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Ben Stephens, Partner at Stags, gives a residential sales perspective on the announcements affecting buyers, sellers and the wider housing market.
Buyers and sellers have more clarity following months of speculation about the Budget. The question now is what the Government’s announcements will mean for their plans to move.
While there was no major change to Stamp Duty to provide an immediate boost to the wider market, there are positive measures for first-time buyers and housing supply, and importantly, some of the uncertainty that inevitably builds ahead of a Budget can now begin to settle.
For those considering a move, the fundamentals remain much the same: people will continue to buy and sell homes for a wide variety of reasons, and for many, their own circumstances will be far more influential than the announcements made in Westminster.
Welcome support for first-time buyers
One of the clearest positives for the residential market is the new Your First Home scheme.
Backed by £4.7 billion, the scheme is intended to support around 70,000 first-time buyers of new-build homes in England. Eligible purchasers will be able to buy with a deposit of at least 2.5%, supported by a 20% Government equity loan. Applications are due to open from February 2027, with the first loans expected from April.
Helping more first-time buyers onto the property ladder is significant beyond the new homes market itself. A healthy property market depends on movement throughout the chain, and measures which help people take that important first step into home ownership are therefore welcome.
Looking further ahead, the Government has also confirmed plans for a new First Time Buyer ISA from April 2029, allowing annual contributions of up to £4,000 with a 25% Government bonus and no upper age restriction.
Greater certainty for buyers and sellers
Ahead of any Budget, speculation around possible changes to property taxation can understandably influence confidence and decision-making.
We now know that there is no widespread overhaul of the taxation associated with moving home. For those who have been considering selling or buying but were waiting to see what the Budget would bring, that greater clarity may make it easier to move forward with their plans.
There may not have been the significant boost to the established housing market that some had hoped for, but nor is there a fundamental change to the reasons people move.
Changes in family circumstances, employment, lifestyle and location will continue to drive decisions, alongside buyers taking their first step onto the ladder, homeowners moving up or down the market and people relocating to the South West.
What about the prime market?
For properties at the upper end of the market, the Government has confirmed that the High Value Council Tax Surcharge will apply to residential properties in England valued at £2 million or more from April 2028, with deferrals, discounts and exemptions forming part of the arrangements.
This will be an additional consideration for some buyers and homeowners, although its effect on the prime market will become clearer as the detail is understood and the implementation date approaches.
Hospitality and Leisure Properties
The Budget’s changes to Small Business Rate Relief may benefit some holiday cottage complexes, although eligibility will depend on individual circumstances and rateable values. In England, existing relief generally provides 100% relief for properties with a rateable value of £12,000 or less, tapering to zero at £15,000. The latest Budget announcement proposes raising the full-relief threshold to £18,000 for qualifying retail, hospitality and leisure businesses, potentially extending support to more eligible operators.
However, holiday accommodation will not automatically qualify, and owners should take appropriate advice to understand how the changes may apply to their individual property or business.
Business Asset Disposal Relief (BADR) will continue to tax qualifying gains at 18%, but the lifetime limit will fall from £1 million to £500,000 from 6 April 2027. For owners considering the future sale of a qualifying business, this makes understanding the potential tax implications at an early stage increasingly important.
Second Home Market
For the second-home market, the decision to leave Capital Gains Tax rates unchanged provides some welcome certainty for owners considering a sale. With no further increase announced, one area of potential uncertainty has at least been removed for those weighing up their options.
Changes to the taxation of property income from April 2027 may, however, encourage some owners of rented properties to review their position. For some, that may mean retaining their investment, while others may decide that the time is right to sell.
If this results in additional properties coming to the market, it could provide greater choice for buyers in some locations. The effect is unlikely to be uniform, however, and will depend on local demand, affordability and the number and type of properties brought forward for sale.
Buy-to-let market
The two percentage point increase in tax rates on rental property income from April 2027 may put further pressure on landlords’ profitability, prompting some to consider selling. From a residential sales perspective, this could bring additional homes to the market and offer buyers greater choice. However, any reduction in the supply of rental accommodation could also put further upward pressure on rents, with the impact depending on local market conditions.
Looking ahead
Budgets naturally attract considerable attention, particularly when there has been speculation about changes to property taxation. But the residential property market is influenced by a much broader combination of factors, including mortgage affordability, confidence, supply and demand, and above all people's individual reasons for moving.
For this Budget, perhaps the most useful outcome for the wider residential market is clarity.
First-time buyers have been given additional support, measures have been announced to encourage housing delivery and the wider market can now move forward with a clearer understanding of the tax landscape.
The Budget hasn't fundamentally changed the residential property market, and that in itself provides some reassurance.
For anyone who has been delaying a decision while waiting to see what would be announced, attention can now return to the question that matters most: is this the right time to move for you?
If you are considering buying or selling, contact your local Stags office for advice on the market and your next move.
