What Could Rishi Sunak’s Premiership Mean for Housing and Mortgages?

With the UK adjusting to the news of yet another new Prime Minister, we examine what Rishi Sunak’s appointment 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 at an eye-watering 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 amid 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, doubling the threshold 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 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, including replacing Housing Secretary Simon Clarke with Michael Gove.

Sunak talked about housing during the summer as he and Truss battled to become the leader of the Conservative party, and clearly, he thinks everyone should aspire to homeownership. “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. Instead, he wants to simplify the planning process 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. He has pledged an ‘infrastructure first guarantee’ to ensure 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 will likely see a lot of change for mortgages, housing and the economy as a whole, but we hope Sunak can reintroduce some stability and that homeowners won’t be hit too hard in the process.