Today, new Chancellor Jeremy Hunt announced a set of measures designed to tackle the ongoing cost of living crisis and inflation being experienced across the UK in his overdue Autumn Budget. Although the budget was undoubtedly negative in some areas, namely the confirmation that Britain is officially in a recession, it did convey some potentially positive messages for the housing market that align with recent property market predictions for 2023.
In today’s announcement Jeremy Hunt confirmed a planned end to Stamp Duty in March 2025, therefore continuing the tax cuts for a further two years. Cuts to Stamp Duty Land Tax were initially proposed by previous Chancellor Kwasi Kwarteng in his ‘Mini Budget’, and appears to be one of the only policies Hunt has not formally reversed from his predecessor, partially due to their speedy approval through parliament. For the time being at least this measure ensures that more homebuyers will pay less Stamp Duty, with 200,000 purchasers being able to avoid paying the tax altogether, thereby making property purchases more attainable. Whilst it will benefit house buyers in the initial term it may cause a rush in the next 12-18 months as buyers and sellers alike look to avoid the uplift in 2025.
The Treasury claimed that the maintenance of the Stamp Duty cuts will “help the jobs and firms that rely on the housing market through the current challenges, while strengthening the public finances in the longer term”. This should help to alleviate fears regarding the projected short-term slump that is anticipated in the sales market by providing an incentive for buyers to move sooner rather than later to avoid missing out on the Stamp Duty cuts.
Although the Chancellor instituted a number of welcome changes to alleviate pressure on the average family’s finances, including increasing the minimum wage and capping social housing rent this is not expected to completely erase the impact of the cost of living crisis. In fact, the country’s financial recovery from its current recession will most likely take years, which may influence attitudes towards the housing market. However, not all of these attitude changes will bode disastrously for purchasers, investors and renters.
With finances for the average Brit being tighter than usual, many first time buyers may be delaying their search for their first purchase, thereby strengthening the lettings market as renters continue to stay in their existing accommodation. This bodes well for buy to let landlords, and we anticipate longer tenancies as renters search for secure accommodation in a competitive market, and potential purchasers will be more likely to consider lettings options rather than releasing capital on a sale. That being said, first time purchasers still have a host of supported options available to get them on the property ladder – check out our comprehensive list of property schemes here.
Whilst the budget is representative of a more recovery and deficit reducing policy, much of it will have been widely expected across the market. Here at Centrick we predict that the Autumn budget may make the sales market less speculative and potentially more buyer than seller focused, with fewer “indulgent” moves, it bodes well for those in a good position to purchase their next property to negotiate better. With fewer potential purchasers on the hunt for their next home or investment, sellers will likely have to work harder to draw the attention of house hunters. This means scrubbing up on your indoor and outdoor presentation, and ensuring that you collaborate with the right selling agent to ensure that you list your unit for the right price.
The Autumn budget also announced a reduction in the generosity of Capital Gains Tax Allowance, which will reduce from £12,300 to £6,000 over the next two years, and will then reduce further to £3,000 by 2025. Although this still puts Brits in a much more reasonable position for CGT than our neighbours in Ireland, or overseas in Canada, Germany and France, this will surely impact those with second homes or investment portfolios. As such, many investors and buy to let landlords who have considered listing their properties for sale may be encouraged to take advantage of the existing £12,300 allowance by disposing of property sooner rather than later, or risk losing thousands of pounds in potential profits. If you are considering disposing of your assets, or simply wish to have a formal evaluation of your property portfolio, check out Centrick Invest services for further information.
In short, Hunt’s plans place the British economy on a road to stabilisation thanks to a set of measures that aim to ease the impact of rising inflation and living costs. However, his changes will undoubtedly impact the property market, with his changes to Capital Gains Tax and 2025 end to Stamp Duty cuts encouraging home movers and property investors to make decisions on the future of their property journey sooner rather than later. If you’re looking for guidance on how best to navigate the current property market in the wake of the Chancellor’s Autumn Budget, contact a member of our team below for tailored advice:
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