Autumn Budget Briefing – What Does it Mean for Housing?
Well – it’s over. Perhaps the most eagerly awaited Autumn Budget in recent times has been delivered and it’s something of a mixed bag for the property market.
Let’s look at how it affects different players.
The Autumn Budget and buyers
Undoubtedly any Budget which has a mix of tax rises and spending cuts adding up to £40 billion will have all kinds of indirect effects on us all. And that might well cause some buyers to reschedule their plans.
While it’s comforting that there’s been no change to stamp duty for most purchasers, there are two important caveats.
One is that there’s no extension of the temporary stamp duty thresholds for first-time buyers. So, from the 31st of March 2025, the position will return to first-time buyers paying 0% on the first £300,000 of a property. And 5% on the portion between £300,001 and £500,000.
I’d have liked more assistance for first-time buyers. Not just to help more young people get on the ladder, but to help oil the market generally. More first-time buyers mean there are more transactions, which is good for the economy as a whole.
The second caveat is that anyone purchasing a buy-to-let or holiday home must now pay a 5% stamp duty threshold. Increased from 3%.
It may be a stretch to feel too sorry for a landlord, but this extra tax will be another deterrent to existing landlords expanding their portfolios. It may stop some people from becoming landlords, to begin with. We need more of them, not less, to provide the homes renters require.
The Budget announcement and renters
The biggest government measure to help tenants is of course the government’s new Renters Rights Bill, which offers a range of protections. This is not part of the Autumn Budget but will transform the rental landscape as soon as next spring.
There’s a fear that landlords hit with additional stamp duty may burden some renters with higher rents as a result. But there’s clear evidence that most renters have reached a ceiling with what they can pay, so landlords will be cautious.
Otherwise, the predominantly young demographics of renters will benefit from some non-housing Budget policies, such as increases to the minimum wage.
What it means for landlords
The stamp duty hike will come as an unwelcome surprise, but the Autumn Budget held some good news, too, for landlords.
Capital Gains Tax, levied on the profits made when a landlord sells a property, is not being raised for landlords. Although it is for those disposing of some other assets, such as shares.
Other Autumn Budget housing measures
The Inheritance Tax threshold will be frozen until 2030. So, it will remain the case that the first £325,000 of any estate can be inherited tax-free.
While it’s typically tax that grabs the headlines, it’s worth noting that the government has used the Autumn Budget to continue its very determined drive to get more homes built. Particularly affordable ones.
The Chancellor announced investments of over £5 billion to help deliver the government’s five-year plan to build 1.5m new homes. A separate affordable homes budget, which runs until 2026, has been boosted by £500m.
There will also be £3 billion spent, primarily to help allocate land for small-scale house builders to join the ‘bug boys’ in constructing more new homes.
Finally, it’s been confirmed that there will be reduced Right To Buy discounts for social housing tenants.
What does this all add up to?
Given the government’s clear warnings about having to fill black holes and raise taxes. The bad news delivered by the Chancellor didn’t come as a surprise. And in my mind, the Budget could actually have been a good deal worse.
More will emerge in the small print over the coming days. It’s often the case that quite significant measures surface at this time. So keep an eye on the media for this.
How the Autumn Budget received by the financial markets in the coming days will determine whether it leads to a slowdown in the reduction of interest rates. My money is on a small reduction still happening between now and Christmas, and more next year.
My advice is always to be strictly analytical about your own financial circumstances before taking the plunge, to sell or to buy. There are many optimistic indicators that the housing market is surprisingly resilient right now. So if you do make a move, good luck!
Last Updated: November 15th, 2024
