Recent property news headlines have naturally taken their lead from the recent Chancellor’s Autumn statement and commentary on the prevailing economic climate.
The latter throws into starker relief some of the advantages of buying new-build homes, a look at the likely movement in average house prices in the coming two-year period, and a predicted surge in private sector rents soon into the New Year.
Let’s take a look behind some of those UK property news headlines.
Landlords hit by tax changes in Autumn Statement
While it might have gone relatively unnoticed on the day, changes to the Capital Gains Tax (CGT) regime will adversely impact those landlords wanting to move out of the buy to let market.
A story in the Mail Online recently revealed that the average landlord who sells a buy to let property once the full effect of the latest changes to CGT have come into effect stands to lose out some £2,600.
The newspaper noted that the current allowance before CGT needs to be paid upon the sale of a residential property is £12,300. But that this will be more than halved at the start of the new tax year in April 2023 to an allowance of just £6,000.
That allowance will again be halved to just the first £3,000 of profit on the sale of a property in April 2024.
Landlords who make a profit greater than these allowances will pay CGT at the current rate of 18% if they are basic-rate income taxpayers or 28% if they pay tax at the higher rate.
The changes are likely to result in the average landlord losing out on around £2,600 if and when a let property is sold says The Mail.
Green finance options to grow and incentivise new-build buyers
The government is backing plans to expand the availability of green finance options for homebuyers who purchase more energy-efficient new-build homes, reported the Buy Association on the 16th of November.
The initiative will see government funding of up to £20 million to mortgage lenders who offer green finance products that will encourage buyers to reduce their carbon footprint and emissions, thereby also cutting back on their energy costs.
Incentives for the purchase of energy-efficient new-build homes will be targeted towards both owner-occupiers and buy to let property investors.
UK house prices forecast to fall for the next two years
Citing official figures from the Office for Budget Responsibility (OBR), the BBC on the 18th of November, forecast a steady fall in average house prices during the coming two years – after which prices are expected to start rising again.
From now until sometime in late 2024, said the OBR, average house prices can be expected to fall by as much as 9%.
While the fall might be welcomed by first-time buyers who are struggling to get a first foot on the housing ladder, their earnings continue to be under severe pressure from the rising cost of living and the challenges of saving for a deposit.
Furthermore, increases in the mortgage lending rate have also made borrowing that much more expensive. Instead of the relatively manageable rates that have prevailed in the past ten years or so, two- and five-year fixed-rate mortgages currently carry an interest rate of a little over 6%.
Rents to rocket further in early 2023 warns industry figure
As landlords faced with the challenges of running a buy to let business sell up and leave the market and those that stay are faced with ever more expensive mortgage borrowing costs, there is a critical shortage of dwellings in the private rented sector.
A story in Landlord Today on the 21st of November drew attention to the inevitable consequence of such a shortage of supply – escalating levels of rent.
With the supply of private rented property at a five-year low, rents are predicted to surge by as much as an extra 4% in January 2023 alone.
