Landlords on edge ahead of October budget despite positive market trends

Bank of England base rate cut offers a summer boost to the housing market.

According to the latest Rightmove House Price Index, since the Bank Rate cut earlier this month, the number of potential buyers contacting estate agents to view homes for sale is 19% higher than in the same period a year ago.

However, despite this positive trend, many landlords are still nervous about the upcoming October budget.

August sees a lull period

August typically sees a lull period in house prices and this year is no different. The average price of property coming to the market for sale has seen a seasonal drop of 1.5% this month (-£5,708) to £367,785.

However, a Bank of England base rate cut and improving market conditions are helping to set up an optimistic autumn market.

This boost in activity has prompted Rightmove to revise its 2024 forecast, shifting from an anticipated 1% decline to a 1% increase in new seller asking prices for the year.

Sparked a welcome late summer boost

Tim Bannister, Rightmove’s director of property science, said: “The first Bank Rate cut since 2020 has sparked a welcome late summer boost in buyer activity. While mortgage rates aren’t yet substantially lower since the rate cut, the fact that the long-hoped-for first cut has finally arrived, and mortgage rates are heading downwards, is positive for home-mover sentiment.

“As the summer holiday season comes to an end, the conditions are there for a more active autumn market. The reaction from home-movers to what is hopefully only the first of several rate cuts over the next year or two, combined with other positive data and trends, has led us to raise our price prediction for the year.

“We now expect new seller prices to rise marginally by 1% over the whole of 2024. This is a relatively small revision from our original prediction of a 1% fall in prices over the year since we didn’t initially forecast anything more drastic than a slight drop in prices this year.”

Landlords worried about October budget

Despite an optimistic property market, many landlords are worried about the upcoming October budget and the rumours of a possible capital gains tax rise.

Gareth Overton, head of residential sales at estate agents Henry Adams, said: “The summer property market has remained fairly active, with increased stability providing a solid foundation for continued strong sales based on buyer confidence.

“The much-anticipated election outcome caused few ripples, with only a slight dip in viewings as the holiday season began. However, as the Autumn Budget approaches, we may see more significant changes, particularly among buy-to-let landlords who are closely monitoring potential capital gains tax implications.

“In areas such as Chichester, Midhurst and Bognor Regis, the current sales market is particularly active and we have seen a noticeable increase in enquiries from downsizers across the board.”

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