Tax fears ‘persuading investors and second homeowners to sell’
Zoopla's latest HPI suggests that possible tax rises in the Budget this month, as well as increases in Council Tax, are forcing buy-to-let owners and people with second homes to sell up.
Property investors and second homeowners are selling up amid speculation about possible tax changes in Rachel Reeve’s Budget later this month, it has been claimed.
A third (32%) of homes for sale are currently ‘chain-free’, many of which will be owned by buy-to-let investors, according to the latest Zoopla HPI.
The most common chain-free homes are two-bed houses, with 41% currently listed without a chain on Zoopla. Previously rented homes account for 13% of homes for sale.
Council Tax bills to double
Many English councils are expected to double council tax for second homes in 2025.
And coastal and rural postal areas popular with second homeowners have seen available supply increase by over 40%, including Truro (47%), Torquay (44%), Exeter (41%), Lincoln (41%) and Bournemouth (40%).
Sales rebound
The Zoopla HPI also reveals that the lowest mortgage rates for 15 months are supporting a rebound in sales market activity across the general market.
Sales agreed and buyer demand are both up by more than a quarter over the last four weeks compared to the same period a year ago.
While sales are up by over 10% across all areas, and are up to 30% higher across the East Midlands and North East. Over a third of sales (37%) are being agreed at more than 5% below the initial asking price.
Second homeowners and buy-to-let investors are facing drastic changes.”
Nigel Bishop, Founder and MD of Recoco Property Search, says: “Second homeowners and buy-to-let investors are facing drastic changes as some local authorities have or are going to start charging double council tax for properties that are left empty for more than a year,” he says.
“More second homeowners are considering whether their holiday home remains a sound financial investment.
“If a substantial number of second homes is being put up for sale, we could see the property market in areas such as Cornwall become increasingly attractive to house hunters who are seeking a permanent residence but are currently priced out of the market.
“That being said, a lot of properties are being offered at considerably high asking prices and sellers will need to adjust their expectations.”
Speculation
Richard Donnell, Executive Director at Zoopla, says: “Speculation over possible tax changes in the Budget and the impact of previous tax changes are continuing to add to the growth in the number of homes for sale.
“We remain in a buyers’ market, and greater choice of homes for sale will keep house price inflation in check into 2025.“
Nathan Emerson, CEO of Propertymark, says: “It’s positive to see further growth within the housing market. 2024 has been a year of progression that has seen changes within the wider economy help uplift the ability for people to approach the marketplace with a new level of assurance.
“We are starting to see early signs of lenders having the confidence to shift up the landscape by offering sub-four per cent mortgage deals in some circumstances, which of course sits firmly below the current base rate and points towards future confidence within the economy.”
Encouraging
Simon Gerrard, MD of Martyn Gerrard Estate Agent, says: “The figures from Zoopla today are really positive and paint an encouraging picture for the market. It’s especially pleasing to see a return to house price growth, and whilst people may be slightly discouraged that this only a minimal increase, the numbers today actually represent a healthy housing market.
“After all, we want incremental and sustainable growth in house prices, rather than the rollercoaster ride of sharp increases and plummeting falls that we’ve experienced in the last couple of years.
“It is also good to see an increase in transactional volume, which again is the sign of a healthy and properly functioning property market.
“This is what the new government will have wanted to see, as it supports the agenda of sustainable long-term growth. As we see more mortgage products come on to the market, they will be become increasingly competitive and more available, which should see transactional volume continue to climb moving forward.”
Small landlords are wise to sell up – there is now nothing in *any* political parties or local government opinions or policies that encourages them. Larger portfolio owner-managers who incorporate have more cushion to survive the encouragement offered to bad tenants by the RRB, reduced the cost of energy improvements by selling old houses, the ever-increasing costs of doing business etc , but Personal CGT at 40-45% will be the final nail in the coffin for citizen landlords. What, really, is the financial point of BTL investment, especially considering all the new risks and deliberate new costs and taxes? It is time to stop providing private rentals and leave it to the Government to sort out the mess its own actions and attitudes are causing.
Whether this lot hammer landlords even more than the last lot – is besides the point.
Landlords are being forced in one way or another out of the business – driving up rents for those that dont want or cannot buy.