Brexit and the housing market

Housing and Brexit Concerns

Whether we head to the polls again in a few weeks’ time for the third time in five years remains to be seen, but the political parties should remember that there is more than Brexit on people’s agendas.

A recent poll from Ipsos MORI for the Chartered Institute of Housing found as many people think the rising cost of housing will impact them personally over the next five years or so (57%), as think the same of Brexit (56%).

For renters, 72% expect housing costs to have a personal impact on them while just 51% think the same of Brexit.

Meanwhile, 73% of respondents believe there is a housing crisis in Britain, with over half (55%) thinking that the issue of housing has been discussed too little in Britain.

The new Prime Minister, Boris Johnson has said he is considering stamp duty reform during his premiership. Measures he has aired publicly to date include:

  • Increasing the stamp duty base threshold to £500,000 from £125,000 (to increase activity at the bottom end of the market, especially once Help to Buy ends)
  • Reducing the top rate tax to 7% from 12% for £1.5m+ homes (to increase activity at the top end of the market, which has been very subdued in recent years)
  • Sellers paying stamp duty and not buyers. However, this is likely to be very unpopular with current owners having to pay tax twice

Among other factors (policy and economic performance being key), changes to taxation in the form of stamp duty land tax at the point of sale can have a big impact on cooling or stimulating the level of activity in the UK housing market.

Despite these fears and potential amendments by the PM, there are transactions taking place in the capital. Rightmove recently reported a summer bounce in activity as buyers look to complete before the looming 31st October Brexit deadline. Indeed, the latest RICS Residential Market Survey suggests the market is beginning to stabilise. In July demand levels increased for the second month running, following consecutive months of decline since July 2018. This is echoed by NAEA Propertymark, who reported that the market is showing signs of resilience despite Brexit fears, with 6,440 more mortgages approved in June than projected in the May Bank of England inflation report.

We understand that the property market can be confusing at the best of times, so if you are concerned about what to do, please do get in contact with us or pop into your nearest JOHNS&CO office for a coffee and an informal chat.