Following the recent Autumn Budget announcement, we want to provide you with an insightful summary of the key measures that may impact the property market.

Economic Outlook

The Office for Budget Responsibility (OBR) forecasts that real GDP growth will be 1.1% in 2024, 2% in 2025, 1.8% in 2026, 1.5% in 2027, 1.5% in 2028, and 1.6% in 2029. The OBR also forecasts that Consumer Prices Index (CPI) inflation will average 2.5% this year, 2.6% in 2025, then 2.3% in 2026, 2.1% in 2027, 2.1% in 2028, and 2.0% in 20291.

Key Property-Related Changes:

Stamp Duty Land Tax (SDLT): There were several changes announced to SDLT in the budget, including increasing the rate on additional dwellings, which is expected to result in 130,000 additional transactions for main home buyers over the next years.

Higher Rates for Additional Dwellings (HRAD): This surcharge, applied on top of standard SDLT rates, will be increased from 3% to 5%, effective 31 October 2024.

Corporate Purchases: The single SDLT rate for corporate purchases of dwellings exceeding £500,000 also rose by 2 percentage points, from 15% to 17%.

Exemptions: Buyers who exchanged contracts before 31 October 2024 are not affected by the HRAD increase

Capital Gains Tax (CGT): There are no changes to CGT rates for residential property, though they will rise to 32% for carried interest from April 2025. From April 2026, carried interest will be taxed fully within the Income Tax framework.

Right to Buy Discounts: The government is reducing discounts for tenants buying their council homes under the Right to Buy scheme. Enabling councils in England to keep all the receipts generated by sales will boost council capacity to ensure that vital social housing is available to those who need it most.

Affordable Housing: The government will invest more than £5bn to deliver their housing plan, which includes an increase to the Affordable Homes Programme to £3.1bn, and £3bn worth of support and guarantees to increase the supply of homes and support small housebuilders.

Investment in Housing: The government has committed to investing over £5 billion to support its housing plan. This will include an additional £500 million to the Affordable Homes Programme to build up to 5,000 additional affordable homes and £3 billion of additional support for SMEs and the Build to Rent sector.

Expert Opinion:

Chris Stone, Managing Director of Elite Property, shares his perspective on the Budget’s implications:

“The Budget is a mixed bag for those in the property market. The government’s investment in housebuilding brings potential growth to the property market, increasing transactions and revenue. However, with the increase to SDLT, buyers will want to take this off the price they pay for homes, keeping price rises in check. This could impact affordability for renters and impact investor confidence, despite the absence of any increase in CGT on residential properties.”

Summary:

The Autumn Budget 2024 introduces significant changes for the property market. While some measures, like the SDLT increase and National Insurance changes, may present initial challenges, the overall focus on boosting the economy, supporting affordable housing, and increasing overall investment in the sector points towards a positive long-term outlook for the property market.

We will continue to monitor the market closely and provide you with further updates as necessary. If you have any questions, please do not hesitate to contact us.