Autumn Budget 2024 – what it means for the property market
Chancellor of the Exchequer Rachel Reeves delivered the Autumn Budget 2024 (30 October) – what is means for the property market.
An increase in Stamp Duty for additional property purchases was the biggest shock for the property market in yesterday’s Budget.
Chancellor Rachel Reeves used her first fiscal statement to hike the additional Stamp Duty rate from 3% to 5% from today.
Brokers have already reported transactions collapsing as a result.
One mortgage adviser, Jack Tutton of SJ Mortgages, said he has already seen two landlords pull out of buying additional properties.
Another, Kelsey Phillips, head of specialist lending at Arose Finance, said:
“Within minutes of the Chancellor announcing the additional surcharge, our investor clients were on the phone to estate agents renegotiating purchase prices lower.
“The immediacy of this tax hike will be painful for clients in the middle of completions and may cause some chains to collapse.
“Going forward, increasing the levy to 5% will undoubtedly restrict investment demand and make buy-to-let significantly less attractive to non-professional investors.”
Industry figure Chris Buckler, founder of The Estate Agency, said:
“Landlords are further being forced out of the market and those vendors sold subject to contract in the pipeline, who were prepared to pay the additional Stamp Duty, whilst they sell their primary residence will be punished.
“This will have an impact on estate agents’ pipelines.
“Agents will need to brace themselves for potential renegotiations and fall-throughs in the next few days.
“Working closely with mortgage intermediates to look if products can absorb this 2% increase will also be a key impact on protecting pipelines.
“Roll up your sleeves – this is when great agents shine.”
Nicky Stevenson, managing director at Fine & Country, added:
“Labour’s announcement also brings a significant blow to older homeowners and those with multiple properties, as the stamp duty charge for second homes is set to rise from 3% to 5% from tomorrow.
“This increase is bound to reshape decision-making for current and prospective sellers in this bracket.
“These tax changes could potentially lead to a slowdown in property sales as owners now have to weigh up the cost of selling against reduced returns.
“Meanwhile, Labour’s abolition of the non-dom tax regime will bring further changes to the property market.
“This move will end the longstanding tax benefit for UK residents with permanent homes outside of the country who currently avoid tax on their foreign income.
“The removal of this regime could reduce demand for high-end properties often favoured by foreign investors.
“Reduced interest from wealthy international buyers may lead to a softening in prices at the luxury end of the market.”
There was no sign of a reversal of plans to reduce Stamp Duty thresholds, meaning first-time buyer relief is likely to drop from £425,000 to £300,000 in April 2025, while the tax will start at £125,000 for all buyers.
The hike in national insurance for employers may also hit estate agents.
Sean Newman, founder of self-employed agency network The Property Experts, said:
“The increase in employer national insurance contributions is likely to hit the traditional high Street agencies hard especially when it is combined with the increase in the National Minimum Wage.
“This is where self-employed agents have the edge in terms of cost control.
“Because they are building a business around themselves as individuals, they can work flexibly and control their costs more effectively through technology – without the need to employ others or pay for expensive premises.
“The increase in Stamp Duty on second homes is bad news for landlords and I would have liked to have seen some additional support for first time buyers.
“But the market is beginning to tick along nicely and there was nothing in there that is likely to halt that trend as far as I can see.
“We look forward to further cuts in interest rates and more would-be homeowners entering the market with confidence.”
Nathan Emerson, chief executive at Propertymark, added:
“Whilst it is understandable that the UK Government needs to find more revenue, the increase in the Stamp Duty surcharge for second homes will not help increase demand for rented property at a time where homes are desperately needed to compete with ever-growing demand from tenants.
“Considering this Government is committed to net zero, it is going to be hard for landlords and homeowners to meet the UK Government’s MEES targets without help via loans and grants.
“Furthermore, the hike in national insurance contributions could hit many property agents who are trying to ensure that they are maintaining a steady cash flow while paying their employees a decent wage.
“However, it is encouraging to see that the UK Government is investing money to end dangerous cladding following the Grenfell Inquiry, something Propertymark welcomes.
We look forward to continuing working with the UK Government as they move these plans forward.”
Meanwhile, the Office for Budget Responsibility said it expects average house price growth to fall back slightly from 1.7% this year to 1.1% in 2025, as the average effective mortgage rate continues to rise.”
It forecasts that house price growth will average around 2.5% from 2026.
Kindly shared by Estate Agent Today
