Tax changes, a new US President and lingering doubts around the recent Autumn budget will create an environment of uncertainty within the proeprty market early next year says Knight Frank’s research chief Tom Bill.

It means, he believes, that consumer confidence will be brittle and tax deadlines will artificially inflate demand.

To add to those headwinds, post-budget, mortgage rates have risen, the government’s financial headroom has narrowed and the risk of inflation has increased.

Bill, though, is still expecting modest price growth across residential markets.

Evasive action

Also, the private sector will increasingly adapt by taking “evasive action” to some of the budget’s more punitive measures, such as individuals passing more housing equity onto their children.

Tax changes in April could also further distort the picture, he says. The nil rate band for stamp duty reverts to £250,000 from £125,000 and bills will rise by up to £2,500. A similar reversion will result in up to £6,250 extra stamp duty for first-time buyers.

This has already had an effect – mortgage approvals climbed to an 18-month high in October as buyers tried to get ahead of the April rise and this will continue until March, followed by a lull in April.

Bill says the opposite may happen in prime property markets due to the new rules for non-doms.

From 6 April 2025, existing non-doms switching to the government’s new residence-based scheme will have three years to bring money into the UK at low tax rates.

We have experienced a number of super prime buyers specifically lining up their property search.”

Some of that money will inevitably end up in the property market but it won’t start happening until after April.

There is evidence, however, that it is already being factored into buyers’ thinking. Stuart Bailey, head of London super-prime sales at Knight Frank says: “In the last week we have experienced a number of super prime buyers specifically lining up their property search, and completion timings, to benefit from the TRF.”

And Nimesh Shah, chief executive of tax advisory firm Blick Rothenberg adds: “My guess is that between a quarter and a third of non-doms will leave but the pace may be slower than initially thought. Some will just ride out the next few years due to schooling or business interests in the UK.”

Bill therefore concludes that the full impact of the Budget may not be seen until late 2025.