Slump in property sales revenue attributed to dampening influence of the forthcoming Autumn Budget, according to Savills.
Slowdown in UK Residential Property Market Due to Inheritance Tax Uncertainty
The upcoming Autumn Budget 2025 has cast a shadow over the UK residential property market, causing a temporary slowdown as buyers and sellers delay decisions due to potential changes in inheritance tax (IHT) rules. According to Savills and market experts, this uncertainty is leading to a market standstill, particularly affecting families planning to move or gift property wealth [2].
Key expected impacts of the IHT reforms include a possible reduction in the current £325,000 IHT threshold, an increase in the IHT rate, the introduction of a lifetime cap on tax-free gifts, and extending the exemption period for gifts. These changes could substantially increase tax bills for property owners and complicate estate planning [1][5].
Savills, while optimistic about long-term house price growth, anticipates a weaker transaction volume in the immediate market due to policy uncertainty [4]. The decline in sales across the company's residential re-sale agency arm is attributed to the impact of actual and potential tax changes on sentiment [2].
Despite the challenges, analysts remain hopeful. Deutsche Numis expects the transactional pipelines to support the market recovery and the attainment of full-year expectations. Peel Hunt believes that Savills' more stable businesses will continue to deliver robust results, with the normalization of commercial property activity improving profits materially in the next few years [4].
Meanwhile, Savills reported a 6% rise in group revenue to £1.1 billion in the six months to the end of June, with underlying profit increasing by 6% to £23.3 million, and reported pre-tax profit rising by 78% [6]. The firm's auction arm also saw a 8% increase in sales, selling over £420 million worth of commercial and residential property during the period [2].
However, the ongoing affordability constraints across the property market, as flagged by housebuilder Persimmon, are another challenge. Interest and mortgage rates, while reduced, still present a barrier to many potential customers [7]. The upcoming Autumn Budget is also having a dampening effect on corporate and private investment activity across Britain [8].
In summary, the uncertainty over inheritance tax reforms tied to the Autumn Budget 2025 is causing a temporary slowdown in the residential property market in Britain, with families and investors deferring decisions amid fears of increased tax liabilities and tighter gifting rules. This market hesitancy is expected to ease once the government announces official measures, after which growth in transaction volumes and house prices could recover [2][4].
References: 1. The Guardian 2. Savills 3. The Telegraph 4. City A.M. 5. HM Treasury 6. Savills Financial Results 7. Persimmon Financial Results 8. BBC News
- Given the ongoing uncertainty surrounding inheritance tax reforms, many families and investors in the UK are holding back on investing in property due to the potential increase in taxes and stricter gifting rules.
- The delay in decisions by buyers and sellers is causing a temporary slowdown in the residential property market, with the uncertainty negatively impacting the transaction volume, particularly affecting families planning to move or gift property wealth.
- The slowdown in the property market could have a ripple effect on other sectors, such as finance and business, as potential investors may put their focus on other areas with more certainty, thereby affecting personal-finance matters.
