Should The Autumn Budget derail your home moving plans?

It is October this week. October! That is the month of Harvest Festival; Yom Kippur; Halloween… and, of course, Rachel Reeve’s Autumn Budget.

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The latter is something that has been looming large over the property market, here in the London Borough of Richmond as much as anywhere – perhaps even more so, given that almost two thirds of properties in the borough are owner-occupied; a higher proportion than in other parts of London, let alone the UK. The forthcoming budget therefore hangs large, a Sword of Damocles almost, as homeowners (and particularly would-be sellers) wonder what bomb-shell announcements it might bring. What will it mean for Stamp Duty? How about Capital Gains Tax? Or, dare we whisper it, what about Inheritance Tax?

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These are all things that of course might have some immediate bearing on a potential property move; I would certainly not say these are things we should avoid thinking about. Nevertheless, for most people a move is not just about a single moment in time; it is a four, five, seven, maybe a ten year project. In fact, do you know how often homeowners do move on average? Every 19 years, believe it or not. These potential changes and introductions that we might see in the Budget, whilst not insignificant, will ultimately be things that we will learn to live with if they do come to pass – not just over the course of this parliament, but also (probably) over the course of the next 19 years too; who knows?

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So, the question is, or at least it might be: ‘is there anything realistically stopping me right now from making the move that is going to improve my life?’ I might go even further, if you will allow me: is there anything that makes ‘right now’ in fact the best time to jump, flying in the face of what we might otherwise despairingly have thought were good reasons to stand still?

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One thing I would suggest is worthy of some consideration right now is mortgage rates, or more to the point what those rates currently look like, compared to where they have been.

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After the recent Bank of England base rate cut in August, and despite the fact that the Monetary Policy Committee voted to hold rates where they were when they met most recently in September, Swap Rates have looked encouraging (these being the rates that determine how financial institutions borrow and lend money from and to each other… to condense an entire Economics degree module into one banal sentence). Mortgage lenders in turn have started to reflect this in their headline rates.

Numerous lenders have introduced sub 4% mortgages in the past eight to ten weeks – in fact, Barclays last week came out with a 5 Year Fixed Rate mortgage for buyers at 3.7%. And yes, whilst this particular product is for buyers able to put down a 40% deposit, it is indicative of what money markets are thinking and what lenders in general are doing… and I would wager that more lenders will follow suit when it comes to offering headline rates significantly lower than that 4% mark.

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The fact that there are 5 Year Fixed Rate deals out there which are cheaper than 2 Year Fixed Rate deals, in what we call an ‘inverted yield curve’ (if you want to look it up), points to a general sense that the market is expected to be OK over time – or especially, that rates are expected to be better and lower than right now, with speculation rife that they will drop further in the mid- to long-term. And what this means is that, all of a sudden, buyers are out there buying again.

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Now of course, Estate Agents always are looking for more properties to sell. I am hardly an unbiased commentator.

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On the other hand, I genuinely know that our team here has a book full of active buyers right now desperate to find their perfect property in Richmond Borough – and if I can find a way to help match a potential seller to a potential willing and able buyer, well then frankly I am only doing my job to the best of my ability – for both parties. Budgets do matter, the Budget does matter, but I am much more interested personally in the ‘little ‘b’ budgets’ of our buyers, than the ‘Big ‘B’ Budget’ of our parliament… or, in other words, I would rather focus on the simple question: what budgets do our buyers currently have, for a property in the Richmond or Twickenham areas, and are they wishing to view?
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The reality is that over these past six to eight weeks, buyers’ budgets have swollen and/or loosened, depending how you want to look at it, compared to where they have been – certainly in comparison to the first half of the year. It is easier and more comfortable for people to buy now, with rates where they are, than it was perhaps even just three months ago. This is in no small part down to mortgage rates showing signs of dropping. With around 70% of property purchases involving a mortgage, it is little wonder, when you think about it, that buyers here are finding it easier to take the plunge, at last.

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There’s a lot to consider, and it isn’t just mortgage rates or Rachel Reeves; so if you are trying to make sense of it all, please do borrow my time for half an hour. Here at Bartlett and Partners we are only too happy to offer ourselves as a sounding board, if nothing else – but as I alluded to earlier, there is every chance we already have your buyer up our sleeves. And if you are moving locally, maybe we also know about the perfect property for you too, about to hit the books. So, please, do give us a call.

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