October, 2024
Following Chancellor Rachel Reeves delivery of her Autumn Budget, Rightmove discuss how the changes will affect the UK property market.
Read the full story at https://www.rightmove.co.uk/news/articles/property-news/autumn-budget-housing-market-2024/
What changes were announced for housing in the Autumn Budget?
Housing announcements included £5 billion government investment to deliver Labour’s housing plan, with a £500 million boost to the Affordable Homes Programme. Investment is planned for sites across the country, such as Liverpool Central Docks, with 2,000 new homes and a transformation of the waterfront.
There will also be £25 million put towards the delivery of 3,000 energy-efficient new homes across the country, with a target of 100% of these being affordable.
Capital Gains Tax on residential property will remain unchanged.
The government has also pledged to engage with industry on plans to make the Mortgage Guarantee Scheme permanently available to support lending at 95% loan-to-value.
What’s happening with stamp duty?
There was no mention in today’s Budget of the extension to the current stamp duty relief for first-time buyers, which is due to end in March 2025.
Stamp duty is a form of tax paid to the government when buying property or land. And the amount buyers pay varies based on the cost of the property, and whether you’re buying a home to live in, or an additional home.
The stamp duty surcharge for those buying second homes, such as landlords buying properties to rent out, is set to rise by 2% from 31 October 2024, increasing from 3%, to 5%.
Our property expert, Tim Bannister, says: “Increasing stamp duty on additional home purchases means that, based on the average asking price for a home, a landlord could face an additional charge of more than £7,000 from tomorrow. In the short-term, some landlords may need to pause for thought, but in the longer-term we expect it becomes another charge that landlords become accustomed to considering.”
The previous Conservative government adjusted stamp duty thresholds until March 2025, which meant that home-movers would pay lower stamp duty fees, and in many cases (mostly for first-time buyers), meant no stamp duty to pay at all. There were no announcements around an extension to the current elevated thresholds, meaning these are set to drop back at the end of March 2025. Tim says: “With the rate at which no stamp duty is charged for home-movers due to fall from £250,000 to £125,000, anyone purchasing a property over this amount could face paying up to £2,500 more in stamp duty land tax.?Meanwhile, the threshold rate at which first-time buyers do not pay stamp duty is?likely to fall from £425,000 to £300,000. If a first-time buyer buys a property at the average UK price of £370,759 they will pay £3,538 in stamp duty from March 2025, compared with nothing now.”
Capital Gains Tax remains unchanged
We saw some trends emerge in the housing market in the run up to the Budget, off the back of several anticipated changes. One of these talked-about changes was an increase to Capital Gains Tax, which could have seen landlords pay increased tax on any income made from rental properties.
Earlier this year we saw a record number of former rental homes for sale as some landlords made the decision to sell their properties as a result of the rumoured tax change, along with other additional costs for landlords that have grown over the years. However, today’s budget has confirmed that the current rates of Capital Gains Tax on residential property will remain unchanged.
