1. Can we expect a housing market crash in 2023?

Who knows? When a housing market crashes, it means that the housing prices have risen to a level that is too high and then suddenly dropped. Demand drops significantly and mortgages are offered at lower loans to value and lenders become nervous. This can make it harder for people to buy a home and can also cause problems for people who have already bought a home with a high loan to value. It can also affect the economy, making people less likely to spend money.

It's true that housing prices have seen above average increases with the added burden of recent mortgage repayments increasing but for first time buyers, this may be in part countered with lower house prices and more properties being sold at or around the valuation amount and not the 15 -30% over valuation that has been commonplace throughout the country.​

Now many agents are confirming that the goal for the seller is the valuation or Home Report price rather than many thousands of pounds above it. Consider this: buying a property in June this year marketed at £250,000 and finally agreed at £275,000. £25,000 over asking price and money people had to find to close the deal on top of their original deposit. Buying in 2023 means you could well be able to use that extra cash to increase your deposit or perhaps use it for some immediate home improvements. A better outcome for the buyer and definitely something for first-time buyers to get excited about!

But that doesn't mean you should jump into a home purchase without doing your due diligence. By taking the time to get your finances in order and ensuring you are ‘mortgage ready’, you'll be able to take advantage of lower home prices and potentially better loan-to-value mortgage deals, ideally being able to put a large deposit down and borrowing slightly less. Plus, if you wait, you may be able to find even better bargains down the line. So don't rush into anything - take the time to do your research and you could end up with a great deal in 2023.

2. Are you looking to provide your children with a secure home while they study?

Investing in property and buying a home for your children to live in while they are studying

could be a great option when house prices decrease.  Having a secure home and a

comfortable environment to live in can be invaluable for your child’s studies. It can provide

them with the stability and peace of mind to focus on their studies and help them to achieve

success.

With student halls, student apartments, shared houses and private rentals on the increase,

the cost of renting is high, especially in cities or areas that are popular for students, so it’s

important to consider and compare the rental market before you buy. Research the average

rental prices in the area and decide if it’s a good investment.

When buying a property for your children to live in while studying, you should also consider

the future. Think about what you plan to do with the property once your children have

finished university. Will you rent it out? Sell it on? Or will your children stay there?  It could

be a good investment and could save you and your children lot of money in the long term.

3. Is now the time to set up a Special Purpose Vehicle (SPV) for your buy to let property?

In his recent budget the Chancellor has announced that from next year, landlords will be on the receiving end of a capital gains tax raid. This means that when they sell a property that has increased in value, the typical investor could lose £2,600. The annual exempt amount for capital gains tax will be reduced from £12,300 to £6,000 next year, and then halved again to £3,000 from April 2024. Any profits made above this amount will be taxed at 18 per cent, or 28 per cent for higher-rate taxpayers.​

When it comes to owning and managing rental properties, landlords have a variety of options at their disposal. One of the most popular methods for acquiring and managing rental properties is through the use of a Special Purpose Vehicle, or SPV.

There are a number of benefits to using SPVs for landlords. Perhaps the most obvious benefit is that it can help you to reduce your tax liability. Special purpose vehicles are treated as separate entities for tax purposes, which means that you can deduct expenses related to the vehicle from your taxable income. This can be a huge savings, particularly if you are a larger landlord with a number of properties. Seek specialist advice from a Tax Expert to understand how it would affect you and where the benefits lie for your own specific circumstances.

In Summary

• The housing market has seen above average increases in prices recently with increased mortgage repayments, but first-time buyers may be able to take advantage of lower house prices and better loan-to-value mortgage deals. It is not certain whether a housing market crash will occur in 2023, however potential buyers should do their due diligence and research thoroughly to find the best deals.

• Investing in property to provide your children with a secure home while they study could be a great option. Research rental prices in the area and consider the future plans for the property to determine if it is a good investment. As always get advice from your tax adviser or accountant first to determine your best tax choices. 

• Given the recent announcement of the capital gains tax raid, setting up a special purpose vehicle to manage your rental property could be a great way to reduce your tax liability and ensure that your rental income remains as profitable as possible.

As we approach 2023 with the right advice and planning, it could well be a year filled with opportunity and hope for many.