House Prices Fall as an After Effect of The Mini-Budget
The issue of house prices has plagued the UK government for years, and with the latest budget announcement came no solution to the problem that has been crippling the economy. New statistics from the Office of National Statistics (ONS) show that house prices in the UK have fallen by 0.7% between July and September, the biggest decline since 2012, following the Chancellor’s mini-budget back in September this year.
It was widely expected that any rise in interest rates would have an impact on the housing market. It would also impact letting agents in Brackley, but experts had predicted that it would occur later rather than sooner, with many pointing to the uncertainty caused by Brexit as one of the main causes of this unexpected fall in prices. Even with new plans being put forward, will it have any impact on house prices? In this article we will examine how the mini-budget affected UK house prices.
What was the UK mini budget?
This year, the 23rd of September was the day of the annual UK Mini Budget. It is one of the most anticipated days in Britain and it often has a massive impact on the future direction of the country. This year, there were many changes to what was announced by Chancellor Kwasi Kwarteng during his speech in Parliament. Some of these included. The new rules will come into force in 2023.
This means that people who are planning on buying or selling their home, as well as people who are renting out their property, will have to be aware of the new rules if they want to avoid any penalties. A landlord could for instance lose control of their tenant’s deposit at the end of an agreement. The first change is that landlords won’t be able to charge tenants more than 10% of the total cost of rent upfront when they move in and they will also need to wait until at least half-way through an agreement before asking for any payments like this again.
How did the mini budget affected the UK house prices?
On the 23rd September, the United Kingdom Chancellor of the Exchequer, Kwasi Kwarteng delivered his mini-budget to Parliament. This mini-budget was meant to offer tax cuts and incentives to the country’s citizens in order to support them in a time of uncertainty.
However, despite all the good intentions from this mini-budget, it seems that it has had an adverse effect on UK house prices. Homeowners saw their property values drop by 1.25% following the release of the budget. That is because homeowners now need to wait two years before they can claim relief against capital gains tax if they sell their property after 21st March 2021, rather than 18 months previously.
Although these changes only apply for higher rate taxpayers, many homeowners have been left disappointed by this as they thought it would be advantageous for everyone who owns property or rents out properties.
In addition, these changes also mean that landlords are no longer able to deduct any losses incurred when providing accommodation to tenants at all. Including when landlords let out a room in their own home.
What’s next and how will this be improved?
No one can predict what the next few months will bring, but there are a few ways to help improve this. Firstly, the government could offer an option for those who don’t want to sell their homes to repay their mortgage in smaller instalments. They could also do more to regulate buy-to-let landlords, which would help with the demand for housing and make it easier for people to find somewhere they can afford. Another way to tackle the issue is by building more affordable houses.
Furthermore, we need to address some of the problems with social housing by introducing different ways for those eligible to apply or rent out these properties. It is clear that something needs to be done soon otherwise we risk creating a generation of youngsters who cannot get on the property ladder, no matter how hard they try.
Conclusion
UK house prices fell in the aftermath of the Chancellor of the Exchequer’s mini-budget announcement, according to a survey. The Royal Institute of Chartered Surveyors (RICS) said that there was a significant shock in October, with the number of respondents anticipating price rises falling from 28% to just 13%. Rising borrowing costs have been cited as a cause for concern for buyers, along with other factors such as Brexit uncertainty.
