Autumn Budget 2024: What’s Next for UK Residential Property Market?

The 2024 Autumn Budget, introduced by Chancellor Rachel Reeves, has brought new insights and impactful changes to the UK’s Property market. As the Labour government’s first budget since taking office, it addresses the challenges of high inflation, rising interest rates, and housing affordability. For property buyers, investors, and developers, these changes offer new opportunities—whether through adjusted Stamp Duty rates, investment in sustainable transport, or expanded support for first-time buyers and affordable housing. Here’s a breakdown of what these updates mean for you.

Key Takeaways

• Capital Gains Tax Stability: Capital Gains Tax for property remains steady, while stocks and shares have seen an increase, reinforcing property’s appeal.
• Stamp Duty Changes for Investors: The Stamp Duty surcharge on second homes has increased to 5%, encouraging investors to focus on long-term gains in a high-demand rental market.
• Housing Market Surge: Sales are up 29% this autumn, driven by competitive mortgage rates and heightened buyer interest.
• Positive Transport Investments: Budget funding supports HS2, Trans-Pennine, and sustainable transport projects, boosting property value in well-connected areas.

Key Budget Expectations for the Housing Market

The Autumn Budget brings a cautious fiscal strategy aimed at stabilising the economy. By keeping VAT, income tax, and employee National Insurance rates steady, the government hopes to support household spending without adding direct costs. However, it has introduced the highest tax increase in recent history, primarily affecting property investors.

For residential property, the Autumn Budget keeps Capital Gains Tax rates steady, providing stability for property sellers and long-term investors. With the new 5% Stamp Duty surcharge on second homes starting 31st October 2024, this change encourages buy-to-let investors to focus on building long-term value in a high-demand rental market, where rental returns continue to thrive. Despite the added costs, the stability in Capital Gains Tax offers some consistency for landlords looking to hold and build long-term value.

Impact on Buy-to-Let Investors and Landlords

With Capital Gains Tax on residential properties remaining steady, buy-to-let investors face new considerations following the budget. The Stamp Duty surcharge on second homes has increased from 3% to 5%, impacting additional property purchases. This adjustment encourages a focus on long-term rental income in a high-demand market, making property a steady income source. Despite these changes, the stability of Capital Gains Tax provides reassurance for long-term investors. As upcoming legislative shifts like the Renters Reform Bill strengthen tenant protections, some landlords may reevaluate their strategies, potentially decreasing the supply of rental properties and driving rents upward. For investors focused on development or resale, these market shifts present new opportunities within a competitive rental landscape.

Impact on First-Time Buyers

For first-time buyers, affordability remains a top priority. Although current property prices and borrowing costs are elevated, buyers still have the opportunity to benefit from Stamp Duty relief before thresholds revert in April 2025, offering a key savings window in today’s market. However, the government’s £500 million commitment to affordable housing could support future affordability, particularly for lower-income buyers, offering some relief in the longer term.

Get in touch with an expert at Rothmore Property to discuss the property opportunities we may have available for you and take advantage of the current Stamp Duty savings before April 2025.

Investing in the Future of Transport

The Autumn Budget has placed a strong emphasis on transport, allocating around £30 billion for projects through 2025–26. Significant funds are earmarked for sustainable transport, including the HS2 tunnelling into Euston, Trans-Pennine Route Upgrade, and East-West Rail. Local transport initiatives, such as bus service improvements and cycling infrastructure, received an additional £3.6 billion.

These enhancements support the development of high-growth areas and strengthen property values in well-connected regions. Improved transport links often drive higher demand, making properties more attractive to buyers and investors alike. This focus on transit-oriented development aligns with Rothmore’s approach to investment, offering clients properties in areas set for growth.

What’s Happening in the Housing Market Right Now?

The housing market has seen a surge in activity this autumn, with sales agreements up 29% compared to the previous year. Enquiries to estate agents have risen by 17%, while listings are up by 12%, giving buyers more options. Market demand has been boosted by declining mortgage rates, with average rates reaching a two-year low, sparking heightened competition among lenders. The return of favourable rates has driven sales to their highest level since the pandemic boom, creating a dynamic year for the housing market.

Rothmore Property: Your One-Stop Shop for UK Prime Properties

Rothmore Property is committed to providing exceptional service to those looking to invest in or purchase property across the UK. Our multi-award-winning team, recognised at the International Property Awards as the Best Estate Agency Single Office in both Greater Manchester and the UK, is here to support clients nationally and internationally. With access to over 60 developments nationwide, including prime locations in Manchester, London, Liverpool, and Birmingham, Rothmore Property offers comprehensive property investment services tailored to each client’s unique needs.

Whether you're a first-time buyer or an investor seeking opportunities in a dynamic UK market, our team has the expertise to guide you. From property search and acquisition to advice on navigating legislative changes, Rothmore Property is your partner in finding the perfect property.

Why Property Remains the Top Investment Choice Despite Tax Changes

While recent tax adjustments may seem to impact property returns, the UK market remains a standout investment choice. Unlike stocks, which are prone to high volatility and unpredictable swings, property offers stability, tangible growth, and reliable value retention. Both property and shares now follow similar Capital Gains Tax rules, but property continues to provide unique benefits—such as consistent rental income and a reliable hedge against inflation. These advantages solidify property as the most attractive investment for those seeking dependable, long-term assets.

Market Stability and Growth Potential

The UK property market has consistently demonstrated resilience and steady growth. According to Savills, property values are forecasted to increase by 17.9% over the next five years, with the average UK property price reaching £300,108 by 2028.

Strong Rental Market

The rental sector in the UK continues to thrive, offering investors consistent opportunities for passive income. With rising property demand and a steady tenant market, rental income provides a solid revenue stream, even as property values increase. For buy-to-let investors, this presents an ideal situation: stable rental yields and robust long-term value growth.

Supply-Demand Imbalance

A housing shortage across the UK continues to create favourable conditions for property investors. With housing supply constantly falling short of demand, both property values and rental prices are expected to rise. This persistent undersupply, combined with rising population and urbanisation, supports an environment where property investment remains highly advantageous.

Economic Strength and Investment Security

The UK’s solid economic foundation further reinforces property investment's appeal. As one of the world’s largest economies, the UK offers stability and consistent growth potential. With Savills’ forecasted market expansion and anticipated stability in mortgage rates, the property market benefits from economic factors that favour both domestic and international investors.

The 2024 Autumn Budget introduces many changes to the residential property market, with new Stamp Duty charges affecting both first-time buyers and buy-to-let investors. High activity and competitive mortgage rates indicate a robust market, with affordability being a common challenge that Rothmore can help you overcome through informed guidance and tailored property opportunities. For those embracing these changes, Rothmore Property’s team offers insights and support to ensure you make the most of your homeownership or investment journey.

Curious about the new opportunities in the property market following the Budget? Get in touch with Rothmore Property’s award-winning team to explore your options.