Property sales are collapsing following tax change rumours ahead of the Autumn Budget, leading estate agents have claimed.
Chancellor Rachel Reeves announced today that the Budget will now take place on 26 November, rather than October, meaning 84 days of speculation lie ahead.
There has been speculation in recent weeks that Labour could seek to make sweeping changes to stamp duty and capital gains tax.
This uncertainty has led to almost one in every five agreed sales in August falling through, according to one estate agent.
Martyn Gerrard Estate Agents, which has 15 offices in London, says buyers are pulling out within a week or two of their offer being accepted.
Simon Gerrard, the firm’s chairman, said: ‘The panic, confusion and uncertainty sparked by these potential new taxes have caused almost 20 per cent of our agreed sales in August to see the buyers withdraw only a week or two later.
‘This is a clear indication that the policies being touted would be severely damaging and show a total lack of understanding of the UK’s housing market.’
Market under siege: Tax rumours are resulting in many buyers taking a wait and see approach in London, while some are withdrawing from purchases
Other agents also say the tax rumours are causing home buyers to alter their plans, and that the long wait until the November statement will exacerbate this.
‘The Budget is meant to provide clarity, but delaying it until late November only fuels uncertainty in the property market,’ said Polly Ogden Duffy, managing director at John D Wood & Co.
‘Many buyers and sellers fear any tax changes won’t be in their favour, so we’re seeing some rushing to complete transactions ahead of time, while others hold back entirely.
‘The result is a market split between urgency and paralysis – with fall-throughs already rising and uncertainty becoming the new certainty in 2025.’
The tax rumours include replacing stamp duty with an annual tax for those who own homes worth £500,000 or more, charging capital gains tax when people sell homes worth £1.5million or more, and changing the gifting rules which could make it harder for parents to give children a house deposit.
There is also a rumour that the chancellor is considering charging landlords National Insurance on the money they make from rent.
‘The most worrying rumour is the prospect of capital gains tax on main residences, which feels like a double hit after stamp duty and is a bitter pill to swallow,’ added Ogden.
‘Equally, this could deter families from downsizing, restricting supply and pushing prices up.
‘A potential wealth tax is also sparking concern, with parallels to how non-dom changes drove people out of the UK.’
Polly Ogden Duffy, managing director at John D Wood & Co, says some buyers are accelerating moving plans while others are holding off
Prices will stay flat – or even fall
Gerrard expects the uncertainty and damage across the property market to continue up until the new year with prices likely remaining flat or even falling slightly.
‘The run up to the Budget with the plethora of leaks and Kite flying of possible property tax grabbing initiatives will fuel speculation, uncertainty and worry, which means that the property market will grind to a halt until the end of November,’ said Gerrard.
‘The market always slows in the run up to the Christmas holidays, which means the Government has effectively demolished the housing market for the rest of the year.
‘We’re now very unlikely to see any house price growth for the rest of this year under this present course of action. House prices will be pressured until the damage is known and done.’
Buying agent Jo Eccles, founder and managing director of prime central London buying agency, Eccord, says that the rumours are causing decision paralysis among some buyers.
‘Delaying the Budget until the end of November is really damaging for the property market.
‘All the speculation on property tax just brings uncertainty and anyone who has been thinking about a move is more likely to wait and see what happens – which in reality will now mean early 2026.
‘If these rumours have no foundation, the Government should say so clearly – otherwise it risks bringing the autumn property market to a standstill.’
However, there are some buyers that will welcome the tax changes – especially when it comes to stamp duty.
Stamp duty is the main property tax paid by homeowners in Britain. It is paid by homebuyers when they purchase a new home.
At the moment, buyers pay nothing on properties that cost less than £125,000. On the amount from £125,001 to £250,000, they pay 2 per cent, then on the portion from £250,001 to £925,000, they pay 5 per cent.
Above that it increases to 10 per cent and then 12 per cent for the most expensive homes.
‘I spoke to one private equity client yesterday who would welcome an annual property tax to replace stamp duty,’ added Eccles.
‘She had decided to stretch her budget to buy at £5 million, on the basis that the stamp duty – more than half a million pounds – only made sense if it was a 10-year purchase.
‘But if that was replaced with an annual property tax, she could buy for the here and now – then move up the ladder whenever it suits her.’
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