TODAY, Boris Johnson announced a deal to secure the UK’s future relationship with Europe.
At the 11th hour, policymakers managed to hammer out an agreement that will prevent the UK crashing out of the transition period.
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Brexit is likely to see house prices stall over the next yearCredit: Getty Images – Getty
But now, both sides have agreed a deal that will determine the rules for any trade between the UK and Europe.
The Prime Minister will address the nation at 3pm today.
It came as:
- There was an eleventh hour row about protections for the UK car industry – which appeared to have been resolved
- Pizza was delivered to the Berlaymont HQ in Brussels late last night as crunch talks continued
- The pound soared against the dollar last night on hopes of a deal
- Already Brexiteers were grumbling about not having enough time to analyse the deal when it comes back to MPs
- Sir Keir Starmer is preparing to urge his shadow cabinet to back a Brexit trade deal – and could hold a meeting later today to get their backing
So, what does a Brexit deal mean for house prices? We explain.
What does a Brexit deal mean for house prices in the UK?
Experts have been divided for some time now on what Brexit will mean for house prices.
The latest Halifax tracker showed typical house prices rose from £237,834 to £253,243 between June and November – the strongest run of growth since 2004.
House prices hit their highest level ever in October according to Halifax
What is stamp duty?
STAMP duty land tax (SDLT) is a lump sum payment anyone buying a property or piece of land over a certain price has to pay.
Up until July 8, most house-buyers in England and Northern Ireland had to pay stamp duty on properties over £125,000.
This was temporarily increased to £500,000 until March 31, 2021 in the government’s mini-Budget in July 2020.
The rate a buyer has to fork out varies depending on the price and type of property.
Rates are different depending on whether it is residential, a second home or buy-to-let, or whether you’re a first-time buyer.
The usual system in England for residential properties means:
- First-time buyers pay nothing on properties below £300,000 (and relief available on properties of up to £500,000)
- You pay nothing if the property costs below £125,000
- You pay 2% if it is worth between £125,001 and £250,000
- You pay 5% if between £250,001 and up to £925,000
- You pay 10% if it is between £925,001 and £1.5million
- You pay 12% on anything over £1.5million
For second homes or buy to let properties:
- 3% on purchases up to 125,000
- 5% on purchases between £125,001 and £250,000
- 8% on purchases above £250,001 and £925,000
- 13% on purchases above £925,001 and £1.5 million
- 15% on purchases above £1.5 million
Meanwhile, Nationwide Building Society reported an annual rise in house prices of 6.5% for November, the highest since January 2015.
But experts have warned that Brexit could put a damper on house price growth, with some suggesting that we could even see prices fall.
The outlook was gloomier when it looked like we’d crash out without a deal, but even with an agreement on the table there could be a stall in growth.
The Office for Budget Responsibility (OBR) predicted last month that house prices will fall next year when the stamp duty holiday ends.
The ONS says that it expects house prices to drop by 8.3% by the end of the 2021, and then not to recover until the end of 2022.
Anthony Codling, founder of property website Twindig, said: “If homebuyers perceive it is business as usual then we would expect the housing market to return to normality and it is unlikely that house prices will fall.
“If a Brexit deal leads to a rise in unemployment or more importantly a rise in the fear of unemployment, we would expect housing transactions to fall and remain at a lower level until the Brexit dust has settled.”
“It is unlikely in our view that house price will fall significantly as a result of Brexit.”
Other commentators believe that Brexit will not be the main driver of house prices falling, but other uncertainties could see the market soften.
Tom Brown, managing director of Real Estate at Ingenious said: “History has shown us that as unemployment increases, house price growth is negatively impacted on account of affordability.
“To date, the Furlough scheme has enabled many millions of workers to remain in employment despite the economic disruption caused by the pandemic.
“Whilst house price rises are unlikely to be sustained throughout 2021 and some heat is likely to come out of the market, data does not point to a crash or correction.”