There has been much discussion around the contents of the Annual Budget and what it will mean for us all. What it specifically means for each person will depend on their age, work status, savings, lifestyle and many other factors.
The property market has been a hot topic in the lead up to the Budget and here we will explain the changes that effect certain aspects of the property market and offer our opinion on what we think the impact of those changes will be.
What are the changes?
- Stamp duty has been abolished for all first-time buyers on purchases up to £300,000
- For those in higher cost areas such as London, stamp duty relief will be available on the first £300,000 on properties up to a value of £500,000
- Reducing the amount of empty properties by giving local authorities the power to charge 100% council tax premium
- Launch a consultation on achieving longer tenancies in the private rental sector offering more security to tenants
- Bridge the 270,000 gap between planning permissions granted and new homes being built by commissioning an urgent review
- Spend £44 billion to promote the build of 300,000 new homes a year by the mid-2020s by supporting capital funding; loans and guarantees as well as training in the construction sector
- Other housing market policies include:
- Aim to eliminate rough sleeping by 2027
- Development of new homes on smaller plots with a concentration on urban areas
- Look to concentrate the build of new homes around city centres and transport hubs
How will this effect the London housing market?
The change in the stamp duty threshold for first-time buyers will have the biggest short-term impact and it will be similar to when previous changes in the stamp duty threshold have occurred. There is likely to be a proportion of first time buyers who have been holding off on purchasing a property due to the predictions around stamp duty cuts. Those savvy buyers are likely to now flood the London market looking for sub £500,000 properties as they will be saving up to £5,000 on their stamp duty costs. The change will also prompt some first-time buyer activity from those who didn’t feel they could afford it before.
All this will mean that there will be even more competition in the sub £500,000 area of the market, which is a popular price point in the East London property market. Buyers who are well-positioned, with their mortgage agreements in place and deposits/stamp duty readily available could quite possibly snap up a bargain during this time.
Sellers within this price point in the market could benefit from having multiple, keen buyers entering the market, potentially driving up the purchase price with the competition.
Sellers who currently have properties on the market just above the threshold will have to consider the impact that the announcement might have on their sale. If they are looking for a quick sale, they might want to reduce the asking price below the threshold. If not, there are still many potential buyers in the market who are not first-time buyers, either 2nd steppers or buy-to-let owners who will stop a gulf appearing in the £501-£550,000 market, which would happen if all buyers received the stamp duty relief.
The other salient point that could have an impact in the short to medium term is around the 100% council tax premium on empty properties. There could be an assumption that this is designed to deter investment buyers, particularly from foreign markets, who increasingly have been buying properties and leaving them empty for years with the intent on selling them for profit further down the line. There has been media outrage that homes are left empty while others are unable to buy. This could also potentially impact landlords in the rental market, who sometimes have void periods between tenants. To find out how to lessen the chance of having a void period visit our blog , written a few months ago on the subject.
Most of the other budget announcements effecting the property market are longer term promises or consultations that need to take place before actual policy is put into place. Check back on our website for details of those policies as they are announced.
If you are a first-time buyer looking to take advantage of these savings, please contact our Residential Sales Team on 020 7749 3838.
If you are a seller and want to know what your property is worth contact our Client Services team on 020 7549 0612