The Autumn Budget 2024, the first from a Labour government in 14 years, was delivered by Chancellor Rachel Reeves and introduces significant changes aimed at addressing the UK’s housing market challenges.
Stamp Duty Changes
Effective from 31 October 2024, the budget increased the stamp duty surcharge on additional properties from 3% to 5%. This change means that landlords and buyers of second homes will face higher costs, potentially impacting the rental market as many landlords may reconsider purchasing new properties. The standard stamp duty thresholds for first-time buyers and home movers remain unchanged until 1st April 2025, providing some relief in the short term.
Capital Gains Tax and Inheritance Tax
Despite speculation, the capital gains tax (CGT) rates for selling rental properties remain at 18% for basic rate taxpayers and 24% for higher rate taxpayers. The inheritance tax threshold will stay frozen at £325,000 until 2030 meaning the first £325,000 of any estate can be inherited tax-free.
Affordable Housing and Investment
The government has pledged £500 million towards affordable housing as part of a £5 billion investment plan. This initiative aims to deliver 33,000 new homes, including 2,000 at Liverpool Central Docks and additional developments in Cambridge. The budget also includes £25 million for 3,000 energy-efficient homes intended to be sold as affordable housing.
Support for Home Buyers
The government has committed to engage with the mortgage industry regarding the Mortgage Guarantee Scheme, which supports 95% loan-to-value mortgages, with a view to it being permanently available, helping first-time buyers with smaller deposits.
Dangerous Cladding
£1 billion of investment has been pledged to remove dangerous cladding from high rise apartment blocks following the Grenfell Tower fire in 2017.
Economic Context and Future Outlook
The budget raises taxes by £40 billion, with significant contributions from National Insurance and stamp duty changes. This move is expected to stabilise public finances while addressing housing market imbalances. The focus on long-term housing supply and affordability aims to create a more sustainable market, though the immediate impact on landlords and property investors may lead to short-term market adjustments.