A significant increase in chain-free homes is observed in the UK housing market, marking a potential shift in property dynamics.
- The proportion of chain-free homes for sale has reached one-third, partly due to landlords and second-homeowners offloading properties.
- Falling mortgage rates contribute to increased sales, with more homeowners entering the market after a period of delay.
- Potential tax changes are driving landlords and second-homeowners to sell, affecting the availability of chain-free homes.
- Housing supply is growing, offering buyers more choices and likely moderating house price inflation into 2025.
The UK housing market is experiencing a notable change, with one-third of homes currently for sale identified as chain-free. This development is partially attributed to landlords and second-homeowners deciding to sell their properties amid concerns about impending tax changes. The market dynamics are shifting as more chain-free homes become available, potentially altering buyer options significantly.
An influx of new property listings has resulted in a 25% increase in agreed house sales compared to the previous year. This uptick is driven by falling mortgage rates and more homeowners deciding to move after a period of postponement. The average rate for a five-year, 75% loan-to-value mortgage has decreased to 4.3%, encouraging market activity.
Landlords and second-homeowners are motivated by the prospect of rising buy-to-let mortgage rates and anticipated tax changes. This group forms a significant portion of sellers, contributing to the rise in chain-free properties. Zoopla’s reports highlight that in London, two and three-bedroom homes, primarily former rentals or second homes, are often found in the chain-free category.
The anticipation of an increase in capital gains tax on residential properties is a critical factor. This expected change, likely to be announced in the forthcoming Budget, suggests a possible rise from the current 18% basic level. Additionally, local councils are planning to double council tax for second homes, prompting increased listings in certain coastal areas.
Regions such as Truro, Torquay, Exeter, and Bournemouth are witnessing a 40% rise in properties available for sale, as many second-homeowners aim to offload their properties. This trend reflects broader strategic moves by property owners in response to legislative forecasts.
Richard Donnell from Zoopla comments on the expanded housing supply resulting from tax speculation and previous changes. He notes that increased supply offers greater choice for buyers and is expected to keep house price inflation in check into 2025.
Despite the current conditions, UK house prices have only increased by 0.7% over the past year, with some regions even experiencing a decline. In particular, the South West, South East, and East of England have seen a reduction in house prices due to affordability constraints. Conversely, Northern Ireland and northwest England have witnessed price growth, pointing to varied regional trends.
Overall, the UK’s housing market is seeing increased activity and supply, driven by financial and legislative factors, likely leading to moderated price growth.
