Property Transaction Efficiencies Required NOW To Combat Falling UK House Prices
Following the significant shock of the mini-budget back in September, house prices have fallen as predicted, with the possibility of redundancies being made in the property sector.
The uncertainty for buyers created by the subsequent rise in inflation, combined with the increased cost of living, means that conveyancing firms need, more than ever, to process transactions as efficiently as possible. To ensure that any impact on their profitability, and cash flow, is minimised.
Fortunately, there are things you can do to help, but let’s take a deeper dive first into what has been happening.
Kwasi Kwarteng’s Mini-Budget
On 23rd September 2022, the Chancellor of the Exchequer outlined a series of measures the Government believed would boost growth, dubbed ‘The Growth Plan’. The main points for residential conveyancing firms were as follows:
- SDLT was permanently cut for residential property buyers in England and Northern Ireland, with the nil-rate band doubled to £250,000.
- In the case of first-time buyers, the nil-rate band increased from £300,000 to £425,000. The maximum price of the property the first-time buyer could purchase increased from £500,000 to £625,000.
- The government took the view that the plan would allow up to 29,000 more people to move per annum.
The changes were initially expected to lead to an average tax saving of £2,500 for all home buyers. With almost 50% of the cost, for all those who moved home in England and Northern Ireland, being tax-free. If your client was a first-time buyer in an area with high property prices, he or she could save a maximum of £11,250 in tax.
Nevertheless, analysts were alarmed that the boost to demand created by the cuts would not be enough to counteract the enormous affordability crunch hitting the market. As soaring inflation pushed the Bank of England to raise interest rates by a further 0.5% on the 22nd September to 2.25%. Resulting in mortgages becoming increasingly more expensive for buyers.
Read the full article on the inCase website here.
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