WHAT DOES THE FIRST LABOUR BUDGET IN 14 YEARS MEAN FOR THE PROPERTY MARKET?

Britain’s first female Chancellor of the Exchequer, Rachel Reeves, put up taxes by a whopping £40bn in her Autumn Budget, but will the property market feel any benefit?

Looking at the sales market?

Many agents would have expected the government to reintroduce some form of Help to Buy scheme. The Chancellor made no announcement of additional support for first time buyers which would have provided additional momentum to an already recovering property market.

Instead, this may come, in the short term at least, through the Chancellor’s decision to stick to the previous government’s plan to revert to previous levels in March 2025.

Temporary stamp duty relief has been in place for FTBs since 2022 and no stamp duty is paid in England and Northern Ireland on property priced up to £425,000.

Next Spring the duty will be payable on homes priced over £300,000 – so if you are thinking of buying a new home, you have 5 months to find and buy a new property to escape the stamp duty levy. You might want to consider our property finding and negotiation as engaging us will definitely quicken the process up for you.

A reform of the rules could also have encouraged more downsizers to enter the market but this option was also rejected by the Chancellor.

Nevertheless the prospects for the market look encouraging for the remainder of 2024 and into next year. I am hopeful that the outlook for the sales market will remain positive for the rest of 2024, with interest still falling and more cuts predicted and mortgage approval at the highest since 2022, the signs are clear that the housing market is surely in an upwards trajectory.

What about the letting market?

It was rumoured that the Chancellor will increase Capital Gains Tax however this did not materialise, as landlords were breathing a sigh of relief, they were hit with a stamp duty increase on second homes – up 2% to 5% from October 31st.  Sellers with sales in progress may be caught on the hop through buyers not budgeting for such a change and it may deter some from investing further in the private rented sector this will ultimately lead to continuous rent increase as less landlords are likely to enter the market.

Agents and sellers must embrace themselves with sales falling through as some buyers may struggle to find the extra fund needed to complete the sale and with some buyers trying the renegotiate the sales.

My advice to anybody currently in the process of buying a property is to reach out to your lenders and find out if they will absorb the extra stamp duty surcharge and add it the mortgage loan although this is likely to increase your monthly repayment amount.

Another huge boast to the property market is  Reeves  announcing  CGT increases on other, non-property assets so investors may be tempted to switch to residential property.

Landlords who have been calling for alterations to the Section 24 of the Finance Act 2015 which removed a landlords right to deduct mortgage interest payments from their rental income, were, again disappointed. No change was announced.

And there will be no change in housing benefit for the most hard-pressed tenants as it was announced that rates will be frozen for next year.

Were there other measures related to property?

The Chancellor announced changes to inheritance tax thresholds with the first £325,000 of any estate being inherited tax-free, increasing to £500,000 if the estate includes a residence passed to direct descendants and £1m when a tax-free allowance is passed to a spouse or civil partner.

She committed £5bn to the UK Government’s housing plan and £3.1bn for the Affordable Homes Programme.

Right to Buy discounts will be reduced so councils can reinvest more cash into the supply of social housing.

Alex Okolidoh has over 15 years experience in property sector. So, if you are a landlord or thinking of selling or buying property, contact him today for a FREE 30 Mins Consultation on how the budget will likely affect. You can reach him on 0160344425 or email norwich@melaniestates.co.uk