After a frantic end to 2024, thoughts are turning to what 2025 will bring for the residential property market and those working in it.
SDLT increases
The first quarter of 2025 is likely to be consumed by this. Estate agents, brokers, lenders and conveyancers are already feeling the pressure build to the stamp duty increases set to come in on 1st April.
Given the significant financial impact of those increases, particularly for first time buyers, the end of 2024 saw increases both in numbers of properties listed and in numbers of sales agreed compared to the same period in 2023 as sellers and buyers scramble to beat the deadline.
According to the latest Bank of England figures, net mortgage approvals for house purchases rose to 68,300 in October, the highest level since August 2022 (72,200). Similarly, approvals for remortgaging increased by 500 to 31,400.
Given the well publicised lengthening of transaction times, realistically it is those sales agreed before Christmas that have the best chance of completing ahead of the stamp duty increases. However, that won’t stop people wanting to try and conveyancers, brokers and estate agents all have their part to play in managing expectations of what is and isn’t possible and ensuring buyers have factored in the higher SDLT costs when making their offer and arranging financing. Conveyancers may well want to consider increasing their prices in order to temper demand to maintain service levels during this critical period and ensure they are properly remunerated on the cases they do take.
Whilst there will be some attempts at price re-negotiation by those buyers who don’t make the deadline, it’s by no means a given that sellers will be willing to reduce agreed sale prices especially when facing higher costs themselves on related transactions.
Mortgage interest rates and affordability
Whilst property portals like Zoopla and Rightmove all seem to agree there will be an uplift in transaction volumes and a series of Bank of England base rate cuts throughout the year, remortgage and product transfers are likely to be another busy sector of the market. Those homeowners on two year fixed rate mortgages taken out at the post mini budget peak in 2023 may find themselves better off in 2025. Those who took five year fixed rates in 2020 when rates were lower will see costs rise, even if interest rates fall as predicted over the course of the year.
All regions and countries across the UK recorded positive year on year growth in 2024 and house prices and sales volumes are expected to continue to grow in 2025 with transaction volumes predicted to reach around 1.15m.
Opportunities for long term growth
2025 is likely to see a continuing interest from estate agents in how best to meet their Material Information obligations and some law firms and tech providers may choose to play a part in helping this to go a step further and make properties sale ready as opposed to just listings ready by working with agents to identify and mitigate issues before the point of sale is reached.
Many law firms are leveraging AI technology to increase productivity and efficiency, with some larger firms already integrating AI-focused training into their talent development processes. Partnerships between law firms and AI solution providers such as Orbital often include bespoke training and onboarding programmes, fostering a deeper workflow integration and greater uptake of the technology by conveyancers of all skill levels.
For those firms looking for external investment or who are already private equity backed and need to demonstrate they are increasing enterprise value to those investors, harnessing advances in technology will be key to unlocking these long term opportunities for sustainable growth.
Looking ahead…
2025 looks set to be a bit of a rollercoaster ride, especially in the first half of the year. But it also looks set to be one with ample long term opportunities for those willing to embrace them.
Sarah Debney, Orbital Witness
