The property market pulse
“Autumn is traditionally a time of renewed activity in the residential market, following what is usually a quieter August. Our teams in Essex and Suffolk have brought some wonderful properties to the market to suit most budgets and we are seeing plenty of sales activity for correctly priced and well-presented properties. The mini-budget has brought a welcome reduction in stamp duty (see below) but upward pressure on mortgage rates (more on this later from our mortgage partner John Foster).
The initial reaction to the mini-budget has probably just accelerated a shift in sentiment that was already well underway. The very strong sellers’ market which had its roots in a post-Brexit/post-lockdown spike of transactional activity has evolved to a market that favours buyers. There is less frenzied buying activity and reduced competition for some of the excellent opportunities currently available. So, if you are a buyer in a ‘buyer’s market’ you might even be able to negotiate and secure your first-choice dream property this autumn rather than experience the frustration felt by many in the past couple of years who kept missing out in frequent bidding wars.
Average asking prices are around 15% higher than they were two years ago but looking ahead, the pressures that led to seemingly endless rising property prices are clearly easing back. We have been here before over many cycles of property demand, but we are incredibly fortunate that Essex and Suffolk are such popular counties to live in and with the coast and countryside on our doorstep, we are still seeing good levels of buyers registering, with serious intent to find their next home.”
Alan Williams Managing Partner
Stamp Duty
Following the mini-budget on 23rd September, Stamp Duty and Land Tax (SDLT) changed with immediate effect. Stamp duty is a tax payable to the government when you buy a home, or land, priced above a certain threshold in England or Northern Ireland. In the mini-budget last week, Chancellor Kwasi Kwarteng announced permanent stamp duty cuts for some homebuyers.
Previously, purchasers would have paid stamp duty on a home, or the portion of a home, priced over £125,000. Following the latest announcement, the stamp duty threshold has doubled to £250,000, meaning if your house purchase is below this amount, you will not pay stamp duty.
SDLT rates for property purchases for owner occupation:
Up to £250,000 – 0%
£250,001 to £925,000 – 5%
£925,001 to £1,500,000 – 10%
£1,500,000+ – 12%
(Example – If purchasing at £450,000, the SDLT is calculated at – £250,000 at 0%, £200,000 at 5%, = £10,000 SDLT payable.)
First-time buyers paid no stamp duty on the first £300,000 of a home purchase prior to the mini-budget. This threshold has now been raised to £425,000. If the home you’re buying is priced below £625,000, you’ll still pay no stamp duty on the portion of the property priced below £425,000, and 5% on the portion priced above this. This is an increase of £125,000 on the previous price cap of £500,000.
SDLT rates for first time buyers only:
Up to £425,000 – 0%
£425,001 to £625,000 – 5%
£625,001 to £1,500,000 – 10%
£1,500,000+ – 12%
These changes reduce stamp duty bills across the board for all home-movers by up to £2,500, and by up to £11,250 for first-time buyers. For those purchasing an additional property, ie: buy to let or a holiday home, and not for owner occupation, there is an additional 3% on the SDLT rates for first time buyers*.
Mortgage Lenders
Following the mini-budget, there was a slump in the value of the pound as traders expected a sharp increase in interest rates by the Bank of England. That prompted a string of major mortgage providers to rapidly pull hundreds of deals from the market and start re-pricing products.
Following Kwasi Kwarteng’s announcement, the interest rate on a new, average two-year fixed deal was 4.74% and it is now at 5.97%. A five-year fixed deal has typically risen from 4.75% to 5.75% over the same period, according to moneyfacts.co.uk. They also went on to say that there were still over 2,600 mortgage products available in the market.
John Foster of Fosters Financial said: “Our phones have been ringing with clients concerned about interest rates and lenders withdrawing products from the market. This is a normal procedure and lenders have been doing this all year. Rates are changing quicker than they have previously, but this is to be expected with the current market conditions. We are seeing mortgage rates increasing and we are expecting more lenders to re-release their products soon and in fact, many have already.”
If you are thinking of selling your property, our local experts have their fingers firmly on the pulse of the local market so please contact us for a free, no obligation appraisal and advice about how to achieve the best price.
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*Data from gov.uk