A notable shift is occurring in the UK housing market as one-third of homes for sale are now chain-free. This change comes amid looming fears of tax adjustments in the upcoming budget.
According to Zoopla, house sales agreements have climbed by 25% compared to last year. This surge is partly attributed to a growing number of new listings. The market is witnessing an influx of homeowners ready to sell after delaying moves over the last two years.
Falling mortgage rates are playing a crucial role in encouraging movement in the housing market. The current average rate for a five-year, 75% loan-to-value mortgage is 4.3%. This is an improvement from the previous year’s 5.5%, reflecting a positive trend for potential buyers.
A considerable portion of the new listings comes from landlords and second-homeowners facing increased buy-to-let mortgage rates and potential tax changes.
Zoopla indicates that a significant proportion of chain-free homes were previously rented. Landowners are eager to sell before new tax policies are implemented.
In London, chain-free properties are primarily two- and three-bedroom houses. Outside London, one- and two-bedroom flats are more common in this category.
Approximately 13% of all homes currently listed were rented before. This pre-emptive selling is a reaction to expected tax policy shifts.
There is a prevailing expectation that the government will elevate the capital gains tax on residential properties. This adjustment might occur in the forthcoming Budget by increasing the rate from the existing 18% basic level.
Adding to the financial pressure, local councils are considering doubling council tax for second homes next year, prompting a spike in listings in coastal areas.
UK house prices have seen a minimal increment, growing by only 0.7% over the previous year. This contrast with Nationwide’s reported 3.2% growth is partly due to last summer’s sharp price decline.
Regions such as the South West, South East, and East of England are experiencing price reductions, marking a challenge in affordability.
Conversely, Northern Ireland has observed a 5.7% price increase, while northwest England has seen a 2.1% rise.
Looking forward, the housing market is expected to experience a modest price rise, driven by increased supply. This trend is projected to persist into 2025.
Richard Donnell, executive director at Zoopla, affirms that speculation over taxes and past changes have contributed to a larger housing supply. “More supply delivers much greater choice for buyers and will keep house price inflation in check into 2025,” he states.
The current market dynamics indicate a significant shift in how properties are bought and sold. As tax implications evolve, both buyers and sellers must stay informed and adapt accordingly.
As the UK housing market adapts to potential tax changes, the rise in chain-free homes provides more choices for buyers. Vigilant observation of market trends and government policies will be crucial for future decisions.
