A budget AND an interest rate cut, what does this mean for the property market in 2025?
Woah!
It’s been a busy few weeks with one of the biggest budgets in recent history, a fall in interest rates, and a spike in housing transactions, but what does all this mean for the market as we approach the end of Q4, and the beginning of a new year?
Let’s begin with the budget and what’s changed – or not, as the case may be!
Capital Gains Tax –
Despite capital gains tax being increased on chargeable assets, the Chancellor decided to keep the rate of CGT for selling property at the same rate. This is positive news for landlords and investors who are planning to exit the market in recent years as it means there won’t be a huge rush in landlords aiming to sell before any change.
Stamp duty –
Overall, for most buyers they won’t notice much change in stamp duty. That is, unless you’re a first time buyer.
From April 2025, the thresholds are reverting back to pre 2022, mini budget level so first time buyers will now be required to pay stamp duty on properties above £300,000, opposed to £425,000 which is the current rate. As a result of this, we expect many first time buyers to aim to speed up their purchases before the change comes into effect in April.
Remember, whether you pay or not depends on when you exchange, not when you put an offer in!
Furthermore, the government introduced higher stamp duty rates for second homes and buy-to-let properties. Therefore, you will now pay an additional 5% if a property is your second or more.
This change has been brought into effect immediately.
Now let’s discuss the recent cut to interest rates…
With inflation now calm and under control, the Bank of England cut the base rate by 0.25%. This is very positive news for those who are looking to take out a mortgage, or who are currently on tracker mortgages as it means saving on monthly repayments.
The decision was widely expected, however there is uncertainty as to whether they will cut rates again in the December decision. It had previously been expected that we could see another cut of .25% before Christmas, however, economists are said to be more cautious following a slight change in inflation forecasts for 2025.
Regardless of the December Bank of England decision, it looks like 2025 will be a lot more positive for the market thanks to overall lower interest rates and more economic certainty.
From growing your buy-to-let portfolio, to buying your first home, our team is on hand to offer you expert advice and get you the best mortgage for your personal circumstances.
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