The UK’s Autumn Budget, announced by Rachel Reeves on 30th October 2024, brings important changes for homeowners, first-time buyers, and property investors. Here’s what you need to know.
Autumn Budget Changes to Stamp Duty Land Tax (SDLT) for Investors
Stamp Duty Land Tax (SDLT) has been increased for second-home buyers and buy-to-let investors. The surcharge on these properties has risen from 3% to 5%, effective immediately. For investors, this means higher initial costs when purchasing rental properties, which may prompt some to reconsider their investment plans.
Stamp Duty Land Tax (SDLT) Changes for First-Time Buyers
The Budget holds better news for first-time buyers, who retain SDLT relief. With rising property prices, this relief aims to keep homeownership within reach. Eligible first-time buyers purchasing homes under £425,000 will continue to pay no Stamp Duty, while those buying homes up to £625,000 will benefit from reduced rates. This continued relief is expected to ease entry into the property market.
Although not referred to in the Autumn Budget, there will be further changes to Stamp Duty in England and Northern Ireland after the 31st of March 2025. These changes will impact virtually all homeowners, including first-time buyers, home-movers and second-home buyers.
What’s Changing on 31st March 2025?
From 31st March 2025, SDLT rates will return to their pre-2022 levels. Here’s what that will look like:
Standard homebuyers:
0% on the first £125,000.
2% on the portion from £125,001 to £250,000.
5% on the portion from £250,001 to £925,000.
First-time buyers:
0% on the first £300,000.
5% on the portion from £300,001 to £500,000.
No relief on homes above £500,000.
SDLT Cost Comparison for a £350,000 Home
Let’s compare how the SDLT changes will affect both first-time buyers and non first-time buyers purchasing a home worth £350,000:
First-time buyer purchasing a home for £350,000:
Before 31st March 2025 (current rules):
No SDLT on the first £425,000.
SDLT due: £0.
After 31st March 2025:
No SDLT on the first £300,000.
5% on the portion from £300,001 to £350,000 = £2,500.
Total SDLT due: £2,500.
Non first-time buyer purchasing a home for £350,000:
Before 31st March 2025:
No SDLT on the first £250,000.
5% on the remaining £100,000 = £5,000.
Total SDLT due: £5,000.
After 31st March 2025:
No SDLT on the first £125,000.
2% on the portion from £125,001 to £250,000 = £2,500.
5% on the portion from £250,001 to £350,000 = £5,000.
Total SDLT due: £7,500.
Capital Gains Tax (CGT) Adjustments Impacting Property Investors
If you’re an investor looking to sell a property, changes to Capital Gains Tax (CGT) could impact you. The basic rate of CGT has increased from 10% to 18%, and the higher rate has risen from 20% to 24% on most assets. However, for residential properties, rates remain at 18% and 24%. These changes could mean a significant tax increase on property sale profits, making it essential for investors to review their portfolios and consider tax efficiency.
£500 Million Pledge for Affordable Housing
In a move to address housing accessibility, the government has pledged £500 million to fund 5,000 new affordable social homes. This funding boost is part of the Affordable Homes Programme, which aims to provide new housing options in various regions, making it easier for people to find affordable homes. The initiative may help first-time buyers find suitable properties, especially in high-demand areas.
Right to Buy discount to be cut
In addition to their pledge of funding 5,000 new affordable social homes, the Government will reduce the Right to Buy discount, and enable councils to keep all the receipts generated by sales to boost the social housing stock
Under the Right to Buy scheme, some council and housing association tenants in England are able to buy their homes at a discounted price. Currently, these discounts are capped at £102,400, or £136,400 if you live in London.
From 21 November 2024, this discount will be cut to £16,000, or to £38,000 for homes in London.
This only applies to homes in England. In Scotland and Wales, the Right to Buy scheme was abolished in 2016 and 2019 respectively. In Northern Ireland, Right to Buy is still available for social housing tenants who've been in their home for a minimum of five years; the discount starts at 20% of the home's market value and increases by 2% each year to the lowest of 60% market value or £24,000.
Making Property Plans? We’re Here to Help
For existing homeowners, the Autumn Budget doesn’t change too much, however it may shift property market dynamics. If you’re planning to buy, sell, or invest in property, understanding these updates can be valuable. With increased Stamp Duty for investors and greater funding for affordable housing, the Budget may create a more accessible market.
If you’re considering a mortgage or your later-life lending options, getting advice tailored to your needs is essential. Contact us at Optimus Mortgages to learn more about how these Budget changes may impact you.
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