31 October 2024
If you are covering the latest stamp duty land tax or monthly property transaction figures, please see the following comment from Karen Noye, mortgage expert at Quilter:
"September property transaction figures reveal that seasonally adjusted residential transactions saw a slight month-on-month increase to 91,820, breaking a downtrend that began in May. These figures are 9% higher than the same period last year, indicating some underlying strength in the market. However, non-seasonally adjusted transactions fell 9% from August, following seasonal expectations. Autumn can be a busy period for the property market and now given the uncertainty of the budget is no longer looming over people, it may give them more confidence to go out and back big housing decisions.
"That said, Labour’s budget announcement, which introduced a 5% stamp duty for second homes, has significant implications. This policy aims to curb investment in buy-to-let and holiday properties by making such purchases more costly upfront, a move designed to ease housing demand pressures. While this may discourage investors, it also risks exacerbating rental shortages, especially in areas heavily dependent on the buy-to-let market. Additionally, the higher transaction costs could have knock-on effects on property prices in regions where secondary property demand has historically driven growth.
"The latest Q3 stamp duty statistics further illustrate these market dynamics. SDLT transactions rose 15% from Q2 and 8% compared to Q3 2023. They may soon start to increase rapidly as a result of yesterday’s announcement of an increase stamp duty on second homes by 2% to 5%, effective today. Although the flip side is that the changes could simply put buy-to-let investors off even more following years of the tax landscape becoming ever more hostile to them. Residential transactions led the growth in stamp duty with a 17% quarter-on-quarter increase, underscoring continued demand despite broader economic uncertainties. Conversely, non-residential transactions declined 2% from Q2 but still posted a 4% year-on-year increase.
"In terms of lending, lenders continue to engage in a price war which is helping to keep mortgage rates down despite the uncertainty posed by the budget. However, the anticipated end of the first-time buyer stamp duty threshold uplift in March 2025 could trigger a rush among new buyers, although many will still grapple with affordability challenges due to relatively high mortgage rates."
