Rent and mortgage costs have surged once again after hitting a 17-month low, according to the latest findings from Barclays Property Insight. The report reveals a 4.5% year-on-year increase in housing costs, a significant jump from the 1.1% growth recorded in August.
The timing of this surge raises concerns ahead of the government’s anticipated budget at the end of October. Many landlords are anxious about a possible increase in capital gains tax, which could further impact the rental market.
Interest Rates in Focus for November
While consumer confidence in household finances remained steady at 70%, Barclays noted that 15% of consumers continue to express concerns about their ability to meet rent and mortgage payments. The Bank of England held interest rates at 5% in September, following its first rate cut in five years in August. However, November’s interest rate decision is expected to be pivotal.
Mark Arnold, head of mortgages and savings at Barclays, emphasized that the upcoming decision by the Monetary Policy Committee (MPC) will be “one to watch,” particularly with potential new measures impacting the housing market.
“While consumer costs are still feeling the effects of housing market volatility, the long-term trend in rent and mortgage expenses is encouragingly downward,” Arnold said. “However, we recognize that interest rates aren’t the only factor—supply and demand pressures continue to play a key role. We hope to collaborate with both the government and industry to address these challenges.”
Rumours of Capital Gains Tax Hike Spark Concern
Speculation is mounting that capital gains tax could rise to 39% in the forthcoming budget, adding further uncertainty for landlords. Treasury officials declined to comment, saying they “do not speculate before the budget.”
Nonetheless, concerns about the potential tax hike have already led some landlords to sell their properties. Data from property platform TwentyCi shows that the number of available rental listings in the UK has plummeted, with only 276,000 properties on the market in July 2024. This marks a dramatic 25% decrease compared to the 369,000 listings available in July 2019, reflecting growing strains on the rental market.
As the budget and interest rate decision approach, housing affordability and market stability remain top priorities for many homeowners and landlords alike.