Market activity fluctuates amid tax reforms and interest rate moves
The UK property market experienced significant changes in the first half of 2025, with adjustments to stamp duty, council tax, and ongoing rent increases shaping buyer and seller behaviour, according to Barclays.
Jatin Patel, head of mortgages, savings and insurance at Barclays, reflected on the evolving landscape, noting that the beginning of the year saw a notable dip in market confidence.
“At the start of the year, confidence in the UK property market had fallen to its lowest point for more than six months, with the figure sitting at just 24%,” Patel said. “Quickly, that moved to 30% in February, and it has hovered around that mark in the months since, with June coming in at 27%.”
The market’s uptick coincided with the drive to get purchases over the line before the changes in stamp duty thresholds came in, a move that defined much of the activity for the first half of 2025.
Barclays reported a 50% rise in average monthly mortgage completions in March, reaching levels not seen since September 2021. However, after the threshold for first-time buyers dropped from £425,000 to £300,000 on April 1, the market slowed sharply. Industry data from Savills indicated a 66% fall in completed sales in April, a steeper decline than after the last major stamp duty change in 2016.
The bank’s research also highlighted the ongoing impact of rising rents. In March, 58% of renters had seen their rent increase in the previous year, with 29% experiencing a rise in the last six months. The average monthly rent rose by £105.90, making it more difficult for renters to save for a deposit. In June, 44% of renters identified deposit costs as the main barrier to home ownership.
“These costs are then squeezing renters’ ability to get on the property ladder,” Patel (pictured right) said. “No matter where you want to live or how old you are, it is always a battle to save for a deposit.”
Despite these challenges, prospective buyers have shown adaptability. Many are reducing discretionary spending, cutting back on holidays, or taking on extra work to save for a deposit.
Changes to council tax also affected the market, particularly for owners of second homes. From April, local authorities were permitted to impose a council tax premium of up to 100% on second properties, provided they gave a year’s notice. Among surveyed second homeowners in May, 35% said they were considering selling, with average annual bills set to rise by £840.10.
Looking ahead, the market is expected to remain active as buyers and those remortgaging respond to interest rate cuts. The Bank of England reduced the base rate to 4.25% in May, its second cut this year. Barclays data shows 35% of remortgagers are considering longer fixed-rate deals, while 32% are exploring flexible options such as standard variable or tracker mortgages.
Barclays’ research found that 65% of buyers offered below the asking price, while sellers accepted an average of £6,632 less than their listing price. Recent government changes to mortgage rules are likely to sustain the buyer’s market into the second half of the year.
Patel said Barclays introduced several measures in response to these trends, including removing deposit requirements for Right to Buy purchases and launching Mortgage Boost, which allows family or friends to support buyers without direct financial gifts. The bank has also raised maximum loan amounts for high loan-to-value mortgages to £640,000 for houses and £310,000 for flats, enabling more buyers to access higher-priced properties with a 10% deposit.
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