The year ahead is expected to be a mixed bag of improvements as well as challenges for the UK property market.
Here’s a rundown of the top seven things that you should be aware of for 2018.
1. HMO rules are set to change
The three-storey minimum rule that is currently in place for a Property to be classed as a house in multiple occupation (HMO) could be removed in 2018, which could bring an extra 160,000 properties into the mandatory licensing regime. There may also be an introduction of minimum room sizes in such houses.
2. Level playing field for capital gains tax
Indexation allowance means that businesses are entitled to more tax relief on Capital Gains than individuals, but this has been reformed for 2018, as revealed in the Autumn Budget. The move will bring the corporate system more in line with personal Capital Gains Tax, which will affect those selling properties that are not their primary residence, for a profit.
3. Council tax could increase in some areas
From April, local authorities will be able to increase council tax in some areas by up to 3%, and in areas where councils provide social care, the bill could be increased by up to 5.99% without having to hold a referendum. However, the same exemptions and reductions will still apply, and the move is expected to help plug the funding gap in adult social care.
4. UK house prices holding steady
Views are mixed on what will happen to house prices in 2018, with the total value of UK property hitting a record high of £6trn in 2017 as prices continued to defy expectations and nudge upwards. London is forecast to suffer the most, with a Savills report predicting a -2% drop in the year ahead in the capital, coupled with a continued slowdown in the prime property market.
5. Property ombudsman shakeup to improve the market
A consultation is set to take place this year on the creation of a single Housing Ombudsman to replace the four systems currently in place, in a bid by communities secretary Sajid Javid to reform and streamline redress schemes. It will mean landlords are covered by an ombudsman scheme as well as agents, and tenants will be offered more protection, too.
6. Interest rates will (probably) rise
Mortgage lending hit a record high towards the end of 2017, with many borrowers making the most of the low interest rates and signing up to fixed-rate deals ahead of November’s base rate rise. The fixed-rate option is likely to remain popular, as many experts are predicting another rise in the Bank of England base rate from 0.5% to 0.75%.
7. Proptech could see a boom
According to Pixel managing director Steve Smith, global investment in proptech (property technology) has grown from around £250m in 2015 to £3.2bn in 2017, and many experts believe this will continue to rise in 2018. Buying and selling of properties has already been largely digitised by the likes of Zoopla and Rightmove, and the growing popularity of the UK’s first digital estate agent Purplebricks.
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