UK Property News Week 36

Welcome to NestInsights, your guide to the evolving UK property market. In this blog series, we explore the latest property news and developments that shape the sector, offering you the insights needed to navigate and thrive. Our goal is to provide a comprehensive overview that empowers you to make well-informed decisions in this dynamic market.

Table of Contents

• Top 10 First-Time Buyer Hotspots in the UK

• Tory Leadership Candidate James Cleverly Pledges to Abolish Stamp Duty

• HMRC Issues New Guidance on Applying for a Stamp Duty Refund

• Property Buying Firm Launches ‘Instant Cash Offer’ to Compete with Estate Agents

• Record High of Ex-Rental Homes for Sale Ahead of Capital Gains Tax Changes

• Lowest Five-Year Fixed Mortgage Rate Available Since the Mini-Budget

UK Property News Week 36

Top 10 First-Time Buyer Hotspots in the UK

As the UK housing market continues to evolve, certain areas are emerging as highly attractive locations for first-time buyers. Factors such as affordability, strong employment opportunities, and good transport links contribute to the appeal of these hotspots. Based on recent data from the Halifax House Price Index, the following locations are proving to be resilient, with a high percentage of homes purchased by first-time buyers.

1. Manchester, North West

Manchester tops the list as the most popular destination for first-time buyers, where 75% of all home purchases with a mortgage were made by first-time buyers in 2023. With an average property price of £212,891, Manchester offers a significantly more affordable option compared to other major cities, sitting £35,000 below the national average. The city’s youthful population, vibrant cultural scene, and strong job market make it an ideal place for young professionals looking to buy their first home.

2. Slough, South East

Slough has become an increasingly popular choice for first-time buyers, with 73% of all properties purchased by this demographic. The average price for a first-time buyer in Slough is £322,961—well above the UK average but still significantly more affordable than nearby London, where prices are closer to £490,000. The town benefits from proximity to London and major infrastructure projects like Crossrail, boosting its appeal.

3. Sandwell, West Midlands

Sandwell in the West Midlands also sees 73% of home purchases made by first-time buyers. Properties here are notably more affordable, with an average price of £179,058—around £40,000 below the regional average. With lower prices and good transport links to Birmingham, Sandwell is an attractive option for buyers looking for affordability without sacrificing proximity to a major urban center.

4. Leicester/Oadby, East Midlands

In Leicester and its surrounding area of Oadby, first-time buyers make up 72% of all home purchases. With an average property price of £218,900, this region offers a combination of affordability and access to a growing job market. The area’s rich history and cultural diversity also contribute to its popularity.

5. Reading, South East

Reading’s popularity among first-time buyers remains strong, with 72% of all purchases in 2023. However, the average first-time buyer property price stands at £302,616, reflecting the area’s proximity to London and its thriving tech sector.

6. Thurrock, Eastern England

Thurrock is another hotspot for first-time buyers, accounting for 72% of all property sales in 2023. With an average home price of £286,391, the area offers a more affordable alternative to London while providing easy access to the capital via transport links.

7. Dartford, South East

Dartford’s appeal to first-time buyers is growing, with 71% of all home purchases made by this demographic. The average property price in Dartford is £314,090, driven by the town’s excellent commuter links to London and ongoing regeneration projects.

8. Knowsley, North West

In Knowsley, 71% of homes purchased were by first-time buyers, with an average price of £157,139, making it one of the most affordable areas on this list. Located near Liverpool, Knowsley is ideal for those seeking a balance between affordability and access to employment opportunities.

9. Wolverhampton, West Midlands

Wolverhampton is another key hotspot for first-time buyers, with 70% of home purchases. The average property price is £172,554, reflecting the city’s ongoing regeneration efforts and improving job market.

10. Luton, Eastern England

Finally, Luton rounds out the top 10, with 70% of first-time buyers accounting for all home purchases. The average price is £245,207, making Luton a more affordable option than London, while still offering excellent transport links to the capital.

With first-time buyers accounting for around 49% of all mortgage-financed purchases in the UK, these areas stand out for offering more affordable options in a challenging housing market​​.

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Tory Leadership Candidate James Cleverly Pledges to Abolish Stamp Duty

As the Conservative Party leadership race heats up, James Cleverly has introduced a bold proposal that could reshape the UK housing market. The former home secretary has pledged to abolish stamp duty entirely on all residential property purchases if he becomes prime minister. This move is part of his broader strategy to boost homeownership and increase market mobility.

Currently, stamp duty land tax (SDLT) applies to homes valued above £250,000, with rates ranging from 5% to 12%, depending on the property’s value.

First-time buyers benefit from a higher threshold of £425,000, but Cleverly argues that the tax still acts as a significant barrier for many. While previous governments have made temporary changes, Cleverly sees the complete abolition of the tax as the necessary next step.

In his campaign, Cleverly called stamp duty a “bad tax,” explaining that it stifles market activity by discouraging homeowners from moving. He argues it prevents older individuals from downsizing and restricts younger families from upsizing, effectively slowing down property transactions, Cleverly stated:

It’s a bad tax that is stopping too many people getting on the housing ladder. It disincentivises housing transactions, stopping older people from downsizing and young families from upsizing, and slows the building of new homes.

Cleverly likened his proposal to the bold housing policies of former Prime Minister Margaret Thatcher, particularly her right-to-buy initiative, which allowed council tenants to purchase their homes. He believes this plan could give younger generations a greater stake in society and bring new life to the housing market​.

The proposal has stirred debate, particularly around the potential impact on government revenues, as stamp duty raises billions of pounds annually. However, Cleverly contends that increased housing transactions would stimulate economic activity and compensate for the revenue loss.

This stance places him as a strong advocate for homeownership and market freedom, resonating with the Conservative Party's core values.

HMRC Issues New Guidance on Applying for a Stamp Duty Refund

In September 2024, HMRC issued updated guidance to simplify the process for applying for a stamp duty land tax (SDLT) refund. This is especially relevant for property buyers who had to pay the higher rate of SDLT for purchasing an additional property but subsequently sold their main home. Under the current system, property owners can apply for a refund if they meet specific criteria.

Eligibility for a Stamp Duty Refund

The new guidance clarifies that buyers who sold their main residence within three years of purchasing a new property at the higher SDLT rate can request a refund of the additional tax paid. If the sale of the main home was delayed due to exceptional circumstances—such as unforeseen legal issues—property owners may still be eligible for the refund even after the three-year window, provided the new property was purchased after January 1, 2017.

Application Process

To claim a refund, individuals must submit an online application through HMRC's Government Gateway portal or by completing the SDLT16 form. Required details include:

• The SDLT unique transaction reference number (UTRN) for the new property

• The sale details of the previous main home, including the date of sale and the buyer's information

The UTRN, an 11-character code, is located on the SDLT5 certificate issued by HMRC upon receipt of the SDLT payment. Once the claim is processed, eligible refunds are typically issued within 30 days.

Deadlines for Submission

HMRC's guidance also outlines key deadlines for refund applications. Claims must be submitted within 12 months of the sale of the previous home or within 12 months of the filing date of the SDLT return for the new property—whichever is later​​.

Property Buying Firm Launches ‘Instant Cash Offer’ to Compete with Estate Agents

In a bid to disrupt the traditional property selling process, the established property buying firm Upstix has introduced an ‘instant cash offer’ feature. The new service, accessible via the Upstix website, allows property sellers to receive an immediate cash offer on their home without the need for a traditional estate agent.

This initiative is seen as a way to offer a faster, more transparent alternative to the sometimes lengthy and unpredictable process of selling through an estate agent.

The service leverages AI technology to generate a preliminary cash offer range after the seller enters basic property details, such as the postcode and property type. This offer is based on extensive property and neighborhood data, aiming to provide sellers with a realistic valuation. Following this, an in-person property inspection and survey are conducted, leading to a final cash offer. Sellers can complete the transaction within a matter of weeks, often as quickly as seven days, a stark contrast to the average sale time of seven months when using traditional estate agents​​.

Upstix’s research highlights the appeal of this service for sellers, especially given the challenges many face.

According to their survey, 23% of sellers reported that their property sale took longer than expected, while 18% had to reduce their asking price, and 9% saw buyers pull out at the last minute.

By offering a guaranteed cash offer and quick completion, Upstix provides an attractive option for homeowners seeking speed and certainty​.

Fred Jones, COO of Upstix, noted that the traditional process can often lead to frustration: “Our new instant cash offers allow sellers to receive an instant and transparent offer on their property and complete a sale when they want, often in a few weeks. For anyone looking for the speed and convenience of a fast sale, Upstix offers a great solution.” This marks a significant shift in the way property transactions can be conducted, potentially reducing the reliance on estate agents for many sellers​.

As the property market evolves, services like this may become increasingly attractive, particularly for sellers who prioritize speed and certainty over achieving the highest possible price.

Record High of Ex-Rental Homes for Sale Ahead of Capital Gains Tax Changes

The number of ex-rental homes hitting the UK sales market has reached an all-time high, with landlords rushing to offload properties ahead of anticipated capital gains tax (CGT) increases. According to recent data from Rightmove, nearly 18% of homes currently for sale were previously rental properties.

This is a significant jump from the 8% reported in 2010, reflecting the growing trend of landlords exiting the buy-to-let market.

The trend is particularly pronounced in London, where nearly 29% of all properties listed for sale were previously rental homes. Scotland and the North East follow, each with 19% of homes previously let out.

This spike in sales comes ahead of the Autumn Statement, where the government is expected to announce changes to capital gains tax, further incentivizing landlords to sell now rather than face higher taxes later.

The current capital gains tax rates for landlords are 18% for basic-rate taxpayers and 28% for higher-rate taxpayers, but there is speculation that these rates may increase, further eating into landlords' profits from property sales.

The impact of this shift is multifaceted. On one hand, first-time buyers could benefit from an increased supply of properties, providing more options in a market that has struggled with limited housing stock. On the other hand, the exodus of landlords from the rental market is contributing to a significant reduction in available rental homes. With rental supply dwindling, this could exacerbate the ongoing supply-demand imbalance, pushing rents even higher.

Industry experts warn that the private rented sector is being squeezed due to increasing tax and legislative pressures, and the rise in ex-rental homes being sold is further evidence of landlords reassessing their positions. Many believe that unless government policy supports investment in the private rented sector, the housing crisis could deepen, with renters facing even more challenges in finding affordable housing .

Lowest Five-Year Fixed Mortgage Rate Available Since the Mini-Budget

The UK mortgage market has seen a significant shift, with the lowest five-year fixed mortgage rate available since the September 2022 mini-Budget now on offer. NatWest has introduced a five-year fixed-rate mortgage at 3.77% for a loan-to-value (LTV) of 60%, the lowest rate seen in two years.

This rate is even lower than Halifax's 3.81%, which had previously been the most competitive in the market​.

This reduction in rates comes amidst speculation that the Bank of England might further reduce interest rates in the fourth quarter of 2024. With financial markets pricing in additional rate cuts, it is expected that consumer confidence will rise, potentially increasing demand for mortgages. Other major lenders, including Barclays and HSBC, have followed suit with reductions, with Barclays lowering its five-year fixed rate for remortgages to 3.93%​.

For buyers, the lower rates could result in significant monthly savings.

The average mortgage payment on a five-year fixed, 85% LTV mortgage for a typical first-time buyer property now stands at £1,097 per month, down from £1,193 a year ago.

This drop in rates marks a full percentage point decrease from last year, when the average five-year fixed rate stood at 5.68%, offering substantial relief to new homeowners and those remortgaging​.

While some mortgage deals, like NatWest's 3.77% rate, come with higher upfront fees (£1,495), borrowers can opt for lower-fee alternatives, such as the 3.82% rate, which comes with a reduced fee of £995. Experts predict that as the Bank of England continues to cut rates, the market may see even more competitive offers, with potential for five-year fixed rates to drop closer to 3.5%​.

Takeaways

• Manchester leads as the top first-time buyer hotspot with 75% of home purchases made by new buyers, thanks to its affordability and job market.

• James Cleverly proposes to completely abolish stamp duty, aiming to boost homeownership and market mobility, especially for young families and downsizing retirees.

• HMRC's updated guidance clarifies the process for reclaiming higher-rate stamp duty, with applications to be submitted within 12 months of selling the main home.

• Upstix introduces an instant cash offer feature, allowing sellers to bypass traditional estate agents and complete a sale in as little as seven days.

• Nearly 18% of homes for sale were once rentals, as landlords sell ahead of expected capital gains tax hikes, potentially tightening the rental market further.

• NatWest offers the lowest five-year fixed mortgage rate at 3.77%, marking significant relief for buyers and signaling further potential rate cuts in 2024.

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