Stamp Duty Changes & More! (Property News October 2024)
Welcome to our latest property news blog, complete with this month's market update video, bringing you up-to-date news from the local property market across our region and the wider world of property.
As ever, we'll take a quick look at the latest market data it's certainly a very interesting time more generally, given the current political landscape, with Donald Trump the newly elected president of the USA and Rachel Reeves' Autumn Budget update still fresh in the minds. We'll touch upon how these may or may not affect buyer confidence going forward.
The Property Market in October 2024
Parking politics for a second, let's take a quick look at October and it's fair to say we've seen more of the same. As we've been saying for several months now, there are good levels of new property coming to market, combined with a strong demand from buyers. These factors mean market activity remains well ahead of last year, and it gives me reasonable confidence we're starting to see signs of upward movement in prices once again in certain parts of the market.
Latest Market Data
The Land Registry index indicated a monthly price increase for their August report (always a few months behind) of 1.5% putting the annual change at 2.8% but when we drill down into the regional figures we can see that Yorkshire and the Humber has been one of the fastest growing regions in the UK with a 2.7% growth in prices last month and 4.4% over the year. This is the equivalent of £10,000 added onto the average property in the last 12 months.
Political Influences on the Property Market
As we enter November and near the end of the year, we start to have one eye on 2025. We now know Donald Trump is going to become the next President of the United States but the effects of this aren't immediately obvious and we're not expecting a short-term reaction to this. More important to the UK market is the recent budget and its potential impact on our economy.
I mentioned in my budget reaction video that we were pleased to see no changes to Capital Gains Tax on property. However, the changes being made to National Insurance, together with the rise in the minimum wage, could have a detrimental effect on businesses, their employees, and the wider economy. We will have to wait and see on this one!
In the short-term, the biggest concerns to us are the failure to address the upcoming stamp duty threshold decrease, plus the additional stamp duty on second homes, rising from 3% to 5%.
No Reverse to Stamp Duty Threshold Change
Stamp duty breaks are set to end in March 2025, meaning they'll return to the previous threshold. Currently, purchases of less than £250,000 (or below £425,000 for first-time buyers) don't require the buyer to pay any stamp duty tax, but from March 2025, that'll revert to £125,000 and £300,000 respectively.
This is just another barrier preventing prospective buyers from making their next move, and will likely lead to a short-term burst in activity which is never good for a market, perhaps even artificially raising prices for a period.
Stamp Duty on Additional Properties
There's already a lack of supply in the buy-to-let market and it's impossible to see how the decision to increase stamp duty on second properties won't worsen the problem. Tenants are already subjected to record-high rents, and the prices will only increase as the supply of buy-to-let properties decreases. As we can see from the chart below, showing data from TwentyEA, tenants already spend 32% of their pre-tax income on rent, and already, this number feels too high.
We will of course keep a close eye on all this through our updates but for now, we anticipate a very buoyant and busy next few months with some uncertainty beyond that.
