You’re all concerned about Rachel Reeves’ Budget next week and certainly some aspects of the property market are frightened almost to death of what’s to come.
Agents worry that buyers and sellers will be targeted for more tax in the form of stamp duty changes, CGT being applied to house sales, a tweaking of the council tax regime and/or a Mansion Tax of some sort and therefore that consumers will be spooked and will sit on the sidelines well into next year, accordingly.
But that’s not going to happen. Well, not to 99% of you.
The Labour government is nothing if not ideological. They do things by way of policy introductions that suit a left-wing agenda, for instance adding VAT to school fees and pushing pension pots into inheritance tax liability. And lowering the CGT threshold, and so on.
These things and more play to a crowd that is distinctly on the ‘equality of wealth’ part of the political spectrum. I wouldn’t go as far as to say it’s akin to a Karl Mark type approach where ‘All property is theft’ as such, but it’s somewhere over in that direction.
Then to my point. All of the property related tax changes that the chancellor has trailed in the media are aimed at the upper end of the housing market (we used to call ‘kiteflying’ from the Treasury ‘leaks’ – but to admit such would get Rachel in more trouble than just being an unlicensed landlord).
If CGT is introduced on primary home profits it will be on homes above circa £1.5m/£2m. This represents less than 1% of UK property transactions annually.
If council tax is messed with, it will add cost to the most expensive of homes, not three-bed-semis in Billericay or flats in Milton Keynes.
A proposed Mansion Tax is said to only potentially apply to sales above £1.5m.
Any introduction of a further levy at the top end of our market will be bad for Prime London, Prime Urban and Prime Country homes, however it’s the uncertainty of what is coming that is surely worse than the few quid extra that Reeves is about to nick from the well-heeled. Frankly, I think Prime sellers and buyers will ultimately suck it up.
But what of the other 99%, the market that you reading this is probably in?
Well, it’s fine. And it’s going to be fine in 2026 – and here’s why…
Interest rates have dropped and the Bank of England is now forecast to reduce the base rate again in December due to inflation easing and the wider economy needing a boost.
Two-year fixed mortgage rates are now at their lowest since 2023.
Wage growth continues, currently at just shy of 5% per annum.
Importantly, the ability for borrowers to bag loans at 6x salary has now been realised thanks to the chancellor and the FCA easing the rules from a previous 4.5x. That’s a 33% uplift in what can be lent.
And property values are up 2.15% year on year, says the average of the Halifax and Nationwide HPIs.
For all of these reasons sentiment remains somewhat positive amongst regular homebuyers and is why the stats at the coal-face of our industry show that the main market is seeing sales, completions and mortgage approvals at roughly the same levels as pre-Covid.
Yes, the bread and butter sector is fine and yes, I know that we will see some comments below that shout anecdotally that ‘my’ market is terrible, however the average situation across Britain really is ok – but perhaps you should maybe stop overvaluing if you actually want to sell more houses?
So, reasons to be cheerful? For sure.
Russell Quirk is co-founder of property public relations agency ProperPR.
