The Budget and how we think it will affect the market
Check out our video, where Pete runs through our thought on the recent budget and what impact it may have on the property market
Dividends, Savings and Property Income increasing by 2%
We honestly can’t remember the last time we had a buy-to-let purchaser who didn’t buy through a company, and by the looks of it, those buyers won’t really be affected. But smaller landlords who own property in their own name just keep getting squeezed. I’d expect most of them to pass the cost on, the same way they did with mortgage increases, or simply sell up. That only adds to the supply problem we already have, which is a big reason rents are as high as they are. Link below with more info.
Cash ISA threshold changed from Saving £20,000 to £12,000k (excluding 65s & over)
We don’t think it’ll have a significant impact. From my experience talking to buyers and doing our due diligence on proof of funds, most deposits are either in a Help to Buy ISA or in stocks and shares ISAs. Link below with more info.
New Mansion Tax
For many homeowners, we don’t expect the new high-value council tax surcharge (often referred to as the “mansion tax”) to be more than a drop in the ocean. That’s not to say it won’t affect anyone at all — but speaking broadly, its overall impact is likely to be fairly limited.
One interesting question it does raise is: who ultimately determines the value of a home? Is it the surveyor, the estate agent, or the algorithm? Between now and 2028, we expect some buyers purchasing near the new tax thresholds to pay particular attention to valuations. Those close to a band limit may seek to keep agreed prices just under the relevant threshold, which could result in some short-term renegotiation. Over time, it’s likely that buyers at this level will naturally try to position offers below the point where higher charges apply. For example, a buyer with a budget of around £2 million may well aim to keep their offer starting with a “1” where possible, simply to avoid unnecessary additional cost. That said, in the premium end of the market we don’t believe this will deter serious buyers from securing the right home if it truly meets their requirements.
Another reason we don’t expect a major market shift is that homes within this value range make up just over 0.5%. Buyers operating in this bracket are generally prepared for higher running costs and are typically purchasing for lifestyle as much as investment.
In summary, the property sector had been bracing itself for far more dramatic changes. We’d heard everything from council tax becoming percentage-based, to higher stamp duty above £500,000, to national insurance being applied to landlord income. In that context, this announcement has been received with a degree of relief.
Now the details are clear and people know where they stand, we expect buyers and sellers alike to simply get on with their plans. For more information on the new surcharge, you can read the official guidance here:
https://www.gov.uk/government/publications/high-value-council-tax-surcharge/high-value-council-tax-surcharge