Following the Autumn Budget, announced by Rachel Reeves on 30 October 2024, Luke Saywell, partner at Gascoines reviews the updates and highlights everything you need to know about property from the Budget.
The main Autumn Budget property news included:
- Stamp duty changes
- Second homes stamp duty changes
- Making Tax Digital
- Inheritance tax and Capital Gains Tax changes
So, let’s get into the details.
Stamp Duty Land Tax is paid by a buyer on the purchase of a house, flat, land and any other buildings over a certain price. No extension to the current relief was announced at the Budget, meaning first-time buyers will now pay Stamp Duty on any property worth more than £300,000 from March 2025. According to Rightmove, the average asking price for a first-time buyer home, a property with two bedrooms or less, is £227,191, however this varies massively per region.
From 1 April 2025,
- The nil rate threshold, which is currently £250,000, will return to the previous level of £125,000.
- The nil rate threshold for first-time buyers, which is currently £425,000, will return to the previous level of £300,000.
The maximum purchase price for which First-Time Buyers Relief (a reduced stamp duty rate) can be claimed is currently £625,000 and will return to the previous level of £500,000
We expect that these changes will lead to a flurry of buyers eager to push ahead with sales completions prior to the March 2025 deadline. This will allow first-time buyers to get more for their money, especially in areas like London and the South of England where average property prices are far higher than the general trend. There is a good scope of time to progress sales of this kind before the deadline, so it shouldn’t put people off who are in a position to progress.
Similarly, for many first-time buyers it still won’t have a major impact, if any, and we anticipate adjustments to be made to property prices to reflect the changes in Stamp Duty where relevant, so there is no need to panic if you’re not quite ready to get on the property ladder.
The second Stamp Duty amendment in the Budget was to the second homes aspect of the tax, which affects anyone investing in a second property or land. The Stamp Duty on these types of sale was increased by two per cent to a total of five per cent of the deal cost, which was implemented with immediate effect the day after the Budget.
Most people will assume that this will increase the cost of buy-to-let purchases as the initial output is higher, however, it’s more likely that these costs will be reflected in the property price. Estate agents should be advising sellers who are targeting landlords in the buy-to-let market to adapt their pricing to accommodate for the higher Stamp Duty percentage and remain competitive. However, if this price fluctuation changes is impacting your decision to invest in a buy-to-let, it’s likely it was never the right investment for you originally.
Bigger impacts could be felt from the Renters’ Rights Bill introduced in September by the Labour government. Section 21, no fault evictions, will be banned which means landlords will no longer be able to evict tenants without a legally defined reason, to reduce homelessness. There is also guidance to reduce discrimination against those with pets and families and the introduction of the Decent Homes Standard under the proposed bill. These amendments will lead to positive changes in the rental market but will have implications for landlords to consider.
Furthermore, the government’s updated focus on Making Tax Digital (MTD), which was first introduced in 2015, will impact landlords with income more than £50,000 from April 2026, followed by those with income more than £30,000 in April 2027. Prior to now there has been delays in the roll out for VAT purposes, however, once implemented for Income Tax the system will replace the annual Self-Assessment tax return currently required for landlords. This means landlords will now have to:
- Keep financial records digitally
- Send quarterly updates to HMRC
- Declare annual income to HMRC digitally
This will be an adjustment for landlords and standardising the support tools for MTD will take time, however, digitalisation is inevitable in nearly every sector and I’m not surprised this move is being made.
The final big change that came from the Budget was to inheritance tax. This tax is paid on someone’s estate when they die, including property, money and possessions in their name, usually for those with an estate worth more than £325,000 but there are a number of caveats and exceptions.
In the Budget, reforms have been made to Inheritance Tax that impact pensions, business relief and agricultural property relief, which were previously exempted from the standard Inheritance Tax charges – all effective from April 2025. Coupled with the main rates of Capital Gains Tax, the tax you pay on the sale of an asset, increasing to 18% and 24% depending on your tax bracket, there will be a big shift in people’s property portfolios.
We anticipate there could be an influx of properties to the market as owners reshape portfolios to invest in other avenues before the increased tax impacts their investments in property. Housing demand has been high for an extended period so increasing supply could see improvements for property buyers looking for a primary residence but will change the buy-to-let and investment market.
Overall, the Budget will bring change to the property market across the board, whether you’re looking to buy, sell, let or invest. At Gascoines, we are committed to understanding these changes so we can advise and support our clients in real time and ensure they are confident in their property decisions.
Contact our team if you’d like to discuss any property requirements today.