Buoyant summer continues, but will the budget dampen it
- Land Registry reports April as the lowest sales volume post SDLT change.
- Stamp Duty could be abolished and replaced with an annual property tax.
- 8% more sales agreed last month than in July 2024.
- Sellers were competing more on price.
- Landlords could be taxed out of the market.
- Bank of England set to hold base rate in September.
- Average property price in England & Wales is £285,563; a 3% year-on-year increase.
The housing market has enjoyed its best summer for many years, although the latest data from the Land Registry shows how much stamp duty changes affect it. March saw the highest number of house sales completed for over 2 years at 77,297; however, April slumped to the lowest ever at 22,700. We saw similar spikes post-COVID when the stamp duty rates changed negatively.
Stamp Duty is one area Rachel Reeves may change in her next budget in October. It is being suggested that it could be abolished and replaced with an annual property tax for properties valued £500,000 and over. This would mean no stamp duty for properties valued at £500,000 and under. The rate being discussed is 0.54%, so on a £600,000 property, the duty would be 0.54% of £100,000, or £540 a year.
Gradual annual levy would not replace the lost revenue that stamp duty upfront payments provide immediately
Source: Lucian Cook, Head of Residential Research, Savills
Changing the stamp duty of this nature would have a massive impact on both home owners and first-time buyers. It would allow existing homeowners to upgrade and free up housing stock for first-time buyers. It would also help buyers liable for this tax to spread the cost so it isn't a considerable lump sum. I like the idea, but as with all stamp duty changes, it is hard to plan for it as you can never guarantee a change, and if it comes in, it'll be with immediate effect.
Use our free Online Stamp Duty Calculator for England or Wales to work out your stamp duty rate.
House prices falling isn't a bad thing
Nationwide Building Society reported UK house prices fell in August as buyers struggled to afford high valuations. Property prices fell by 0.1 per cent last month from July, the third month-on-month fall since April, following changes to stamp duty.
house prices are still high compared to household incomes, making raising a deposit challenging for prospective buyers, especially given the intense cost of living pressures in recent years
Source: Robert Gardner, Chief Economist, Nationwide Building Society
I believe slight falls in property prices aren't a bad thing (and are needed), because when they do, we see more sales. This is what we're seeing now as Rightmove reports that house sales in July were their highest for the time of year since 2020, with 8% more sales agreed last month than in July 2024. Whilst the sales volume increased, the average asking price on newly listed properties dropped by 1.3 per cent this month to £368,740.
Sellers were competing more on price and that the number of sales agreed in July was the highest for the month since 2020 when demand for bigger homes was unleashed by the COVID-19 pandemic and government tax breaks
Source: Colleen Babcock, Property Expert, Rightmove
Set a buyer's price for a faster sale
This is a complicated market that estate agents must adapt to, or face prolonged times to find a buyer. The overall average time to find a buyer is now 62 days; however, it takes an average of 32 days to find a buyer if a property does not need a price reduction, versus 99 days if it does.
The successful agents will be the ones to set their pricing right for the area and demand. Propertymark reported that the average number of new prospective buyers registered per branch decreased to 65, "but realistic pricing is converting".
What is stimulating the competitive pricing is the volume of new properties coming to market alongside the more affordable mortgage products. There were around 11.2 homes placed for sale per branch in July 2025, up from last year's 10. If sellers keep coming to market, we'll continue to see static house price growth for the rest of 2025, as buyers, for once, have the upper hand.
How long can this last?
Not all property professionals are seeing the market in the same way. The Royal Institution of Chartered Surveyors (RICS) has released its latest monthly housing report and found that interest from prospective home buyers receded and completed purchases dropped in July. An index of new buyer inquiries produced by RICS was 6% down last month, down from 4% up in June, signalling a softening in demand. RICS said the outlook was clouded by uncertainty over the Bank of England's next moves on interest rates and the upcoming Budget.
The budget is likely going to fall on Wednesday the 29th October 2025, and the noise around stamp duty will mean all eyes are going to be fixed on what Rachel Reeves announces. If there is a preferential change to SDLT, hold onto your hats as the market erupts.
Recent policy commentary on the private rental market
A recent article in The Telegraph raises several points about potential new government policy and its impact on landlords and the wider housing market.
The article argues that a rumoured plan to levy National Insurance on rental income on landlords with more than 1 rental property, and combined with new regulations, could be the final straw for many in the sector.
The key points are:
- A proposed National Insurance levy is seen as the latest disincentive for landlords.
- The policy could push more landlords to sell up, reducing rental supply.
- Fewer rental homes will drive up rents for tenants.
- The new tax may generate less revenue than expected as landlords exit the market.
The English Private Landlord Survey (EPLS) from 2024 reported that 55% of landlords owned more than 1 rental property, so this new National Insurance would have a material impact.
Will mortgage rates go down again in 2025?
As predicted in our last report, the Monetary Policy Committee (MPC) cut the base rate in its August 7th meeting. The vote of 5-4 saw the rate lowered from 4.25% to 4%, a move aimed at stimulating the UK's slowing economic growth and boosting consumer confidence.
This is the fifth rate reduction since last August, and analysts widely expect at least one more cut before the end of the year.
With mortgage lenders already responding to these market signals with more competitive products, we are seeing a more favourable borrowing environment.
As Governor Andrew Bailey stated in a recent interview: "I really do believe the path is downward" when talking about interest rates. I don't think this means we'll see a change to the base rate in this month's meeting. Yes, it needs to go downward, but inflation is estimated to be rising to 4% in September, double the target the BOE wants to achieve. I think it is more likely that a rate change will occur in the November meeting, and this month we'll see a vote of "stability" and no change.
The upcoming MPC announcements on Bank Rates are on the 18th September, 6th November, and 18th December.
I think it is more likely that a rate change will occur in the November meeting, and this month we'll see a vote of "stability" and no change.
Source: Andrew Boast, CEO of SAM Conveyancing
Sales volumes dip sharply as average property prices continue to rise
England & Wales
In June 2025, the average property price in England & Wales stood at £285,563; a 3% year-on-year increase compared to June 2024 (£277,249).
The average price for first-time buyers reached £239,553 (up 3.1% annually), while owner-occupiers purchased at an average of £346,822 (up 3.4% year-on-year), and cash buyers at £272,370 (up 2.7% year-on-year).
On the transactional front, completed sales saw a significant drop. In April 2025, England & Wales recorded 20,700 completed transactions. This represents a 60% decrease from the 51,258 sales observed in April 2024 and is the lowest volume since the lockdown period in April 2020.
This sharp decline is not indicative of a market crash. Instead, it is a direct result of the large number of sales that were brought forward and completed in March to beat the changes in the Stamp Duty Land Tax (SDLT) thresholds on April 1st. This created an unusually quiet April as the market recalibrated following the tax-driven surge in activity.
Mortgage approval reports
Home buyers
In July 2025, House Purchase Mortgage Approvals continued their upward trend, reaching 65,352; a 1.2% increase from the 64,571 approvals recorded in June 2025 and a 4.6% increase from the 62,489 approvals in July 2024.
The trend suggests that home buyers are motivated to enter the market. Additionally, with lenders continuing to offer competitive rates, affordability pressures are easing, providing further support to transaction levels.
The average 2-year fixed mortgage rate is now at 4.49%, with the lowest available rate at 3.73%, showing a wider range of options for borrowers.
Remortgages
Remortgage Approvals reached 38,889 in July 2025. This represents a notable 6.6% decrease from 41,619 in June 2025, but a substantial 54.1% increase from 25,237 in July 2024.
While the monthly drop may appear concerning, it follows the peak in remortgaging activity seen in May and June as homeowners rushed to secure new deals ahead of the August base rate cut.
I am seeing that the remortgage market will improve substantially. The UK Finance data shows 900,000 fixed-rate deals are due to expire in the second half of 2025, and with the average five-year fixed mortgage now below five per cent, more homeowners can afford to remortgage.
FCA softens remortgage rules
The Financial Conduct Authority (FCA) published the Policy Statement 25/11: Mortgage Rule Review First steps to simplify rules and increase flexibility. In this review, they have, therefore, removed guidance no longer required, and amended their rules to provide greater opportunity for innovation and to make it easier to:
- Remortgage with a new lender.
- Reduce the overall cost of borrowing through term reductions.
- Discuss options with a firm, while still having the option to seek advice if needed.
The review forms part of the 5-year plan from the FCA to support growth in the housing market by simplifying their mortgage rules. In March this year, mortgage lenders were reminded of these changes, which have seen lenders provide access to mortgages to more people.
The FCA’s reforms are a welcome step to help lenders respond more effectively to customer needs and widen access to homeownership. Their optional nature means that firms can apply them in line with their own risk appetites. By reducing regulatory friction and enhancing switching flexibility, the reforms will enable the mortgage sector to continue supporting the government’s growth agenda by supporting new and existing mortgage customers.
Source: Charles Roe, Director of Mortgages at UK Finance
How many new-build properties are being built?
In Q1 2025, total starts for new homes reached 29,610. This marks a notable increase of 15.5% compared to Q4 2024 (25,640) and a substantial 22.8% rise year-on-year from Q1 2024 (24,110), suggesting renewed confidence among housebuilders, rebounding from lows experienced in late 2023.
Conversely, total completions in Q1 2025 registered 32,560 units. This represents a 20.3% decrease from Q4 2024 (40,860) and a 5.2% decline year-on-year from Q1 2024 (34,360). This adjustment in completions reflects the inherent time lag from earlier periods of lower starts, as well as ongoing challenges in delivery.
Labour is expected to fall short of its 1.5 million homes target, with projections estimating 840,000 homes will be delivered over five years
Source: Savills
Andrew Boast FMAAT
CEO of SAM Conveyancing
What a summer it has been, and August hasn't let up. With house prices falling, high numbers of buyers, and properties to sell, the market is buoyant in the right way.
I predict the MPC will keep the BOE base rate at 4% this month, and more likely cut it to 3.75% in November.
September should carry on where August left off, static house price movements, more sales agreed, but a wary eye on the news of the upcoming budget....not another Liz Truss fiasco please!
Sources: Latest data from - Gov.UK, Bank of England, UK House Price Index, ONS and Propertymark (NAEA).
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