The Budget – October 2024

A property-related summary…

Given this was to be the first labour budget for 14 years, there had been lots of speculation in the weeks leading up to it, with all sorts of rumours surrounding Capital Gains Tax and Stamp Duty.

We haven’t seen anything like the rumours were suggesting, but Chancellor Rachel Reeves has brought in a few changes which will no doubt impact the property market…

Stamp Duty

Whilst there is no change for the vast majority of the market, there were a couple of somewhat unexpected announcements on Stamp Duty which saw both first-time buyers and those looking for a second home (whether for personal use or as a buy-to-let investment) hit by the changes.

First-Time Buyers

Currently (and until April 2025), first-time buyers can take advantage of a 0% rate of Stamp Duty on purchases up to £425,000, meaning most pay no stamp duty at all.

By not extending the policy beyond April 2025, the level at which first-timers purchasing property are subject to Stamp Duty will drop to £125,000.

Second Homes

The Chancellor also took the opportunity to increase the rates of stamp duty paid by those buying second homes, whether for personal use or investing in buy-to-lets, by 2%, taking it up to an additional 5% on top of the standard rate paid on purchases.

Capital Gains Tax

Although many were expecting to see a substantial shake-up to Capital Gains Tax (and perhaps in an effort to offset their shocks on Stamp Duty), the Chancellor surprisingly did not extend the increase in Capital Gains Tax on other assets to include property ( Buy-to-Let and Investment properties as you do not pay Stamp Duty on your own home), stating there would be no change to the current levels.

This will have come as a welcome relief to many of those who own rental properties, and will hopefully go some way towards calming the negative press we have seen in recent weeks talking about a mass exodus of residential landlords from the property market.

While locally at any rate, this (happily for all those living in rented property) seems not to have been the case, there will of course be a few who may reconsider purchasing buy-to-let properties following the budget, but I suspect that will be influenced more by the new stamp duty rules!

Inheritance Tax

Although according to government numbers, only 6% of estates pay inheritance tax, and so it only affects a very small number of people, the current rates have once again been frozen.

As it stands, you can pass on a personal allowance of £325,000, rising to £500,000 if you are passing on your home to a direct descendent. By freezing these levels for a further two years until 2030, as values increase in line with inflation, more estates will naturally fall into these bands through a concept known as ‘fiscal drag’.

Some are naturally suggesting this is yet another stealth tax behind what appeared to be beneficial headlines.

Alongside the freezing of Inheritance Tax thresholds, there were a couple of unexpected changes, and ones which have unsurprisingly caused anger amongst those affected.

The inclusion of Pensions into the Inheritance Tax rules will not only mean more estates are caught by the changes, but will no doubt upset those who have been carefully planning for many years and have now had the rug pulled from beneath them.

Those who have property as part of their retirement plans, whether through SIPPS (Self-Invested Personal Pension) or other structures will probably want to speak to their advisors before the changes come into effect in 2027.

Perhaps even more controversially, and one which the likes of Jeremy Clarkson and Kirsty Allsopp (of Location, Location fame) have been extremely vocal on, is the taxation of farms, and which some are now predicting could well see an end to the passing down of farms from generation to generation, with farms broken up to meet their obligations.

In Summary…

As we have suggested before, what we want (and need!) for a healthy property market is stability and steady growth, and not the booms and busts we often get off the back of political grandstanding.

While the international stock and money markets have so far viewed some of the announcements on Wednesday in a negative light (although thankfully not as badly a Liz Truss’s mini budget!), potentially meaning that interest rates may take slightly longer to come down than previously predicted, the vast majority of property related changes were not as detrimental as people had feared, and should, all being well, lead to a more stable housing market, and one which comes with balanced and steady growth.

Whether the budget has influenced you or not, if you are thinking about buying or selling please contact us today and let us help you with the next stage of your property journey.

Hackney & Leigh

Caring about you and your property