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

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A third of homes currently for sale in the UK are chain-free, as landlords and second homeowners rush to sell amid speculation about potential rises in capital gains tax in the next Budget.

According to Zoopla, a real estate search site, the number of agreed-upon home sales is up 25% compared to this time last year, due in part to an influx of new listings.

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

However, a large proportion of new listings are coming from landlords and second home owners seeking to offload properties due to rising buy-to-let mortgage rates and the looming prospect of tax changes. Zoopla data shows that in London, two- and three-bedroom homes are more likely to be chain-free, often indicating they were previously rented or second homes. Outside the capital, the chain-free market is dominated by one and two-bedroom apartments.

Nearly 13% of all homes currently listed were previously rented, with owners looking to sell before potential tax changes take effect. It is widely expected that the government will increase capital gains tax on residential properties in its first Budget at the end of this month, which could raise the rate from the current base level of 18%.

In addition, several local councils are planning to double council tax on second homes next year, increasing the number of listed properties in coastal areas. The Truro, Torquay, Exeter and Bournemouth areas have seen a 40% increase in the number of homes for sale over the past year as second home owners look to offload their properties.

Richard Donnell, CEO at Zoopla, commented on the trend, noting that the combination of tax speculation and past changes has led to an oversupply of housing. “More supply provides much greater choice for buyers and will keep house price inflation under control until 2025,” Donnell said.

Zoopla data shows that UK house prices rose by just 0.7% over the past year, well below the 3.2% growth recorded by Nationwide. This discrepancy stems in part from the sharp price decline Nationwide recorded last summer.

However, house prices are now lower than they were a year ago in areas such as the south-west, south-east and east of England, where affordability remains a challenge. In contrast, prices in Northern Ireland have risen by 5.7% over the past 12 months, with northwest England also seeing growth of 2.1%.

Looking to the future, Zoopla expects home prices to continue to rise, but at a modest pace due to the increasing supply of homes on the market.

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