It’s time to gaze at the crystal ball and make predictions for the housing market in 2018. So what do we think are the big factors that could affect homeowners, first-time buyers, and property investors this year?
Rates – Interest rates have become a hot topic after the Bank of England’s Monetary Policy Committee raised the base rate from 0.25% to 0.5%. Although not a big climb, another increase is possible at some stage. This would affect borrowers on standard variable rates and tracker deals, with those on a £175,000 tracker mortgage seeing £22 added to their monthly repayments if the base rate increased to 0.75%. But borrowers on fixed rates will of course see no change.
Housebuilding – Although a slightly maligned sector in recent years, government policies have helped drive a new wave of housing development, with 217,000 homes coming onto the market in 2016-17. This is up an impressive 20% on the year before, albeit still short of the government’s target of 300,000 homes a year. But there are several indicators, such as increased construction activity, which suggests the numbers may improve again in 2018.
Brexit – There are conflicting reports on how Brexit may affect the housing market this year. But the uncertainty surrounding Brexit could very well have an effect on consumer behaviour, which means another unpredictable year in store for homeowners and first-time buyers.
Buy to Let – As well as the next stage in the reduction of tax relief, there are now two more big changes coming the way of landlords. From April, all landlords of Houses of Multiple Occupation will require a license, previously only applied to those with property housing 5 or more unrelated occupants.
April again will see the beginning of new rules regarding Energy Performance Certificates, or EPCs. It will be now unlawful to let or lease a residential or commercial property that has an EPC rating of F or G, which may cause problems for landlords letting out a house or flat that does not have the required rating.
Housing Policies – The government’s flagship budget announcement that stamp duty has been abolished for first time buyers on properties valued up to £300,000, will certainly help first-time buyers in 2018.
The Help to Buy Equity Loan, boosted in the budget with an extra £10bn of funding, will continue to support firsttime buyers. Young savers will also continue taking advantage of the Help to Buy ISA, which boosts savings by 25% on monthly deposits of up £200.