, such as landlords wanting to expand their portfolios. They may look to increase rents as a result, but with tenant affordability already stretched that may not be possible.
But they aren’t the only ones who will pay more. Stamp duty thresholds have been held at a higher level since September 2022. These expire at the end of next March and since no further announcements were made, those thresholds will reduce from April for buyers to £125,000 - half of the previous £250,000 threshold.
First-time buyers haven’t escaped an increase either. Their threshold will reduce from the current £425,000 for a property worth £625,000 or less to £300,000 on a £500,000 or under purchase.
Reasons for confidence
Longer-term, increased housing investment, planning changes and improvements to minimum wages will help those renting and first-time buyers to get on the housing ladder.
Additional housing
The government added a further £500 million to its Affordable Homes Programme as part of its effort to deliver what it promises will be the biggest increase in social and affordable housebuilding in a generation.
Greater affordability
Affordability should also improve. The Budget included measures to increase the National Living Wage across all age groups, with the most dramatic rise for younger adults. This will help with general cost-of-living expenses for the lower-paid.
Interest rates were also cut post-Budget– with the second base rate cut of 2024 announced in November. At 4.75% it’s hoped this will begin to feed through to greater affordability and lower mortgage rates.
For first-time buyers, the Government also announced that the mortgage guarantee scheme, which offers mortgage loan-to-value rates of 95% and was due to expire next year, will be made permanent. More details are due in the spring.
Proctors is an independent network of individual estate agent businesses with branches in Beckenham, Bromley, Park Langley, Petts Wood, Shirley and West Wickham. We’ve been buying, selling and letting in these areas since 1946. Get in touch to find out how we can help you with your property requirements.