The Chancellor’s mini budget and the effect on the housing market?
The housing market, including estate agents and conveyancers have long been wondering how long the recent housing bubble could last. In 2020 when the Chancellor at the time, Rishi Sunak, announced a stamp duty holiday for all properties up to £500,000, this was enough to sure up the market during the difficulties encountered by the Coronavirus pandemic. It allowed the level of transactions taking place during the latter part of 2020 to the middle of 2021 to far exceed expectations. Since the summer of 2021, professionals involved in property have been wondering how long it could last. So the question is, will the recent announcement by the new Chancellor help the market sufficiently to continue the upward trend?
The increase on the Stamp Duty threshold from £125,000 to £250,000 which was announced on 23 September was intended to support the housing market which is facing difficulties with interest rates on the increase and the cost of living crisis fuelled by energy increases. So far the markets have not reacted positively to Kwasi Kwarteng’s radical budget. Indeed they have spiralled even further after he announced a few days after the budget that he intended to make further tax cuts in future, with no cost saving measures to counter balance his spending. Lenders have started to revise their mortgage offers to reflect the increase in interest rates and these are changing by the day as further announcements are made by the Government. It remains to be seen what the effect of the housing market will be.
Hatice Mustafa, Partner and head of Residential conveyancing says “We have been anticipating a possible downturn in the market would happen in the coming months. It will remain to be seen whether the stamp duty cut offsets that, or just pushes prices higher. With mortgage rates increasing and market volatility, this will likely have an unsettling impact on the housing market” In the past when the stamp duty threshold has increased, this has often led to house prices increasing. With mortgage deals being pulled by banks and lenders, people may be unable to afford the increased borrowing that will be needed to buy a property. One thing is for sure, the housing market does not react positively to uncertainty and that is what is currently happening.
If you are looking to buy, sell or remortgage a property then contact our experienced conveyancing department on 0208 949 9500 and they will be happy to offer you advice or a quote.