As the Chancellor’s Autumn Budget announcement approaches, the UK property market is keeping a close eye on potential changes that may impact people. Rightmove has analysed the current landscape, providing insights and predictions on the Budget’s possible effects on housing costs and homeownership.
One of the most closely watched aspects of the upcoming Budget is the future of stamp duty thresholds, with significant implications for buyers if the current rates are not made permanent. Rightmove’s property expert, Tim Bannister, said that “rumours indicate the ‘nil rate’ stamp duty threshold will return to previous levels in 2025, potentially adding £2,500 in stamp duty costs for many buyers.” Under this scenario, the exemption rate for all home-movers would decrease from 28% to only 5% if the £250,000 nil-rate threshold falls to £125,000.
A Rightmove survey of over 34,000 people reveals differing priorities across segments, but a few concerns are shared. The most popular changes respondents would like to see include:
- Simplifying the home-buying process (44%) was the most important housing focus that existing home-owners thought the new government should focus on delivering
- More support for first-time buyers (60%) was the most important factor for renters
- Reforming the stamp duty system (46%) came out on top for landlords, while introducing legislation to improve the energy efficiency of rental homes came last (12%)
What’s more, the number of sales agreements is up by 29% year-on-year, while estate agent inquiries and available homes for sale have also risen by 17% and 12%, respectively.
In the rental market, energy efficiency requirements have left landlords facing significant expenses and regulatory uncertainties. To meet the government’s expected minimum Energy Performance Certificate (EPC) rating of a C by 2030, landlords will need to upgrade around 2.9 million rental properties at an estimated total cost of £23.4 billion, or roughly £8,074 per property. Matt Smith, Rightmove’s mortgage expert, says that by reviewing the affordability criteria for home-buyers in a responsible way, more options could open up for first-time buyers. Matt said:
“Market regulation has had its intended impact to help prevent people from overstretching themselves when taking out a mortgage. It also means that there are many people out there, particularly first-time buyers, who find themselves priced out of the home that they want because they can’t borrow enough or pass the stressed rate test. There are several hurdles for first-time buyers to clear, made more difficult with higher mortgage rates, and payments outpacing wage growth.
Lenders, both new entrants to the market and major lenders, have looked at how they can work within the existing framework to provide more support to first-time buyers which has been really encouraging to see. We think there is the opportunity for the government to help unlock greater long-term affordability in a responsible way through a wider review of affordability criteria alongside the regulators and lenders.”
Nathan Emerson, CEO of Propertymark, said that the UK Government’s announcements within its Autumn Budget are “crucial to the future of the housing market and wider economy”. He continued:
“We know that the Stamp Duty tax incentives of 2020 helped stimulate the UK economy in response to the lockdowns that were taking place that year. Therefore, as buying a home remains an unaffordable aspiration for many people, especially at a time when the average house price keeps increasing in value, any future reforms must ensure that more aspirational homebuyers are not pushed out of the housing market and assistance is available for those wishing to take their first step onto the housing ladder.
At a time when renting is also becoming increasingly expensive due mostly to a lack of supply and increasing demand, any Stamp Duty reforms should also guarantee that there are incentives for those wishing to invest in the private rental sector to boost the number of homes available to rent and ultimately bring down rents for tenants.”
