What Could Rishi Sunak’s Premiership Mean for Housing and Mortgages?
With the UK adjusting to news of yet another new Prime Minister, we take a look at what the appointment of Rishi Sunak could mean for homeowners, potential buyers and housing as a whole.
Are mortgage interest rates going up?
The Bank of England, charged with monitoring and adjusting interest rates to manage inflation, is due to meet on November 3rd. Until Sunak’s appointment, the forecast for interest rates was looking pretty grim, with inflation eye-wateringly high, the cost of government borrowing increasing and the pound hitting its lowest ever rate against the dollar.
Sunak’s appointment seems to have soothed the financial markets for now at least. He has a reputation as fiscally conservative and will take inflation very seriously as part of his financial plans. Overall the Bank of England should feel an easing of the pressure to increase rates by as much as they may have deemed necessary under Truss, meaning mortgage rates may not increase quite as much as many feared.
We wouldn’t say this is good news exactly, as rates will almost certainly still go up, but it’s very much a ‘could have been worse’ scenario for anyone on a variable rate mortgage or looking to buy or remortgage soon.
Will Sunak honour the stamp duty cut?
As chancellor in summer 2020 Rishi Sunak temporarily increased the stamp duty threshold from £125,000 to £500,000. This stamp duty holiday, which ended completely in October 2021, was designed to stimulate the housing market and get people buying and selling again in the midst of the pandemic and is a classic Tory economy boosting move.
Permanent stamp duty changes were announced in the government’s mini budget in September 2022, with the threshold doubling from £125,000 to £250,000.
While Jeremy Hunt reversed many of the mini-budget tax cuts on October 17th, the stamp duty cut currently remains in place. With so many first-time buyers already struggling with ever-increasing house prices, we hope that Sunak will honour the stamp duty cut for now, as one way to tackle affordability within the housing market.
What are Sunak’s plans for house building?
One of Sunak’s first acts after taking on the top job was reshuffling his cabinet, and this included replacing Housing Secretary Simon Clarke with Michael Gove.
Sunak talked about housing during the summer as he and Truss battled to become leader of the Conservative party, and clearly homeownership is something he thinks everyone should be aspiring to. “We are the standard bearers for capitalism,” he told Sky News in one interview. “That’s why I’ll do whatever it takes to build affordable, plentiful housing, building the next generation of Conservative voters.”
How he intends to do this isn’t entirely clear. He’s already said that he’s against a previous Tory commitment to build 300,000 homes a year in England, rejecting it as an arbitrary numbers game, but instead he wants to make the planning process simpler and remove barriers for smaller developers.
Sunak has also said he wants developers to finish a project before they are given planning permission for other plots in the same area, and he has pledged an ‘infrastructure first guarantee’, to make sure new homes are supported by enough local doctors, schools and roads – both good measures in theory, although it’s hard to see how this will work in reality alongside speeding up the planning process.
The next few months are likely to see a lot of change for mortgages, housing and the economy as a whole, but we hope that Sunak can reintroduce some stability and that homeowners won’t be hit too hard in the process.