How has the value of your property changed?

Stamp Duty rates and Land Transaction Tax have been slashed, interest rates have increased and house prices have fallen. Here’s the very latest from the property market…

The news story stealing the headlines is that of the Stamp Duty rates and Land Transaction Tax cuts announced earlier. These changes could lift 200,000 people out of paying any tax on purchasing property. This is fantastic news as it'll allow more people to move, whilst also helping more first-time buyers get on the housing ladder. There have also been some gloomy headlines of late, talking about the “end of the house price boom” or "house prices drop for the first time this year". However, many of these publications failed to mention that these stats were talking about asking prices rather than actual selling prices. As it turns out, asking prices always dip in the summer – and, according to Rightmove, the August dip of 1.3% was exactly in line with the 10-year average.

So, what is the latest on the property market? How will the Stamp Duty cuts and Land Transaction Tax changes in England and Wales affect you? What’s going on with mortgage rates? And what exactly is happening with house prices? Let's find out...

Could you save thousands in Stamp Duty tax?

Some great news for those of you looking to purchase property in England this year! Chancellor Kwasi Kwarteng has announced plans to cut stamp duty in a bid to boost the economy. The level at which people begin paying has jumped from £125,000 to £250,000. The first-time buyers amongst you will be thrilled to know that the government has increased the level at which you start paying stamp duty from £300,000 to £425,000. You’ll also now be able to access relief when buying a property in England costing less than £625,000 rather than the current £500,000.* As of yet, no changes have been announced to Scottish property taxes but Land Transaction Tax is changing in Wales.

What's happening with Land Transaction Tax in Wales?

Finance Minister for Wales, Rebecca Evans, announced some fantastic new measures for both buyers and sellers. Anyone buying a property for less than £225,000 will now pay no tax on it. The threshold for paying Land Transaction Tax is being increased from £180,000 to £225,000 and the change will come into force from 10th October.

What’s happening with UK house prices?

UK house prices increased by 8.3% or £19,800 in the past 12 months*. The South West and Wales are jointly the best performing regions, with annual house price growth of 10.6%. Strong demand from buyers and lots of new sales being completed has helped the high rate of house price growth in these areas. New sales agreed remain in line with last year while stock levels have started to slowly increase after being incredibly low in recent months. It’s always worth getting an up to date valuation to see whether your property is worth more than you think…

Average two-year fixed mortgage rate goes above 4% for the first time in nearly a decade**

The financial data provider Moneyfacts stated that the average new two-year fixed rate has increased by 0.14% since the start of August, and now stands at 4.09%. This is the first time that rates have broken through 4% since early 2013 and it adds to the dilemma faced by many buyers. It’s also 62% more expensive than it was the same time last year, when it was at 2.5%.** If you’d like to learn more about how to choose between fixed rate mortgages, head here.

House prices did fall 1.3% in August

According to Rightmove, the average price of property coming to market dropped by 1.3% in August* (-£4,795) to £365,173. This is the first price fall of the year. However, before we all start worrying about the decrease, it’s important to mention that this is very usual for this time of year. Traditionally prices do fall in August – it’s the time of school holidays, so moving home is less of a priority. People tend to wait until autumn to start thinking about moving again. Some of the more urgent sellers who are coming to market are therefore pricing more competitively in order to capture the attention of a suitable buyer quickly.

Have interest rate rises affected house prices?

The seventh consecutive base rate rise, this time by 0.5% to 2.25%, will no doubt be in the minds of many home-movers. It’s likely that the impact of these rises will gradually filter through during the rest of the year, but at the moment they’re not having a serious impact on the number of people wanting to move. There’s still strong buyer demand and a lack of stock available, which is keeping house prices high.***

Will the cost of living cause house prices to fall?

It may feel surprising that sales market activity is not weakening faster, given increases in the cost of living, rising interests and a drop in UK consumer confidence. Rising inflation and the rising cost of living are hitting those on lower incomes first and will take longer to impact higher income households.

Low supply of rental properties as landlords exit the buy-to-let market

Some landlords are leaving the buy-to-let market. Research suggests that the attraction of the private rental sector is waning slightly*** due to an increase in regulation and rules, thus reducing the supply of much needed private rental homes. Tax hikes in recent years, including the extra 3% stamp duty surcharge on second homes and the changes to mortgage relief are driving away many landlords. If you are considering becoming a landlord, the thinning private rental sector means there’s high tenant demand but not many properties. This could be a great opportunity, if you know what your property could rent out for…

Landlords put greater focus on energy efficiency in their investments

If the new EPC proposals go through, the minimum ratings for EPCs will rise from an E to a C rating by 2025. Investors are adapting their current investments to help to counteract the hike in the cost of living. Investors are also looking to make improvements to their properties – solar panels and draught proofing in order to increase property values.

New rules in place from 1st October regarding mandatory smoke and carbon monoxide alarms

From October 1st landlords – or their agents – must meet the mandatory requirement of fitting smoke and carbon monoxide alarms to their rented properties. The rules state that all rental homes in England must provide a carbon monoxide detector in rooms used as living accommodation where there is a fixed combustion appliance, such as gas heaters and boilers. This is also the case for fireplaces and log burners.

Sources:
*https://www.rightmove.co.uk/news/house-price-index/
***https://www.gov.uk/government/news/government-introduces-landmark-reforms-to-deliver-fairer-private-rented-sector-for-tenants-and-landlords
^https://www.gov.uk/evicting-tenants/section-21-and-section-8-notices
†https://www.propertymark.co.uk/resource/housing-insight-report-april-2023.html
‡https://homelet.co.uk/homelet-rental-index
MKT/UKON/230523

Correct at time of publishing – October 2022

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