Brits shy away from buying houses as uncertainty over property tax increases
Buyer inquiries and sales slipped in August, with ‘ongoing uncertainty’ putting the brakes on the UK’s housing market, according to new data.
Agreed sales slipped sharply, with a net balance of 24 per cent of property professionals seeing transactions fall, up from a balance of 17 per cent the previous month, the Royal Institution of Chartered Surveyors (RICS) said.
Surveyors expect sales to remain largely stagnant over the next three months, the report said.
A net balance of 17 per cent of property professionals reported new buyer inquiries falling in August, increasing from a balance of seven per cent in July.
At the end of August, property experts noted that early signs of speculation about tax increases in the Budget had started to compromise confidence among some buyers.
Rumours have been swirling in Westminster about a variety of property tax changes Rachel Reeves might introduce in this Autumn’s – or further down the line – in an attempt to plug a £40bn gap in the nation’s finances while overhauling a complex system of levies and charges.
The Treasury is reportedly looking into a range of options, including a national property tax on the sale of homes, a local annual property tax based on property values, and an introduction of capital gains tax on the sale of homes over £1.5m.
Vistry CFO calls for tax certainty
On Wednesday, housebuilder Vistry reported a slowdown in demand in its half-year results, with agents in London reporting a significant stall in activity.
Vistry’s chief financial officer said that “we’ve got to avoid more procrastination”.
“The [November] Budget date … is a longer period of uncertainty. They don’t necessarily need to wait for the Budget for their housing pronouncements.
If they can announce things earlier to create more certainty in the market, that would be a good thing,” he said.
The Budget is set to take place on 26 November, significantly later than last year when it was held in October.
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, agreed that what has been a resilient summer market may give way to caution ahead of the Budget.
“The caveat to [transaction levels] is whether capital gains tax on primary residences, national insurance on rental income and a Mansion Tax will kill the autumn market as vendors and buyers opt to wait and see,” Reynolds said.