Our September UK property market round-up is slightly longer than usual. However, it is packed with the latest news and industry insights to help you navigate current changes.
Government mini-budget – Stamp Duty
On September 23rd, the government announced a cut to Stamp Duty Land Tax (SDLT) in its mini-budget which means no Stamp Duty is payable on the first £250,000 and for first-time buyers, that rises to £425,000 (in England and Northern Ireland).
The rates are now:
0%: £0 – £250,000 (£425,000 for first-time buyers)
5%: £250,000 – £925,000
10%: £925,000 – £1,500,000
12%: £1,500,000+
The chancellor also added that discounted SDLT for first-time buyers would apply to properties costing up to £625,000 (up from £500,0000).
Buy-to-Let landlords will continue to pay the 3% surcharge introduced back in 2016 however, they will save money on their SDLT obligation following the announcement.
Interest rates up by 0.5%
Interest rates made the headlines again this week, with the Bank of England increasing the base rate from 1.75% to 2.25%, taking borrowing costs to their highest level since 2008.
In our opinion, the cost of borrowing has been at a record low for 13 years and compared to 2008 (5.25% Feb), the cost of borrowing remains incredibly affordable.
What should you do with this information? First, it’s time to take action and seek independent advice from a mortgage expert. Evaluating the best deals for your circumstances will allow you to assess your options and adapt. You may even find yourself on a better fixed-rate deal.
Falling pound makes UK property more attractive to international investors
With the pound at a 37-year low against the dollar, currency fluctuations have significantly influenced investment decisions for overseas investors.
Over the year, the pound’s value has fallen. As a result, overseas buyers have found themselves enjoying more buying power, snapping up UK properties at discounted prices and capitalising on favourable exchange rates.
Foreign interest in the market remains undeterred. With UK property values and rents reaching an all-time high, confidence in the sector remains strong and offers long-term returns.
Rents at a record high
According to Zoopla’s latest index, rental growth is close to peaking at 12.3% per annum, with average rents up by £115 per month over the last year to reach £1,051.
In light of the rising cost of living, there is a higher demand for smaller properties which has seen an increase in searches for apartments.
Despite the increasing cost of living, a chronic undersupply of rental properties continues to push rents upwards, which has led to Zoopla’s forecast of above-average growth rates into 2023.
For property investors, the fundamentals of the UK’s Buy-to-Let market remain geared toward growth. With first-time buyers likely put off by rising interest rates, the demand for rental property will grow until inflation is tackled.
What do these changes mean for you?
You may wonder what these changes mean and how you should navigate them to ensure your property portfolio is at peak performance. Here are our top tips:
- Seek information from an independent mortgage advisor
- Get your property revalued – how much equity do you have?
- When was the last time you assessed your rent?
- Offload an underperforming asset and capitalise on record-high values
- Diversify – consider a Student Property, a Short-term let, or a new location
Book a consultation with a property market expert to explore your options.
