A regional agent says the fear of further taxes on the private rental sector may lead to a spurt of landlords selling up this autumn.
Gareth Overton of Henry Adams – an agency operating in Hampshire, Sussex and Surrey – says: “The summer property market has remained fairly active, with increased stability providing a solid foundation for continued strong sales based on buyer confidence. The much-anticipated election outcome caused few ripples, with only a slight dip in viewings as the holiday season began.
“However, as the Autumn Budget approaches, we may see more significant changes, particularly among buy to let landlords who are closely monitoring potential Capital Gains Tax implications … The Bank of England Base Rate appears to have had a positive impact on home-mover sentiment. Underlying demand remains positive and we expect activity to gather pace in line with the traditional seasonal fluctuations as we move into the autumn months.”
Chancellor Rachel Reeves has left the option open to raise CGT rates.
In an answer to a question about raising CGT Reeves said: “I want to bring that tax burden down because I want to make Britain the best place to start and grow a business, and I want working people to keep more of their own money in their pockets It is always important when you’re deciding tax policy to strike the right balance.”
Labour has ruled out many other possible tax rises, making CGT a possible target for the October 30 Budget – currently around £15 billion is expected to be raised from CGT this year, rising to £23.5 billion in five years’ time, according to the Office for Budget Responsibility.
Overton’s comments were made in response to the latest Rightmove asking price index.
This shows a seasonal drop of 1.5% this month (-£5,708) to an average £367,785. Asking prices have fallen in the month of August for the past 18 years, and the size of this month’s drop is in line with the long-term average.
Rightmove says new sellers who come to market at this quieter time of year may have a pressing need to sell, so tend to price more competitively. However, it suggests that summer sellers this year may find that t”here is a degree of buyer buzz around the market that was missing in the peak-mortgage-rate market at this time last year.”
The portal goes on: “The first Bank of England rate cut for four years at the start of the month has helped to accelerate mortgage rate drops and contributed significantly to improved buyer demand. These better conditions are helping to set up a positive autumn market, and a further spur to activity following the Bank Rate cut has led Rightmove to raise its 2024 forecast from a 1% drop over the whole of 2024 to a 1% rise in new seller asking prices.
Tim Bannister, Rightmove’s director of property science, says: “The first Bank Rate cut since 2020 has sparked a welcome late summer boost in buyer activity. While mortgage rates aren’t yet substantially lower since the rate cut, the fact that the long-hoped-for first cut has finally arrived, and mortgage rates are heading downwards, is positive for home-mover sentiment. As the summer holiday season comes to an end, the conditions are there for a more active autumn market.
“The reaction from home-movers to what is hopefully only the first of several rate cuts over the next year or two, combined with other positive data and trends, has led us to raise our price prediction for the year. We now expect new seller prices to rise marginally by 1% over the whole of 2024. This is a relatively small revision from our original prediction of a 1% fall in prices over the year, since we didn’t initially forecast anything more drastic than a slight drop in prices this year.”
Since the Bank Rate cut on August 1, the number of potential buyers contacting agents to view homes for sale is 19% higher than in the same period a year ago.