The average price of a home rose by 9.7% compared with a year earlier, gaining £24,500 to £276,759. However, monthly growth rose by 0.3%, down from 1.1% in December and the smallest monthly rate of increase since June 2021. Commentators expect the housing market to cool “considerably” this year as Britons are confronted by a cost-of-living squeeze. The Bank of England raised interest rates to 0.5% to curb inflation that it expects to rise above 7% in April. It forecast that rising energy costs and goods prices would lead to a 2% drop in people’s net income after inflation this year — the biggest hit to real incomes since comparable records began in 1990. About 22 million households will have to pay 54% more for their electricity and gas supplies from April 1, when the energy price cap rises to around £2,000. The Bank also predicted that growth in Britain’s GDP would slow. However, while commentators believe house price growth will cool this year, they did not expect prices to fall significantly. Unplanned savings built up during the pandemic will go some way to offsetting the income squeeze. And with around 80% of UK mortgage debt at fixed rates, most mortgage-holders are well insulated from short-term increases. Furthermore, more stringent affordability criteria and mortgage regulation introduced during the 2010s means that recent buyers should be better placed to cope with higher mortgage rates than in the past.

Past performance is not a reliable guide to the future. The value of investments and the income from them can go down as well as up. The value of tax reliefs depend upon individual circumstances and tax rules may change. The FCA does not regulate tax advice. This newsletter is provided strictly for general consideration only and is based on our understanding of law and HM Revenue & Customs practice as of February 2022 and the contents of the Finance Bill. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned in connection with the content hereof and any such action or inaction. Professional advice is necessary for every case.