The budget is the big news driving markets in the UK this week, but its timing presents a major opportunity for astute property buyers. Meanwhile, across the Atlantic, New York’s newly elected mayor Zohran Mamdani has launched an ambitious programme centred on large-scale social housing investment.
Grasping the nettle
Mamdani is proposing more than 100 billion dollars of public investment in social housing within New York alone. This scale would be unprecedented for any single city and represents a deliberate attempt to address decades of under supply. Only government can capture the long term benefit of social housing, including stable rents, secure tenure and the opportunity for families on modest incomes to remain in major cities.
The United Kingdom has also increased its own housing budget, with Rachel Reeves raising the annual social and affordable housing allocation from 2.5 billion to roughly 4 billion pounds. However, much of this is labelled as affordable housing, which often fails to meet the needs of people on low or average incomes. The contrast with Mamdani’s focus on genuine social housing is striking.
But who will pay?
A central question is whether Mamdani’s approach to paying for the programme is workable. Recent reports suggest a rise in interest from American buyers in London’s super prime market following the mayor’s election. This reflects the reality that high net worth individuals can easily move their finances or even relocate to avoid specific tax changes.
A broad based contribution structure is likely to be more effective than relying solely on a small number of wealthy residents. A city funded through general consumption or income taxes would be better placed to raise stable and predictable revenue for long term housing projects.
Oh, and about those rent freezes
Rent freezes are another key element of Mamdani’s platform. While attractive in principle, a significant body of academic research warns of unintended consequences. Examples from Berlin, New York and Scotland demonstrate that rent caps can restrict supply, stimulate black market activity and ultimately push rents even higher.
Scotland’s recent rent control experiment provides a clear illustration. Despite the intention to slow rent increases, the country recorded a 12 percent rise in a single year, the highest in the United Kingdom. Without expanding supply, cities face the same pressures regardless of regulatory intervention.
Christmas is coming
Current market conditions in the United Kingdom create notable opportunities for buyers. December, in particular, is traditionally a strong month for acquisitions. Many sellers pause activity before Christmas, competition drops and auction prices tend to be more favourable. December and August often deliver the best buying conditions because many market participants are distracted or away.
Market activity is expected to remain relatively calm until the end of the year. A significant uptick is likely in January once the implications of the budget are understood.
And so is the budget
Several factors will determine whether the upcoming UK budget is positive or negative for property owners. Three issues stand out:
- Stamp duty reform. There has been speculation that stamp duty could be replaced by an annual property tax. Removing the tax on transactions could stimulate mobility and improve market efficiency.
- Additional property tax rates. Last year the additional rate increased from 3 percent to 5 percent. Scotland already charges 8 percent on comparable transactions. A further increase is possible even if it has not been publicly discussed.
- A mansion tax style adjustment. Bands F, G and H, or newly created bands for properties above two million pounds, are being floated. Such changes may generate limited revenue but could produce political benefits, especially at a time when the government is keen to manage internal party tensions.
Mortar & Margins is produced in Solihull by Propenomix. Its editors are Duncan Hooper and Adam Lawrence