The new Prime Minister’s swift decision to rule out abolishing Stamp Duty could help revive buyer activity following a month of political uncertainty.
The number of prospective buyers registering across Chestertons’ London-wide network fell by 22% year on year to 1,740 in July - the steepest decline since November, when registrations dropped by 29% immediately ahead of the Budget.
July’s fall came amid mounting speculation over who would replace Sir Keir Starmer and what a change of leadership could mean for property taxation.
Adam Jennings, Head of Residential at Chestertons, said the new Prime Minister’s immediate response to the Stamp Duty speculation should help restore buyer confidence.
He commented: “The clarity provided so quickly into Andy Burnham’s tenure should, in theory, help people who are thinking of buying.
“The lesson from last year was that people don’t want to make a big decision in uncertain times when so much money is at stake. Inevitably, they are inclined to wait and see.
“By ruling out changes to Stamp Duty in the upcoming Budget, the Prime Minister has removed a significant question mark for buyers. Hopefully, that position remains in place for at least the next 12 months and gives the market the certainty it needs.”
Recent national housing data also reflects the slowdown as speculation over the country’s next Prime Minister mounted.
Seasonally adjusted mortgage approvals fell by more than 13% month on month in May - the sharpest monthly decline in 44 months - before recovering by 2.9% in June.
There are also early indications of improving consumer sentiment, which some observers have described as a ‘Burnham bounce’.
Henry Knight, Managing Director of Springtide Capital Mortgage Brokers said: “Tracker rates continue to be popular as they are working out as the lowest priced options and many buyers still feel the ultimate direction of travel is downwards even if the pace of this movement has been slowed by events in the middle east. There’s still discussion about a possible 0.25% increase at some point, but it seems clear that policymakers would prefer to avoid this if they can help it.”
The GfK Consumer Confidence Index rose by six points in July, from -23 to -17, its highest level since January, and its largest monthly increase since November 2023.
However, the economic picture remains mixed. The Bank of England held the Base Rate at 3.75% for a fifth consecutive meeting, easing fears that its next move could be upwards amid inflationary pressures arising from the Middle East.
Consumer price inflation also fell from 2.8% in May to a 15-month low of 2.6% in June, slightly below economists’ expectations.
Demand for rental properties stabilised in July following a strong rebound in the first two months after the Renters’ Rights Act came into force, according to Chestertons’ latest data.
The figures come as new data from Rightmove shows that asking rents in London are now rising faster than in the rest of Great Britain for the first time in almost three years.
Portal enquiries, often the first indicator of tenant demand, fell by 7% year-on-year in July, following increases of 17% in May and 10% in June, the first two months after the introduction of the Renters’ Rights Act.
The shift follows five consecutive months of declining portal enquiries before the legislation came into effect, suggesting the market is beginning to settle after an initial burst of activity.
As Chestertons highlighted in its June Lettings Report, one unintended consequence of the Act may have been landlords increasing asking rents to test the market. This is because legislation prevents landlords from accepting offers above the advertised rent.
In May, the first month under the new rules, the number of landlords reducing asking rents fell sharply, down 36% year-on-year, after several months in which a growing proportion had lowered rents.
Although June saw a partial reversal, with rent reductions increasing by 6% year-on-year, July recorded an increase of just 1%, indicating that landlords are becoming more confident in their initial pricing.
Katinka Hill, Head of Lettings at Chestertons, said: “Activity seen immediately after the legislation was introduced in May eased off in July, however during the first ten days of August our branches have seen applicant registrations go up by 18% year-on-year. This is in line with the seasonal summer uptick we would expect this time of year.”
The latest Rightmove Rental Trends Tracker provides further evidence of rising rents across the capital. Asking rents increased by 2.9% year-on-year in the second quarter, up from 1.4% in Q1 and marking the strongest rate of growth in two years. London's rental growth also outpaced the rest of Great Britain (+2.3%) for the first time since Q3 2023.