Now that the dust has settled on the Autumn Budget, it’s time to explore how it will impact the property market. When the Chancellor, Rachel Reeves, delivered her Budget speech a fortnight ago, it was a bold statement with substantial tax, spending, and borrowing initiatives. As accounting firm PwC described it, the Budget was “a concoction of sweet and sour.”
While the Autumn Budget did not bring about seismic shifts for the property market as some had anticipated, a few key changes are worth noting.
Stamp Duty Changes
Interestingly, the most significant development from the Autumn Budget was not something the Chancellor explicitly mentioned. Ms Reeves chose not to renew the Stamp Duty concessions introduced by the Tories in 2022. Under these temporary measures, home-movers in England currently only pay Stamp Duty on properties valued over £250,000, while for first-time buyers (FTBs), the threshold is £425,000.
With no extension announced, these concessions will expire in April, meaning thresholds will revert to £125,000 for home-movers and £300,000 for FTBs. This change could cost buyers thousands, depending on their property purchase value. While this may not deter all potential movers, it is a compelling reason to finalise transactions before April.
Rightmove’s Tim Bannister predicts a surge of market activity as buyers rush to beat the Stamp Duty deadline. He noted, “We may now see a rush of buyers, particularly first-time buyers, either accelerating their plans or striving to close deals before charges increase.” The Bank of England’s recent decision to reduce the base rate by 0.25% to 4.75% could further energise the market.
After April, more FTBs—an estimated 20% according to Zoopla—will be subject to Stamp Duty.
Stamp Duty on Second Homes
Landlords and property investors were not overlooked in the Autumn Budget. The Chancellor announced an immediate increase in the Stamp Duty surcharge on second homes and holiday properties in England, raising it by 2% to 5%. This change has already prompted some landlords to renegotiate or pause deals.
While this may temporarily slow investment activity, Tim Bannister believes that, over time, landlords will adapt to this additional cost as another routine consideration.
Capital Gains Tax (CGT)
Despite widespread predictions of increased Capital Gains Tax (CGT) on second homes, the Autumn Budget left CGT rates unchanged for property sales, with basic rate taxpayers continuing to pay 18% and higher rate taxpayers 24%. However, there was an increase in CGT on profits from shares and non-residential assets, aligning these rates with those for second properties. Importantly, this tax does not apply to primary residences.
Inheritance Tax (IHT) Updates
The Autumn Budget also brought limited changes to Inheritance Tax (IHT). The £325,000 threshold was frozen for an additional two years. Although only about 4% of estates currently pay IHT due to exemptions for spouses and civil partners, this freeze means more estates could eventually be subject to IHT, making future planning essential.
Additional updates related to IHT concerning farm/agricultural businesses and pensions were also announced.
VAT on Private School Fees
As anticipated, VAT will now apply to private school fees. Opinions are divided on the impact, with some suggesting it will push families towards state schools, increasing competition for spots at top-performing schools. If your property is near a sought-after school, this could influence your marketing and pricing strategy.
Why Experience Matters in the Property Sector
Given the rapid shifts stemming from the Autumn Budget, including changes to Stamp Duty and market dynamics, it’s essential for sellers to work with experienced estate agents. Navigating market fluctuations and complex regulations demands skill and expertise. With years of experience handling market upswings, downturns, and policy shifts, we are here to guide you every step of the way.
Thinking of moving? Contact us for tailored advice on how the Autumn Budget and market changes could impact your next move.
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