You’re all involved about Rachel Reeves’ Price range subsequent week and positively some points of the property market are frightened virtually to dying of what’s to come back.
Brokers fear that patrons and sellers will likely be focused for extra tax within the type of stamp responsibility modifications, CGT being utilized to deal with gross sales, a tweaking of the council tax regime and/or a Mansion Tax of some kind and subsequently that customers will likely be spooked and can sit on the sidelines effectively into subsequent 12 months, accordingly.
However that’s not going to occur. Nicely, to not 99% of you.
The Labour authorities is nothing if not ideological. They do issues by means of coverage introductions that swimsuit a left-wing agenda, as an illustration including VAT to highschool charges and pushing pension pots into inheritance tax legal responsibility. And reducing the CGT threshold, and so forth.
This stuff and extra play to a crowd that’s distinctly on the ‘equality of wealth’ a part of the political spectrum. I wouldn’t go so far as to say it’s akin to a Karl Mark kind method the place ‘All property is theft’ as such, however it’s someplace over in that route.
Then to my level. All the property associated tax modifications that the chancellor has trailed within the media are aimed on the higher finish of the housing market (we used to name ‘kiteflying’ from the Treasury ‘leaks’ – however to confess such would get Rachel in additional bother than simply being an unlicensed landlord).
If CGT is launched on main dwelling income will probably be on houses above circa £1.5m/£2m. This represents lower than 1% of UK property transactions yearly.
If council tax is messed with, it is going to add value to the most costly of houses, not three-bed-semis in Billericay or flats in Milton Keynes.
A proposed Mansion Tax is alleged to solely probably apply to gross sales above £1.5m.
Any introduction of an additional levy on the high finish of our market will likely be unhealthy for Prime London, Prime City and Prime Nation houses, nevertheless it’s the uncertainty of what’s coming that’s certainly worse than the few quid further that Reeves is about to nick from the well-heeled. Frankly, I feel Prime sellers and patrons will in the end suck it up.
However what of the opposite 99%, the market that you simply studying that is in all probability in?
Nicely, it’s effective. And it’s going to be effective in 2026 – and right here’s why…
Rates of interest have dropped and the Financial institution of England is now forecast to scale back the bottom charge once more in December resulting from inflation easing and the broader financial system needing a lift.
Two-year mounted mortgage charges are actually at their lowest since 2023.
Wage development continues, at present at simply shy of 5% every year.
Importantly, the flexibility for debtors to bag loans at 6x wage has now been realised due to the chancellor and the FCA easing the principles from a earlier 4.5x. That’s a 33% uplift in what could be lent.
And property values are up 2.15% 12 months on 12 months, says the typical of the Halifax and Nationwide HPIs.
For all of those causes sentiment stays considerably constructive amongst common homebuyers and is why the stats on the coal-face of our business present that the primary market is seeing gross sales, completions and mortgage approvals at roughly the identical ranges as pre-Covid.
Sure, the bread and butter sector is okay and sure, I do know that we’ll see some feedback beneath that shout anecdotally that ‘my’ market is horrible, nevertheless the typical state of affairs throughout Britain actually is okay – however maybe it is best to perhaps cease overvaluing in case you truly wish to promote extra homes?
So, causes to be cheerful? For positive.
Russell Quirk is co-founder of property public relations company ProperPR.
