This week Reeves took centre stage; speculation was rife over the chancellor’s musings over property taxes which caused property owners and buyers alike to wait with bated breath for the conclusion of this series in this year’s budget. Welcome to another UK Property News Recap – 22.08.2025
UK Property asking prices fall in August
August caused sellers to sweat, dropping average house prices in the hope of distracting buyers from their holidays. The biggest adjustments, when first listed, came at the top of the ladder but across the UK the average listing price was -1.3% lower in August, making the average UK ASKING price £368,750. For those keen to move on, Rightmove data shows that those properties that didn’t adjust their price after listing, found a buyer on average within 32 days as opposed to 99 days for those who had to reduce. Realism is proving a timely move.
UK Rental affordability remains stretched
Wage rises do little to cushion rising rents, leaving tenants feeling further squeezed. Despite incomes increasing faster than rents in England and increasing slower than rents in Wales and Northern Ireland; tenants on average spent 36.3% of their income on an average-priced rented home in England, compared with 25.9% in Wales and 25.3% in Northern Ireland in 2024. London continued its reign as the least affordable region with a rental affordability ratio of 41.6% closely followed by other prominent cities in England.
Prime central London sales stall
According to CBRE sales in prime central London fell 10% on Q1 2025 levels. Surprisingly though average achieved “capital values in Q2 were up by 32% quarter-on-quarter, and 10% year-on-year. Values are now at their highest level since 2023 Q3.” This averaged at about the same level as last year but with notable increases in Knightsbridge & Belgravia versus Fitzrovia, Bloomsbury & Soho which saw falls of 11%. On the rental front, agreed lets fell, down 15% on H1 2024 levels but values rose 6%.
Reeves weighs up property taxes
This week, there was a huge amount of speculation around Rachel Reeves’ plans to draw down from homeowners. Up for consideration was a one-off property tax on sale or an annual levy which sellers or existing homeowners would pay. The thought behind this is that scrapping Stamp Duty would enable more buyers to traverse the ladder, especially strapped-for-cash first time buyers. It would however penalise those who had accumulated wealth over time in their property whose income may have diminished or not risen enough now to afford the current value. It would also pose a financial shock when they do sell which could lead to sellers asking for more or less depending on the tax bracket they’d fall into or create generational homes (if gifting isn’t also hit.)
It has the potential to galvanise the bottom of the market but prices would rise here due to demand not just from first time buyers but down-sizers skirting below tax thresholds while decreasing values at the top of the ladder, reducing the tax intake.
Council tax reform was also mooted but it is a more complex beast to work out. Again basing households’ level of tax on the property price which is a collective migraine for some government office to ascertain. Thoughts are this would only be implemented in a second term so they have some time to finesse.
Regardless, speculation will drive some abroad, others to batten down the hatches and others to move fast…Rachel Reeves’ POTENTIAL capital gains raid on property sales above a certain threshold will, if nothing else, disrupt the market.
Inflation picked up a pace but owner occupiers’ costs took a breath
Inflation may have risen as everyone took to the skies but owner occupiers’ cost growth slowed 0.93 percentage points in July 2025. Rental growth took a step off the gas while electricity and gas fuelled further growth
UK House prices show signs of growth while rental growth slows
The ONS tweaked its methodology this month which reduced the initial overestimation of new build provisional estimates. As a result, there were larger-than-normal downward revisions to recent months’ estimates.
As it stands, average UK house prices were ESTIMATED to have increased by 3.7%, to £269,000, in the 12 months to June 2025 while rental growth slowed in July; up 5.9% to £1,343 but down from 6.7% in June. Rents in Wales saw the most significant annual growth up 7.9% while Scotland slowed to 3.6% in the 12 months to July 2025.
In contrast, annual house price growth in Scotland was ahead, up 5.9% leaving Wales trailing with growth of 2.6% in the 12 months to June 2025.
Stalling for development time
Developers are stalling for time hoping for more favourable interest rates, speedier planning, affordable funding, staff and increased profits. (Demonstrating that even developers have a vision board.)
“The median time taken for a housing project to kick off after getting full planning permission rose to a record 16.3 weeks last year, according to an analysis of about 700 sites of at least 100 private homes in London by broker Knight Frank. That’s 31% longer than in 2023 and is up by more than 80% compared with 2018.
Prime Central London Rents feel the benefit from a weak sales market
When in doubt, rent. The prime central London rental market is flourishing as the sales market stumbles. Those who can’t sell or won’t compromise on price are renting out their homes for record sums to foreign internationals (predominantly Americans and Israelis who’d prefer not to be ‘dictated’ too by their current government) and wealthy domestic clients who want a base but not the tax bill that comes with buying a property. This buys them time and clarity on what exactly Reeves will do before committing to anything longer term.
Based on Lonres and Beauchamp Estates data there was a 154% rise in agreed lets in the first half of the year when compared with 2024 on properties over a 1,000 a week. The top of the prime sales market is reeling but not buckling. The saying “pride comes before a fall” springs to mind…
Five-year fixed mortgage deals fall below 5%
According to Moneyfacts average five-year fixed deals joined two year residential mortgages in falling below 5% this week – potentially boosting sellers’ belief in the autumn market more than buyers
Date set for Renters Rights Bill Final Stage
Save the date: The final stage of the Renters Rights Bill to be considered by MPs has been set for September the 8th. This could require further finessing but it is a step forward.
Right to Buy sales increase by 7%
In the 12 months to March 2025, 7,494 homes were sold to tenants by local authorities under Right-to-Buy as they rushed to grab a bigger discount before they were reduced in November 2024. The regions where activity was highest was in London and the South East; tenants realising that this was potentially their last shot at homeownership for a while with rates elevated. At the same time 3,593 replacements were funded through receipts from sales, an increase of 4% compared with 2023-24 but some way off from making up the numbers.
And that concludes this week’s UK Property Recap – 22.08.2025. Any suggestions or comments please get in touch.
