Stamp duty cuts and rising interest rates – what happened during a busy September for Oxfordshire’s property market

It has been a month of significant change for the UK. It remains unclear how house prices will be affected by the Government’s recent announcements and the reaction of the Bank of England.

On Friday, September 23, Chancellor of the Exchequer Kwasi Kwarteng announced a cut to stamp duty. This formed part of his mini-budget which included the biggest tax cuts since 1972. On the same day, the Bank of England raised interest rates by 0.5% to 2.25% – the highest level since 2008.

Both moves will affect first-time buyers, current homeowners and those considering buying a new home. In our latest blog, Oxford Property Consulting makes sense of changes which will impact the property sector in 2022 and beyond.

Stamp duty cut

  • All properties purchased at £250,000 or lower are now free of stamp duty (from £125,000).
  • Threshold for first-time buyers increased from £300,000 to £425,000.

Stamp Duty was first introduced in the 17th century and is a tax paid by homeowners when they purchase a property.

In June 2020, a ‘Stamp Duty Holiday’ for homes purchased under £500,000 was introduced. The move supported people’s confidence in buying, selling and renovating through the COVID-19 pandemic and in turn helped drive economic growth.

The ‘holiday’ ended in September 2021, but this month the Government announced it would be cutting stamp duty again to help buyers get on the property ladder.

READ MORE: Stamp Duty Cuts, everything you need to know via The Times

Rising interest rates

  • Interest rates raised to 2.25% – they were 0.1% this time last year
  • Experts predict rates could peak at 6% by November 2023

Interest is the amount you are charged for borrowing money and affects mortgages, debt and loan payments and savings.

The Bank of England’s Monetary Policy Committee (MPC) controls interest rates. They are seen as the main lever to control inflation, in part by impacting households’ disposable income. The MPC will meet again in November and have indicated that they are ready to increase rates again, if required. This should help strengthen the pound in the wake of the government’s mini-budget.

When interest rates rise, buyers and those looking to re-mortgage will have to pay back more money than previously.

For example, the average tracker mortgage customer is now paying £216 more per month compared to December 2021, when rates were increased slightly to 0.25%.

READ: Oxford Property Consulting’s summer 2022 guide to rising interest rates

The property market

What impact will the decisions made this month have on the property market?

It’s the million-dollar question which no one can answer with great certainty.

In the short-term

A stamp duty cut incentivises people to buy and therefore increases demand. Increased demand leads to higher prices.

The weakened pound makes the UK housing market look more appealing to foreign buyers.

Increased interest rates harm those who borrow the most and are likely to outweigh stamp duty incentives.

In the long-term

Those looking to re-mortgage could struggle with the increases in monthly mortgage repayments they face. While recent increases in rental prices mean there is no respite on that front.

Volatility breeds opportunity. Cash buyers can take advantage of decreased confidence and demand.

Those needing to sell may have to adjust their expectations on price. We could see prices begin to fall.

Buying in Oxfordshire

Oxfordshire holds four clean aces that not all counties in the UK can showcase.

1. Rural and urban luxury

From Oxford’s dreaming spires to the rolling countryside of the North Wessex Downs and Chiltern Hills, Oxfordshire has something for everyone.

2. Central location

Fourteen of Oxfordshire’s train stations operate daily services to central London which take less than an hour. Good road links via the M40, A34 and M4 serve the UK’s north, east, south and west too.

3. Outstanding education

This month, Oxford University topped The Times’ Good University Guide for 2023. Oxfordshire is home to a fantastic selection of private and state schools too.

4. Vibrant and diverse social scene

Whether you’re looking to sample Oxford’s historic cobblestone streets, take in some live sport or one of the county’s countryside festivals, Oxfordshire is home to a fantastic array of live events.

These benefits have historically made Oxfordshire fairly resilient to property crashes. With perhaps more people than ever now considering upping sticks and moving to Oxfordshire, why not see if our team can help you find your dream home?

Our local experts are here to help you save time and money and use their extensive book of contacts to help you buy a property at the right price.

Click here to contact us for further information.