One-third of homes for sale now chain-free as tax fears loom ahead of budget

One-third of homes currently for sale in the UK are chain-free, as landlords and second-homeowners rush to sell amid speculation over potential capital gains tax increases in the forthcoming Budget.

According to Zoopla, the property search website, the number of agreed house sales has risen by 25% compared to this time last year, driven in part by an influx of new listings.

The increase in sales activity is also being supported by more homeowners coming to market after delaying their moves over the past two years. Falling mortgage rates are encouraging more movement, with the average rate for a five-year, 75% loan-to-value mortgage now at 4.3%, its lowest level since May 2023, down from 5.5% a year ago, according to the Bank of England.

However, a significant proportion of the new listings are from landlords and second-homeowners seeking to offload properties due to rising buy-to-let mortgage rates and the looming prospect of tax changes. Zoopla’s data shows that in London, two- and three-bedroom houses are most likely to be chain-free, often signalling that they were previously rented or second homes. Outside the capital, one- and two-bedroom flats dominate the chain-free market.

Approximately 13% of all homes currently listed were previously rented, as landlords look to sell before potential tax changes take effect. It is widely expected that the government will increase capital gains tax on residential property in its first Budget at the end of this month, potentially raising the rate from the current 18% basic level.

Additionally, many local councils plan to double council tax for second homes next year, leading to a surge of properties being listed in coastal areas. Truro, Torquay, Exeter, and Bournemouth have all seen a 40% increase in the number of homes for sale over the past year as second-homeowners look to offload their properties.

Richard Donnell, executive director at Zoopla, commented on the trend, noting that the combination of tax speculation and previous changes has resulted in an expanded housing supply. “More supply delivers much greater choice for buyers and will keep house price inflation in check into 2025,” Donnell said.

Zoopla’s data suggests that UK house prices have risen by just 0.7% over the past year, much lower than the 3.2% growth recorded by Nationwide. This discrepancy partly stems from a sharper drop in prices recorded by Nationwide last summer.

However, house prices are now lower than they were a year ago in regions like the South West, South East, and East of England, where affordability continues to be a challenge. In contrast, prices in Northern Ireland have surged by 5.7% over the past 12 months, with northwest England also seeing growth at 2.1%.

Looking ahead, Zoopla anticipates that house prices will continue to rise, but at a modest pace due to the growing supply of homes on the market.

Read more:
One-third of homes for sale now chain-free as tax fears loom ahead of budget