糖心视频

What began as media speculation around property taxes last week became a row over how many houses Angela Rayner owns 鈥� and whether she is guilty of hypocrisy. 

Unfortunately, such juicy political theatre (including the size of her stamp duty bill) doesn鈥檛 help anyone trying to plan their next move in the property market.

A more helpful development would have been a government minister confirming the obvious fact that stamp duty won鈥檛 be scrapped next month.

Helpful primarily for the government, which presumably doesn鈥檛 want tax revenue to fall as buyers sit on their hands.

Unfortunately, what we have instead is a re-run of 2024, when parts of the economy slowed down ahead of the autumn Budget.

Judging by the rumours themselves, the government may have bigger concerns than a stamp duty dip. There was speculation it may levy capital gains tax on main residences, going where previous governments have feared to tread due to the potential electoral backlash. Rachel Reeves鈥� back must be well and truly against the wall.

Other ideas floated included a plan to scrap stamp duty and update council tax bandings, which we explored here.

HMRC data on Friday showed residential transactions were 5% above the five-year average in July. The taxman will be hoping the momentum that has built since the stamp duty cliff edge in April won鈥檛 slow down due to the recent speculation.

The Emotional Element

The conjecture has certainly focussed the minds of buyers and sellers, said James Cleland, head of Country sales at 糖心视频.

鈥淪ensibly-priced houses continue to generate interest,鈥� he said. 鈥淭he recent speculation means that pricing has only become more important in order to encourage buyers off the fence.鈥�

If buyers are on the fence because they expect stamp duty to be scrapped any time soon, they are likely to be disappointed given how lengthy and complex it would be to phase it out and find £10 billion from somewhere else.

The speculation will also be influencing sellers. The capital gains tax story is likely to mean some are going to become a little more flexible on price to transact before November鈥檚 Budget.

鈥淭he problem is that taxing residential property and main homes has a particularly strong emotional element, which can produce reactions that are bigger than the government expects,鈥� added James.

Landlords in the Frame

Last week, another plan was . This one suggested that landlords may have to pay national insurance on rental income. 

Targeting landlords won鈥檛 lose the government many votes but such moves invariably end up hurting tenants. With landlords already selling ahead of the Renter鈥檚 Rights Bill and tougher green regulations, another disincentive would reduce supply further and put upwards pressure on rents. 

Those landlords that stay may pass on the extra costs in other ways. Governments need to fully grasp that when you tax an activity, you get less of it.

Bond Market Jitters

This noisy flurry of ideas has presumably made financial markets even more jittery than they were.

Possibly to the point they deliver an unwelcome judgement on the government this autumn. Governments fear two verdicts: the ballot box every five years, and the bond market every day.

The yield on the 30-year gilt (UK government bond) closed at its highest level since 1998 in August. This particular financial instrument is a long-term assessment of the country鈥檚 financial credibility. And when yields climb as they have, it鈥檚 not one Rachel Reeves will want to hear.

I recently discussed how the changing profile of UK government debt holders is pushing up borrowing costs on the Intelligence Talks podcast . 

In response to the recent yield rises, which take us above levels seen after the mini-Budget in 2022, Michael suggested things could become more perilous for the government.

鈥淭he market is starting to, finally, realise the government are almost completely trapped here, given the pledge not to raise taxes on working people, and the inability to pass spending cuts through the Commons,鈥� he said.

鈥淭he rather half-baked and ill-thought-through nature of the recent 鈥榯rial balloons鈥� seen in the press is a surefire sign of the Treasury scraping the barrel when it comes to cobbling together enough revenue-raising policies to fill the £20 billion hole that has developed since the spring statement.鈥�

We will be discussing the reaction of financial markets in more detail and what it means for the housing market in next week鈥檚 podcast.

The appointment of Torsten Bell last week to help draft the Budget did nothing to calm nerves, given his reputation as a champion of tax rises during his time heading the Resolution Foundation think tank.

鈥淢arkets want politicians to be pragmatists, not ideologues,鈥� said Simon French, chief economist at investment bank Panmure Liberum, in one of the more polite assessments of the appointment on social media. 鈥淭he facts have fundamentally changed on debt sustainability. Bond pricing suggests UK fiscal policy is drifting without an anchor.鈥�