Budget 2024: Property market recap

Miller Metcalfe posted on 30th October 2024

Labour’s 2024 Budget brings a range of announcements affecting renters and homebuyers. Chancellor Rachel Reeves has concluded her Autumn Budget presentation — Labour’s first in over 14 years — in the House of Commons.

Ms. Reeves began with a major announcement: the Budget will introduce £40 billion in tax increases to address a £22 billion deficit in public finances and stimulate economic growth. Stamp duty tax will increase as expected next year, and capital gains tax for residential properties will remain at its current rates. Additional property-related announcements from the Chancellor outline further impacts on the UK housing market.

Stamp Duty Land Tax Increase

Ms. Reeves announced an increase in the surcharge on second homes and buy-to-let properties, from three to five percent starting on October 31st 2024. “The extra two per cent cost on buying second homes and investment property will reduce demand from second home buyers and investors,” noted Richard Donnell, Head of Research at Zoopla.

Donnell added that second home buyers are already responding to last year’s Budget changes, which allowed councils to double council tax for second homes, leading to increased selling by second home owners. In areas with a high concentration of second homes, the number of properties entering the market has quadrupled.

The Budget does not freeze stamp duty thresholds, so they will increase for homebuyers from the end of March 2025 as scheduled. Property tax breaks that began with the September 2022 mini-Budget will revert to previous rates in the spring.

Higher thresholds will particularly impact homebuyers in England’s most expensive regions. Buyers are expected to factor these added costs into their offers, which may help keep property price increases in check.

First-time buyer relief will no longer apply to properties priced up to £625,000, and savings will only apply if the total property price is no more than £500,000. Starting from the end of March 2025, first-time buyers will be exempt from stamp duty up to £300,000 if the total property price remains below £500,000.

Buyers of additional properties must pay a five percent surcharge as of October 31, with non-UK residents continuing to face a two percent surcharge. Apart from these changes, current stamp duty thresholds remain in effect until March 31, 2025.

Capital Gains Tax for Residential Property

The capital gains tax (CGT) for residential properties will remain at current rates of 18 and 24 percent. However, for other assets, the lower CGT rate will increase from 10 to 18 percent, and the higher rate from 20 to 24 percent. CGT applies to the profit from the sale of an asset, such as a buy-to-let property or inherited land, that isn’t the seller’s main residence. Exceptions include most owner-occupied homes, which are typically exempt under private residence relief.

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Budget 2024: Property market recap

Stamp Duty Land Tax Increase

Capital Gains Tax for Residential Property

Miller Metcalfe

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