Yesterday’s budget was much anticipated, and although rather disappointingly it lacked specific policies to boost the housing market, the clarity that is has brought will have a stabilising influence, if nothing else.
As for the key take-homes from this budget, several policies stand out most as having market relevance.
Most prominent of these…is the ‘mansion tax.’
This can be understood as a recurring annual charge for homes valued over £2 million, which is collected alongside and on top of their council tax.
Though an intimidating prospect, this tax is only likely to directly affect 0.5% of sales, and although it may cause some distortion at the top end of the market, the general public impact is likely to be low.
In terms of the surcharge to higher council tax band properties, this is also likely to affect only 1% of households, limiting its mainstream relevance.
Admittedly, it was disappointing that yesterday’s announcement did not feature any reductions to stamp duty rates for first-time buyers, nor was the SME Help to Buy scheme revised, as speculated.
In my view, a Stamp Duty holiday for transactions under £500,000 would have been welcome, especially as a way of reducing upfront costs for first-time buyers.
It is important to address, as well, the impact this budget has had for landlords. Indeed, this has been something I have been regularly asked about in the last 24 hours.
The budged laid out several changes to savings and investment income, including dividend and property income, from April 2027. To some extent, this may well dampen investor appetite. However, I’m inclined to think it might not cause a mass exodus…so much as a sector re-structure.
In other words, more landlords might use corporate vehicles for their portfolios, continuing the trend for buy-to-let mortgage applications being monopolised by limited company borrowers.
Reassuringly though, UK Finance data does indicate that even despite recent challenges, more landlords are investing and remortgaging than last year.
This brings us some comfort, as property investment does of course underpin housing stability.
Another another high note, the widely-feared property tax on homes over £500,000 has been avoided.
This is likely help to reboot market activity, as buyers and sellers who might have been affected by this change will now have the assurance they need to move forward.
On the whole, the budget did set out some important priorities.
Notably, there was some commitment shown to invest in technology, science and infrastructure, which will have positive repercussions for property.
For example, by investing in the digitisation of technology that supports conveyancers, including the land registry, transactions will be faster, and growth stimulated.
Yes, there is still more that can and should have been done to unlock property market growth.
However, we can expect the clarity we now have in this budget aftermath to have a generally stabilising effect on the market.
To this end, those considering buying or selling in the not too distant future can move forward with some much-needed confidence.