First-time buyers surge as landlords exit the property market

A significant rise in home sales is driven by first-time buyers amid landlord exodus.

First-time buyers surge as landlords exit the property market

In recent months, the UK housing market has witnessed a remarkable shift, with first-time buyers stepping into the spotlight as landlords retreat. According to new data from online estate agents Zoopla, there are currently 306,000 homes in the process of being sold, representing a staggering £113 billion in transactions. This marks the highest total since the autumn of 2020, when a stamp duty holiday spurred a wave of purchases during the pandemic.

Rising sales and changing demographics

The total value of the sales pipeline has increased by 30% year-on-year, while the number of homes with a sale agreed has surged by 62,265 compared to last year. This trend is largely attributed to a growing number of buy-to-let landlords exiting the market, driven away by increasing regulations and higher taxes. As these landlords leave, a flood of first-time buyers has emerged, eager to purchase former rental properties.

The recent drop in mortgage rates has further encouraged these buyers to act quickly.

Stamp duty relief and its implications

Industry experts note that first-time buyers are racing to finalize deals amid concerns that Chancellor Rachel Reeves may alter stamp duty relief in the upcoming Budget. Currently, first-time buyers are exempt from stamp duty on properties valued up to £425,000 and pay a reduced rate on homes costing up to £625,000. This exemption means that approximately 80% of new homeowners do not pay any stamp duty. However, there are fears that the Chancellor could revert the threshold to its previous level of £300,000, potentially adding an additional 20% of homeowners to the stamp duty burden.

The outlook for first-time buyers

According to Zoopla’s latest House Price Index, first-time buyers are expected to account for 36% of all home sales in 2024, compared to 31%% for existing homeowners. Richard Donnell, executive director at Zoopla, emphasized that while first-time buyer numbers have rebounded due to falling mortgage rates, the requirement for a sizable deposit remains a significant barrier. He cautioned that any changes to stamp duty relief could further complicate the path to homeownership for this group, who already face considerable affordability challenges.

As the housing market continues to evolve, first-time buyers are seizing the opportunity presented by the exit of landlords. With favorable mortgage rates and the potential for favorable stamp duty conditions, this demographic is poised to play a crucial role in shaping the future of the UK property market.