Even if you try not to check the news these days, you’ll no doubt have heard of the September mini-budget, delivered by Liz Truss and Kwasi Kwarteng.
Yes, that’s the one where the proposal for unfunded tax cuts sent global markets running and mortgage rates rocketing up. Since then, we’ve had a new Prime Minister and a new Chancellor, and together they have issued an autumn statement designed to calm the markets.
So let’s take a moment to look at what changes have been introduced in the autumn budget and what they could mean for you.
The (not so) permanent Stamp Duty cut
Home buyers celebrated when Chancellor Kwasi Kwarteng announced a permanent Stamp Duty cut back in September. He announced that he was upping the nil-rate Stamp duty threshold for first time buyers from £300,000 to £425,000 on properties up to £625,000. For all other buyers, he chose to increase the point at which the duty becomes payable (from £125,000 to £250,000).
However, one of the first moves taken by the new Chancellor, Jeremy Hunt, was to reverse the cut, setting an end date of 25th March 2025. It’s disappointing news, but you can still benefit from the Stamp Duty discount if you buy a home within the next two years.
Second homes and buy to let property: sell or hold?
Capital gains tax is payable when you sell a rental property or a second home, and from April 2023 onwards, vendors will pay more tax. From 2023 the tax-free allowance will be cut from £12,300 to £6,000. In 2024 the threshold changes again to £3,000.
These tax hikes could tempt landlords to sell, and we could see a fall in rental properties. Alternatively, landlords reluctant to lose regular income in a recession may continue letting in the hope that the tax rate will eventually change.
House prices could become more affordable
Since the autumn statement, the Office for Budget Responsibility – which monitors the government’s economic plans – has looked at the outlook for the UK economy.
The OBR predicts that property prices will fall by 9 per cent between the end of 2022 and the autumn of 2024. This is mainly due to an increase in the cost of mortgages and the current economic recession. However, a gradual recovery is expected after 2024, with prices rising by 1.2 per cent in 2025, by 3 per cent in 2026 and then by 3.5 per cent in 2027.
It’s worth noting that these are only forecasts, and property prices will vary depending on your location. Currently, our estate agents in Ilford are busy with properties going through in time for Christmas, and the sales team in Barkingside are also seeing high levels of activity.
If you have moving or investment plans for 2023, we would love to hear from you. Our local property experts are always ready to share their knowledge and experience, so don’t hesitate to get in touch.
Call us on 0203 972 7341 or email info@oaklandestates.co.uk.
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