The estate agency industry and wider housing sector has faced numerous challenges in recent years, but with a change of government last summer came a new direction.
“Growth” and “change” were the keywords of the government’s election manifesto — and housing targets are set to be a big factor in whether or not those words become reality.
One of the government’s headline-grabbing policy changes was a rethink of the planning system for housing; namely reintroducing local housing targets, and alterations to the National Planning Policy Framework. These changes are expected to have a ripple effect that will increase the momentum of housing market investment — twinned with steady economic growth forecasts.
The return of mandatory local housing targets is a welcome boost for the United Kingdom’s property economy, with the government aiming to build 1.5 million new homes across the country over the next five years. This should be easier to achieve with changes to the planning system, limiting the amount of red tape developers must cut through before commencing development, despite the challenges housebuilders may find in securing the right tradespeople.
It won’t all be plain sailing, though, as an increase in Capital Gains Tax will make landowners reluctant to pay additional tax on their sales. This, in turn, will make it more difficult for developers to secure the land they need for much-needed house building targets to be met. Indeed, it has been reported that business disposal was accelerated upon the announcement of higher Capital Gains Tax requirements.
The additional National Insurance contributions from 13.8% to 15% for employers, as well as a reduction to £5,000 as the threshold for secondary contributions, are another obstacle to consider when implemented in April 2025.
Numerous industry experts are anticipating a boost in not just demand, but also asking prices. Online real estate giant Rightmove has predicted a 4% increase in asking prices for houses this year, as well as a 4% spike in average rent costs.
Despite this, mortgage rates are set to fall again this year, as sales volume and housing demand continues to recover from the surge of the 2022 mini-budget.
Following the moderate stabilisation of prices and some markets in 2024, there is cause for more optimism in 2025, but there remains a reliance on consistent wider economic growth via government policies and global market reliability for this sector to truly thrive.
Whatever happens in 2025, there is certainly much for estate agents, landowners, developers and house buyers alike to consider, and at Duncan & Toplis we are here to help however we can.
For those who need the support of an expert adviser in navigating these changes, get in touch with one of our property and construction team.
