The market and the budget

So what was or is the impact on the property market? Not a huge amount in our opinion, and of course it could have been worse. 

Unlike the previous mini budget, there were no “horrors” in yesterday’s budget, and this was reflected in the wider market with no big moves in sterling, gilt yields or swap rates. The government’s truce with financial markets lives on.  

  • Most relevant is obviously stamp duty. The stamp duty changes announced by former Chancellor Kwasi Kwarteng in September will now be reversed from 1 April 2025. That means the nil-rate band will revert back to £125,000 from £250,000. So we have 28 months to enjoy a maximum saving of £2,500. We think this a positive, and although it might not be a permanent change, it is a positive and better than 6 months ago!
  • Still relevant but not ginormosly, is that the annual exemption for capital gains tax (CGT) will be cut from £12,300 to £3,000 from April 2024. That means anyone selling a second residential property will pay CGT on all gains above £3,000, a further hit of £2604. In the scheme of things and given the average UK house price is c£296,000, it will be a loss but only a very small one as a % of total return. 
  • The top rate of income tax changing will have nil impact on the property market. 

We think there are a couple of key take-aways here; 

  • A: thank goodness it seems that grown-ups are once again in charge, and are acting to stabilise the economy. Markets tend to agree. 
  • B: while nobody enjoys spending cuts and tax rises, the above changes will not detrimentally affect the property market or house prices.
  • C: the important message is that perhaps we are actually returning to normality now, rather than entering a crisis. The 13 year period of extremely low interest rates is over. This period was an anomaly, not the norm. Long term, with interest rates at say 5-6% is actually a normal market, 0.5% is not normal, 14% is not normal and longer term borrowing at 5 to 6% would be considered a good rate! 

Yes we will inevitably have short term weakness in house prices.

If you are looking to sell please contact us ASAP, it is better to plan and watch the market accordingly. 

If you are a buyer there will inevitably be more opportunities in the next 6-12 months, and contact us as many of the best opportunities are off market. 

If you are an investor consider the following that the highly respected Savills recently forecast; East Midlands price rise forecast of +20% from 2024 to 2027. Mainstream market rental growth of 17% over next 5 years. How many other investment opportunities in a solid, real asset will beat this? 

Please do contact us with any queries

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