Helping first-time buyers navigate the UK Spring Budget announcement

Nick Lewis-Smith, Director at Michael Anthony Estate Agents, discusses how the UK Spring Budget announcement will affect first-time buyers

Nick Lewis-Smith, Director at Michael Anthony – Estate Agents, began his career with Michael Anthony in 2004. He remains very passionate about helping people find their dream homes and providing the best possible service.

Here, Nick provides his expert insight on how first-time buyers and landlords will be impacted by the UK Spring Budget announcement.

How will the UK Spring Budget announcement affect first-time buyers?

Currently, buyer demand is higher than expected – its highest since October 2022 after the mini-budget announcement. According to Zoopla’s house price index, there are 65% more properties on the market compared to last March. This makes an ideal time for first-time buyers to consider owning their own property, especially as more sales are going through in lower price bands.

Prepayment meter bills would be brought in line with direct debits

This year’s Spring Budget also announced that prepayment meter bills would be brought in line with direct debits, which is great news and will help people with the cost of living crisis. With this help and with house prices lowering and rent continually increasing, now is the ideal time for first-time buyers to step onto the property ladder. Presently, it is cheaper for people to buy property than it is to rent.

What is your advice to first-time buyers?

First-time buyers must seek independent mortgage advice. Those who are hoping to take their first step onto the property ladder need to look at the whole lending market and must set affordability parameters which suit their buying needs and current lifestyle. Securing a mortgage in principle before entering negotiations on a purchase will always put first-time buyers in a much stronger position to buy position their dream home.

I advise first-time buyers to save up at least a 5% deposit before looking at houses within their price range. However, in the wake of the COVID-19 pandemic, more lenders and asking for a 10-15% deposit. Ultimately, though, it’s always best for first-time buyers to make the largest deposit possible when buying property. This is because it makes buyers a safer investment for a mortgage lender – with a larger house deposit, lower mortgage interest rates will be offered.

How will house prices be affected in general?

After Autumn’s mini-budget announcement, the housing market saw a 1.4% price fall. Following the Spring Budget announcement, the main price drops in housing are finished – whilst there may be a slight drop in the near future, generally speaking, house prices will remain stable. Potentially, towards the end of the year, house prices may start to pick back up slowly.

The Spring budget mostly focused on jobs and economic growth, which ultimately supports the housing market as house prices tend to stagnate and fall when unemployment rises, and the economy is doing badly.

How will landlords be affected by the UK Spring Budget announcement?

Apart from the modification in corporation tax relief, which impacts certain landlords with extensive property portfolios operating as a company, there was a scant reference to any other measures that might incentivise landlords to continue investing in the sector.

Before the budget announcement, suggestions such as reintroducing tax relief on mortgage interest payments and reducing stamp duty were proposed as ways to assist the sector. Nonetheless, neither of these proposals was implemented.

Landlords are also facing big changes with the ‘Renters Reform Bill’, due to be voted on in parliament before next month (May 2023). This bill will end no-fault evictions and require all rental properties to meet a new ‘decent homes standard’, which currently only applies to the social housing sector. On top of this, by 2025, landlords may be banned from renting homes that have an Energy Performance Certificate (EPC) rating lower than C.

We are seeing more landlords choosing to sell their properties

Due to the challenges landlords are currently facing, we are seeing more landlords choosing to sell their properties. As a result, this is diminishing the availability of properties for rent. This increase in demand and limited supply has pushed up rent prices. Unless there is a significant increase in the number of properties available to let, Rightmove predicts that the average asking rent will rise by an estimated 5% in 2023 alone. Outside London, the average monthly rent costs £1,172 (up by almost 8% on last year). In the capital, average rent has hit a record-breaking average of £2,480 per month – with inner London average rents over £3000 for the very first time.

If a buyer is looking to invest in buy-to-let, it’s important to seek advice on the best target properties that will provide the correct rental yields and the types of property which make safe investments for the long term. Some people may be ‘an accidental landlord’, where the current sales market price point means that renting your property for a period of time is the financially wise route to follow. With the current rate of increased rents and dip in rental properties on the market, now is a good time to consider becoming a landlord.

This piece has been written and provided by Nick Lewis-Smith, Director at Michael Anthony – Estate Agents.