England, Wales, Scotland & Northern Ireland
UK Housing Market
UK housing affordability one of the worst amongst OECD countries, leading research finds
Brits pay the second highest amount of rent in OECD, with UK rents at an all time high
David Hannah, Group Chairman of Cornerstone Tax, discusses the need for the Chancellor to revitalise the UK's property market by cutting interest rates and reforming Stamp Duty
Research from The Resolution Foundation has found that the UK offers the worst value for housing among advanced economies. The analysis reveals that UK households pay the second highest amount of rent out of OCED countries, making UK housing significantly less affordable than most OECD countries. This comes at a time when the Office for National Statistics (ONS) has revealed that average private rents experienced their most rapid annual increase last month. This increase marks a rise from the previous 8.5% annual rate recorded in January, indicating a persistent upward trend in rental prices. David Hannah, Group Chairman of Cornerstone Tax, the UK’s leading property tax advisory, argues that Chancellor Jeremy Hunt needs to revitalise the UK's property market by cutting interest rates and reforming Stamp Duty.
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“2023 was an extremely turbulent year in the UK property market, with successive interest rate increases and a generally hawkish approach to the control of inflation..."
David Hannah, Group Chairman
Post the Spring Budget, David Hannah, argues that attention ought to be brought towards stimulating the property market’s lower end. One easy fix for policymakers would be to reassess the current thresholds for stamp duty payment, homes that are valued at £250,000 or less are currently exempt, with a 5% levy being charged on homes valued between £250,000 and £925,000. However, with the current price of a UK home standing at £288,000, it’s clear that SDLT payment bands are long overdue for an overhaul. According to Hannah, those looking to purchase properties on the mid-to-high end of the property market will, in turn, have a chance to sell their low-end properties as a result of an increase in demand from prospective buyers, encouraging movement and generating momentum within Britain’s frozen housing market.
Furthermore, the UK's interest rates remain amongst the highest in the G7 group of advanced economies following the Bank of England's fifth consecutive decision to pause hikes to the base rate of interest starting in September. This has prompted experts and analysts to insist that interest rates have reached their apex, with David calling for the BoE to seriously consider cutting the base rate in a bid to help boost the UK's stagnating property market. Hannah calls for the government to prioritise the overheated private rental sector, making the market work again for tenants and landlords alike through the creation of new incentives, as well as an overhaul to the current stamp duty regime and the cutting of interest rates.
David Hannah, Group Chairman of Cornerstone Tax, comments:
“2023 was an extremely turbulent year in the UK property market, with successive interest rate increases and a generally hawkish approach to the control of inflation by the Bank of England. Emerging trends indicate that the BoE may have overcompensated at the expense of the property market.
“February's inflation figures and mortgage approvals should indicate an overall cooling off of the UK economy which must be acknowledged by the BoE and, in an effort to avoid a sudden crash of inflation, will increase pressure on the MPC to start reducing interest rates sooner rather than later."
“Economies have momentum, with the rate of inflation continuing its downward trajectory towards the BoE’s threshold of 2% - the MPC must look ahead and start thinking about the optimum time to cut rates. I’d urge the MPC to seriously consider cutting the interest rate as even a reduction by a quarter percentage point would signal optimism within the UK economy, with a target base rate of 3-3.5% being the overall goal if the BoE want to truly prioritise buyers in the new year."
David Hannah, Group Chairman
