UK property market poised for growth despite Budget uncertainty

Property investors can expect a brighter outlook for the market in the coming year – despite the looming uncertainty of the Autumn Budget.

According to Octane Capital’s chief executive, Jonathan Samuels, lower mortgage rates will drive increased activity.

He explains: “Investors are worried about the impact of this week’s Budget, largely stoked by the government’s talk of a ‘£22 billion black hole’ in public finances that they need to fix.

“With this in mind, mortgage lenders are waiting to see how the government’s announcement alters the market before they start dropping rates to gain market share.”

‘Landlords are making steady profits’

He added: “Obviously, we hope Labour keeps tax increases to a minimum, but regardless of what happens, the fundamentals of the market are getting stronger all the time.

“Landlords are making steady profits, tenant demand is as fierce as ever, and mortgage rates should start falling once the Budget is done – easing the burden on the nation’s investors as we move into 2025.”

Mr Samuels also notes that lenders are holding back from aggressively competing on mortgage rates, largely due to the uncertainty that comes with an Autumn Budget announcement.

He also says that if Labour chooses to leave the stamp duty bands as they are, there will be an ‘influx of activity’ before the April 2025 deadline.

Increase in Capital Gains Tax

While investors are concerned about potential tax hikes, such as an increase in Capital Gains Tax or Inheritance Tax, there are hopes that any changes may exclude property.

The Bank of England’s expected interest rate cut in November, coupled with falling inflation, is further expected to contribute to lower mortgage rates.

The markets widely expect the Bank of England to cut the base rate from 5% to 4.75% next month, after the CPI Inflation rate fell to 1.7% in September, below the Bank’s 2% target.

Economists at Capital Economics and Goldman Sachs are also predicting significant declines in average interest rates over the next year, potentially reducing monthly mortgage payments by around £150.