How does the new Autumn budget 2024 affect the property market?

As Rachel Reeves delivered her first Autumn Budget as the UK’s first female chancellor, the housing and mortgage landscape saw minimal direct surprises. However, global events may hold more significant implications for contractor mortgages. Let’s delve into the key aspects of the budget and their potential impact on homes, property, and mortgages.

Implications for First-Time Buyers

One notable absence from the Autumn Budget was a replacement for the ‘Help To Buy’ scheme. Despite Labour’s previous hints at a successor called ‘Freedom To Buy’ in their election manifesto, the budget did not address this initiative. As first-time buyers wait in anticipation, no extension of the current stamp duty relief was mentioned either. We can assume that first-time buyers may be paying Stamp duty land tax at the same rates as everyone else come April 2025. 

Stamp Duty Changes for Investment and Second Homes

The budget introduced a somewhat ambiguous increase in Stamp Duty Land Tax (SDLT) for second homes and investment properties, raising the first tier from 3% to 5%. While the specifics remain unclear, it’s anticipated this increase might apply across all SDLT tiers. As this change is effective immediately, clarity from the government is essential.

Capital Gains Tax Adjustments

While the rates for second homes and investment properties remain unchanged, capital gains tax on shares and other non-property assets has been frozen. The lower rate has increased from 10% to 18%, and the higher rate from 20% to 24%, both implemented as of October 31st.

Boosting Homebuilding

Labour’s commitment to constructing 1.5 million new homes remains firm, with £3.1 billion allocated from this budget for new-home construction. This includes £3 billion to support smaller developers, aiming to prevent land hoarding by larger builders. Reeves has tasked the deputy PM with overseeing the initial £500k investment, highlighting the government’s dedication to this initiative.

Advancements in Social Housing

Addressing the longstanding underinvestment in social housing, the budget empowers local councils to make autonomous decisions regarding housing needs. With measures to fund these efforts, including reductions in Right To Buy discounts and allowing councils to retain proceeds from council house sales, Labour makes significant strides toward rectifying past neglect in this sector.

Fulfilled Promises: New Homes in Liverpool and Cambridge

Staying true to their manifesto, Labour allocated funds for 2,000 homes around Liverpool docks and additional housing developments in Cambridge. These projects signal continued investment in regional housing expansion.

Early Reactions and Mortgage Interest Rates

As the budget details emerged, British borrowing costs saw an uptick globally, causing swap rates, crucial to lenders’ mortgage pricing, to rise as well. With potential geopolitical tensions and supply chain disruptions also in play, maintaining low mortgage rates could prove challenging. First-time buyers already facing higher stamp duties may find interest rate cuts by the Bank of England hard to come by, as lenders pass increased borrowing costs onto consumers.

Conclusion

Acting swiftly could be wise for those considering purchasing their first home or remortgaging. As financial conditions evolve, waiting might expose buyers to less favourable terms. The Autumn Budget 2024 has set the stage for significant changes, and the coming months will reveal their full impact on the housing market.

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Navigating the property market can be daunting, but with proper preparation and advice, you can find your perfect home quickly. If you require any advice or have any questions regarding the above information, contact us for free expert guidance and support.