How The Budget Could Impact First-Time Buyers and Landlords
After rumoured “difficult decisions” and lots of anticipation, Labour’s Budget is finally here.
On October 30th, Rachel Reeves delivered the first Labour Budget in 14 years. Capital gains, inheritance taxes, and National Insurance changes were some critical points of this news, but what does it mean for the UK property market?
In this blog, we’re looking at the budget’s main impacts and what this means for first-time buyers and landlords. Keep reading to get the lowdown now.
Key Budget Changes Impacting The Property Sector
The Budget introduces big changes affecting property purchases. Here are some of the main points.
Stamp Duty
The Budget’s immediate impact on the housing market includes a Stamp Duty increase on second homes, rising from 3% to 5% overnight. This will result in significant costs for buyers of additional properties and could reduce demand for investment properties.
Stamp duty thresholds for first-time buyers and movers are set to drop in April 2025. This will make properties over £300,000 for first-time buyers and over £125,000 for other buyers more costly, potentially affecting affordability and housing market mobility.
Read the Allen Goldstein Stamp Duty guide here.
Capital Gains Tax
Capital Gains Tax (CGT) has also increased, but Keir Starmer confirmed that the tax will not apply to a primary residence, easing concerns for homeowners.
However, changes that affect profits from other assets, like shares, were announced. The lower CGT rate will rise from 10% to 18%, and the higher rate from 20% to 24%.
CGT on residential property remains at 18% and 28%, which could impact landlords and investors but won’t affect most first-time buyers, as it mainly targets higher earners. This aligns with Labour’s goal to avoid tax hikes for working people.
Talk to the Allen Goldstein team today to see what this tax means for your property needs.
House Building Investments
The Chancellor announced that Labour’s £5 billion plan aims to boost affordable housing with a £3.1 billion increase to the Affordable Homes Programme and £3 billion in support for smaller house-builders.
This push is expected to address housing shortages by increasing supply and improving buyer options, especially if the homes remain affordable.
These projects are promising, but can often take years to significantly impact availability, and with a backlog of 4.3 million homes, any progress will likely unfold gradually over the coming decades.
Additionally, projected inflation increases could keep mortgage rates elevated longer, slowing anticipated drops and leading to higher monthly home-buying costs.
What This Means For First-Time Buyers
The Labour Budget’s push to increase affordable housing aims to make property ownership more accessible for first-time buyers.
The £5 billion investment to expand the affordable housing supply and incentives for smaller builders should enhance home availability and affordability. Potential changes to Stamp Duty thresholds in April 2025 will affect buyers, with purchases over £300,000 for FTBs facing higher tax.
Additionally, if new support measures are introduced, such as more favourable deposit requirements, entering the property market could become more feasible for FTBs amid current economic challenges.
What Landlords Need To Know
Recent tax reforms could affect landlords’ rental property investments, with higher Capital Gains Tax potentially impacting profits on property sales.
Also, stricter regulations may be on the horizon, targeting rental standards, tenant rights, and energy efficiency. These changes could increase operational costs or require property upgrades, affecting overall returns.
For landlords, staying informed on evolving policies will be essential to managing rental investments effectively. Allen Goldstein is here to help you navigate these changes with ease.
Read more about our landlord services here.
The Takeaway
Whether you’re a first-time buyer or a landlord, the Allen Goldstein team is here to help you navigate the effects of the Budget.
Reach out to our team of experts now for personalised advice. Contact us here.
Or pop by for a chat! You’ll find us at 104 Cromer Street, London, WC1H 8BZ.