To say that October is going to be a big month for the UK economy, and more specifically the personal finances of every single person in the country, would be something of an understatement.
It might be the start of the month, but I suspect we are all, to some extent, looking towards the end, specifically the 30th October when this new Labour Government will deliver its first, and perhaps most consequential, Budget of the next five years.
Without doubt it has felt like a long time coming and part of me can’t help but feel that the long wait has potentially impacted on transaction levels. More people than normal have decided to ‘wait it out’ and see what the Budget holds for them before committing to a property buying or selling decision.
While not indicative of the entire UK market, recent data out of Knight Frank for the London market suggests this is exactly what has happened, albeit in a super-prime space rather than anything we might deem to be an average UK property transaction.
According to Knight Frank, there were 22% fewer transactions over the course of the year to July 2023 than in the previous 12 months and it put this down to the recent level of uncertainty amongst those who might ordinarily be active in this space.
Tax changes
While this demographic is perhaps concerned about changes to CGT, inheritance tax, pension tax relief, etc, others across the country might simply be waiting to see where Rachel Reeves feels the need to go in order to make up for the £19bn black hole apparently found in the UK’s finances.
It’s likely that a Labour Government will look first to those with deeper pockets, but as we’ve seen with the decision to cut the winter fuel payment for pensioners, it may also go for more universal cuts and tax rises – if it can find them.
Now, part of me believes that – for the average person in the UK and certainly for those who are looking to be active in the property market – the Budget might not necessarily be the big game-changer that some are expecting.
In fact, my belief is that post-Budget the necessity to ‘sit on hands’ will be gone, and there will be a significant element of pent-up demand that will be unleashed, which has simply been watching and waiting for two months or so.
It is after all a much better market to delve into than it was at this time last year. For example, August residential transactions, were up on the same month in 2023, and only marginally down on July 2024, according to HMRC. And you can guarantee the Bank base rate cut in August plus of course the anticipation that rates will fall further, will be generating much more consumer confidence, interest and demand.
I’ve read the words ‘rate war’ a number of times in recent weeks, and it’s hard not to agree with this assessment. If lenders have seen subdued activity, then they are certainly doing their darndest to generate interest via their pricing. This seems particularly pertinent in the lower LTV residential space, where there appears to have been a vaulting competition amongst lenders in order to get the cheapest product into the market.
Constant reviews
Of course, being able to offer cheaper products to clients is good news to tell, but if there are constant changes then I suspect advisers’ work rate on individual cases will be up, as they have to review what is on offer now, but also on an ongoing basis before the completion date.
We know this is a lot of work in itself but, for the most part, the procuration fee stays the same regardless and therefore it is absolutely vital advisers are supplementing this income by covering off other adviser needs such as conveyancing, protection, GI and the like.
For all types of clients, the opportunity to provide conveyancing advice is there, and not only does this deliver a positive consumer outcome, but it can significantly add to the profitability of each client interaction. This is particularly true when for the most part, few clients know where to turn to for conveyancing services and would much rather take the advice of a trusted professional.
Overall, providing that all-important Budget doesn’t throw the entire market off course, I think we’re in for a strong end to the year, and into 2025, and advisers can clearly benefit from this by securing the increased business out there and making sure they maximise it in all ancillary areas.
Mark Tosetti is chief executive of Broker Conveyancing
