Property investors and potential borrowers who have been sitting on the sidelines may finally be spurred into action. Many homeowners and would-be first-time buyers have been waiting for rates to come down before they progress, restraining the market in the process.
Thankfully, we may see a flurry of activity emerge over the coming weeks. The Bank of England has cut the base rate to 5%, the first fall since 2020. It was able to do this as inflation seems finally under control. Our costs are on the way down.
But, the momentum may be short lived. Rachel Reeves, our new Chancellor, has warned of a £22bn budget shortfall that caught the new Labour government by surprise. Sadly, if inevitably, this calls for tax rises in the autumn budget, currently scheduled for October 30.
It’s hard to know exactly how this will take shape. So far, Ms Reeves has ruled out national insurance, income tax, or VAT hikes. This leaves few options, however.
Many commentators believe Labour will be forced to target certain taxes which will make them unpopular among investors and asset holders. Specifically, from a property market perspective, CGT, business rates, stamp duty, and IHT could be affected.
So, we may only have a few months to reap the rewards of cut rates before tax rises risk dampening sentiment in the market. Property investors could be given a window of opportunity that lasts mere weeks.
Still, that could be plenty of time for those who are prepared. Fix-and-flip investors can wrap up their plans well before October. Meanwhile, auctions which need to be wrapped up within a month are still proving popular.
What this means for us in the lending scene is that specialist finance may be in high demand over the coming weeks. Bridging, with its ability to be there for borrowers within mere days, will likely be highly popular with brokers and borrowers soon. We’re ready for this, we just hope borrowers will be able to keep up with us!