The Autumn Budget - What it Means if you are looking to Buy or Sell
November 2024
The Autumn Budget -
What it Means if you are looking to Buy or Sell Your Property
The long anticipated the first Labour Budget in 14 years.was delivered by Chancellor Rachel Reeves, there has been much speculation over taxes and inparticular those relating to the housing market. Home owners - particullary first time buyers and renters have waited eagerly to see what changes in will affect them in the coming months, with mortgage rates still relatively high than five years ago and the issue of the general cost of living, many household incomes have been squeezed.
So what announcements were made and how will they affect the average person looking to buy or rent . The good news is that the government has announced a £5 billion government investment to their housing plan as well as £500 million boost to the Affordable Homes Programme across the country as well as £25 million put towards the delivery of 3,000 energy-efficient new homes, with a target of 100% of these being affordable.
Stamp Duty
Stamp duty is a form of tax paid to the government when buying property or land . The amount buyers pay varies based on the cost of the property, and whether you’re buying a home to live in, or an additional home.The stamp duty surcharge for those buying second homes, such as landlords buying properties to rent out, is set to rise by 2% from 31 October 2024, increasing from 3%, to 5%. First time buyers were also particularly interested as many have to weigh up the cost of a purchase, the morgage interest rate and and stamp duty as an additional cost before they can afford their first home. Unfortunately there was no mention of the extension to the current stamp duty relief for first-time buyers, which is due to end in March 2025.The previous Conservative government adjusted stamp duty thresholds until March 2025, which meant that home-movers would pay lower stamp duty fees, and in many cases (mostly for first-time buyers), meant no stamp duty to pay at all. There were no announcements around an extension to the current elevated thresholds, meaning these are set to drop back at the end of March 2025. At the moment no stamp duty is not applicable on properties £250,000 to £125,000, however anyone purchasing a property over this amount could face paying up to £2,500 more in stamp duty land tax. For first time buyers the rate at which they do not pay stamp duty is likely to fall from £425,000 to £300,000, for a first-time buyer purchasing a property in London this would buy you a one or two bed flate depending whhere you are looking for a property on sale for £370,759 this will mean an extra £3,538 in stamp duty from March 2025, compared with paying nothing now. Buyers are already looking to purchase a property, will be looking to bring their plans forward or trying to get their deal done before charges go up. It can take take 3 - 4 months or longer to complete a property transaction once a sale is agreed, which means that unless you are chain free and a cash buyer there is little time left to purchase a property before the deadline comes in
Capital Gains Tax remains Unchanged
We saw some trends emerge in the housing market in the run up to the Budget, off the back of several anticipated changes. One of these talked-about changes was an increase to Capital Gains Tax, which could have seen landlords pay increased tax on any income made from rental properties.The private rental market is extremely important to the UK economy, last year we saw a record number of former rental homes for sale as some landlords made the decision to sell their properties as a result of the rumoured tax change, along with other additional costs for landlords that have grown over the years. However, today’s budget has confirmed that the current rates of Capital Gains Tax on residential property will remain unchanged which we hope will stablise the market.
No changes to Inheritance Tax
Inheritance tax (IHT) is paid on assets inherited when their original owner has passed away, including savings, property and investments. Currently the first £325,000 of an estate is exempt from IHT, and £500,000 when the estate includes a residence passed down to direct descendants. The previous Prime Minister Rishi Sunak introduced a freeze on these thresholds until 2028, and in yesterday’s budget Chancellor made no change to the rate.
Mortgage Guarantee Scheme
The government has also pledged to engage with industry on plans to make the Mortgage Guarantee Scheme permanently available to support lending at 95% loan-to-value. Mortgaage rates were reduced by 0.25 % to 4.75% which will help those looking to raise a mortgage or renew their old rate. The current Bank of England base rate is 4.75% as of 7th November 2024. The next review is scheduled for 19th December 2024 when the Bank of England will review the base rate again for lenders.For more infomation on how the budjet will affect you and your house move contact us for some Advice and Information or call us on 0208 743 1166