The UK housing market, as well as several other economic indicators across the country, sustained a wrecking ball of a blow back in September 2022. This was the result of former prime minister Liz Truss’ disastrous mini-budget. All of the games made coming out of the beginning of the decade were wiped out, and then some.
A slow recovery has ensued, but the need for the new government to try to fill the budget chasm left by the last has led to some hefty changes to the housing market. The culmination of the changes for the usually hot summer market has seen the buyers gain leverage.
The figures would suggest that the number of properties up for sale has allowed buyers to negotiate for lower prices because of the competition among sellers. This new state of play as a buyers’ market has led some sellers to try other means of getting a fair price on their property.
Shifting the Market with a Few Major Changes
Three major changes arrived in short order to impact property owners and would-be sellers and buyers. These changes concerned landlord laws, taxation on second homes, and stamp duty. The latter had the most immediate impact on home buyers. Here, the brackets were moved to put a duty on movers paying £125,001 or more.
This was a hefty change from the previous bracket of needing to spend at least £250,001 to incur a five per cent stamp duty tax on top of the purchase. The new lower bracket, which is £125,001 to £250,000, is only two per cent, but it is a new tax for more properties nonetheless.
Regarding landlords, the laws are being changed to make the whole sector far more renter-friendly. New rules with stricter regulations on rent increases, simplified tenancy agreement structures, and the abolition of no-fault evictions are all in the Renters’ Rights Bill. Understandably, this will have several landlords selling properties.
Finally, there are the long-overdue second home taxes. The UK is a rather small country and is already lacking in housing stock, so it’s only right that those who want a second home and often aren’t using a property should pay extra for the privilege. With councils permitted to double tax on these properties, many second-home owners sold.
Circumventing the Traditional Market
As it turns out, after a significant spike and then drop around stamp duty changes, there’s now a very competitive housing market for buyers. Having negotiation power and many options, in many postcodes, cuts of over 15 per cent to asking prices are now the average. Further, people want to shed properties before incurring more costs.
To try to circumvent these trials of the traditional market as well as limit additional costs coming in, many affected by the recent rule changes have pivoted to cash home buyers. Popular among landlords looking to retire, people going through a divorce, and those facing repossession, cash buyers now have an even wider audience.
The key to the increased success of this kind of buyer is the speed at which they operate. A seller would enter their postcode and a few other details to get a free cash offer fast. If it’s to their liking, the cash buyer goes through the motions of selling a property – the cost of which is factored into the offer rather than charged later – and they complete.
So many different parties now want to find ways to sell their property. Specifically, ways that help to speed up the process and skip past a buyer’s paradise where hefty discounts are being sought. So, it makes sense that cash house buyers have become so popular in the UK.
