Property Expert Dominic Murphy of DM & Co. Breaks Down the Autumn Budget for Solihull Observer Readers:
Over the past few months many home movers have been waiting for the Autumn Budget, with buyers also being cautious, in the hope that there maybe favourable changes to Stamp Duty Land Tax (SDLT) and ultimately lower interest rates.
Chancellor Rachel Reeves has laid out several property focused measures, which are summarised below.
1. Capital Gains Tax (CGT) On Residential Property Remains Unchanged
Despite speculation of a possible increase, CGT rates on property sales remain at their current levels: 18% for basic rate taxpayers and 24% for higher rate taxpayers. This will be a relief for investors and landlords who feared that aligning CGT with income tax rates would lead to significantly higher taxes on profits from the sale of second homes and buy-to-let properties. Private Residence Relief (PRR) will continue to apply on the disposal of primary residences.
2. Increase In Stamp Duty Land Tax (SDLT) Surcharge On Second Homes
In a bold move, from 31st October, 2024, the SDLT surcharge on second homes and buy-to-let properties will increase from 3% to 5%. The aim is to reduce demand from second home buyers and investors, reducing competition with first-time buyers and lower overall demand in the housing market. The government hopes to discourage investments which often increase property prices in high demand areas. However, some will argue that it may lead to higher rental prices if landlords pass the increased costs to tenants. Those sellers who were prepared to pay the additional SDLT, whilst they sell their primary residence, will now have to pay an additional 2%.
Many home movers eagerly anticipated there would be changes to the SDLT thresholds, so they will be disappointed this did not happen. We must also remember that previous SDLT cuts put in place in September 2022 will end on the 31stMarch, 2025. Whilst this change will impact everyone planning to move, it is first time buyers who will be the most effected. The SDLT threshold for all buyers will revert from £250,000 to £125,000 meaning that more buyers will be subject to SDLT. First time buyers, who previously had an exemption threshold up to £425,000, will see it drop to £300,000, and those in the more expensive regions will hard hit.
3. Increased Investment In Affordable Housing Supply
Addressing the UK’s housing crisis, the government has committed to expanding the supply of affordable homes. The Affordable Homes Programme will receive an additional £3.1 billion in funding, targeting the construction of homes accessible to low-income families. With housing affordability a persistent issue, particularly for younger buyers and renters, this funding increase aims to meet urgent demand for more affordable housing options.
4. £5 Billion Investment In Housing and Support For Small Housebuilders
The government has allocated over £5 billion towards its broader housing strategy, a significant portion of which will support small and medium sized housebuilders. By supporting these builders, the government aims to diversify the market, reduce the dominance of large developers, and stimulate construction in areas where housing is in high demand. This investment not only increases the housing supply but also helps stabilise the building sector, encouraging job creation and economic growth.
In summary, the Budget presents a property market strategy focused on making housing more accessible. The government’s increased funding for affordable housing and support for small builders shows its commitment to improving housing supply. By keeping CGT rates steady and raising SDLT on second homes, the Budget reflects an intention to rebalance the property market and foster fairer competition among buyers.
I don’t believe that the budget has produced any major surprises to the housing market. We have felt the local property market slow a little in the lead up to the budget and expect it to now kick on positively. There was an element of apprehension surrounding speculative SDLT savings, we know now that this is not the case, and I expect that those that want to move will continue to do so.
If you’d like to discuss the local property market please feel free to get in touch with me directly via email on [email protected] or via WhatsApp on 07595 903811.
Visit: www.dmandcohomes.co.uk
About DM & Co: Dominic launched DM & Co. in 2013 with a view to delivering a world class estate agency business and service to the local Solihull property market. Testament to his success is the copy-cat culture that exists, you will notice that if DM & Co. does something, it isn’t long before the rest follow! Leading from the front, company culture and ethos is paramount – Dominic is a firm believer in the best business is referred business and a happy client is a client for life! Priding himself on being readily available to all, he is highly interactive across social media platforms and is ‘Happy as Larry’ to be contacted 24/7 via WhatsApp on his personal number – 07595 903 811. If you want a pro-active agent that is hell bent on delivering client focussed results with a straight talking approach, get in touch.
