How Might The Budget Impact On The Property Market?

The first Budget delivered by an incoming government is always a highly significant affair, as it is the one that sets out the priorities for tax and spending more than any other.

However, there has been much trepidation ahead of the appearance of chancellor Rachel Reeves at the despatch box, amid concerns about higher taxes and possible spending cuts.

Such matters will have been of interest to those trying to buy or sell property, both in terms of any direct policy impacts, but also any indirect ones, such as higher taxes that might constrain some people’s ability to afford to buy.

Now thespeech has been delivered, it is clear that it is mainly businesses that face the biggest burdens, such as changes to employer national insurance tax thresholds.

True, the minimum wage has risen, but this will not be enough for home buyers in London. What may be of more significance, therefore, is whether the impact on business costs will reduce the incomes of small business owners who want to buy a house to the extent that they can no longer afford to do so.

A change that will have a direct impact is the increase in the second homes surcharge on stamp duty from three per cent to five per cent.

This will impact purchases by landlords and theInstitute for Fiscal Studies has criticised this move, with director Paul Johnson warning that this cost will be passed onto renters, not least if it reduces the supply of rental properties.

Overall, however, with no changes to income tax or VAT, the Budget may not have a very large effect on many residential buyers or sellers.