Budget 2024 and the property Sector

about 1 month ago
Budget 2024 and the property Sector

1. Investing in Housing Development

The budget introduces a £5 billion commitment to the UK Government’s housing plan, with a focus on expanding the availability of affordable homes. This includes:

  • Affordable Homes Programme: Increased funding to £3.1 billion.
  • Support for Small Housebuilders: £3 billion in funds to increase housing supply, focusing on boosting small developers.
  • New Housing Projects: An additional £128 million will support developments, tackling issues like river pollution that hinder construction and funding 3,000 energy-efficient homes across the UK.

Further details will be outlined in the upcoming Spending Review, including support for councils and housing associations to expand affordable housing.

2. Safety Enhancements

Following the Grenfell Tower report, Reeves pledged £1 billion to expedite the removal of unsafe cladding from buildings, enhancing safety across the country’s housing stock.


3. Taxation Adjustments

Business Rates:
Labour had pledged to abolish business rates, but for now, the 75% discount (set to end in April 2025) will be replaced by a 40% discount, capped at £110,000, for eligible properties in retail, hospitality, and leisure.

Stamp Duty Land Tax (SDLT):
From 31 October 2024, the Higher Rates for Additional Dwellings (HRAD) will rise from 3% to 5%. This increase targets second homes, buy-to-let properties, and non-UK residential property buyers. Though intended to aid first-time buyers and increase primary home transactions, the HRAD hike may deter rental property investors, potentially impacting housing availability.

Capital Gains Tax and Inheritance Tax:
No change in Capital Gains Tax rates for residential properties (remaining at 18% and 28%). The inheritance tax threshold freeze extends until 2030, allowing £325,000 tax-free per estate or up to £1 million if passed to a surviving spouse or civil partner.


4. Social Rent Increases and Right-to-Buy Changes

Social rents in England are set to increase by CPI inflation plus 1%, currently expected to be around 2.7%. The increase provides more stable funding for social housing development, yet it may contribute to rising housing benefit costs.

To preserve council housing, Right-to-Buy discounts will be reduced, and councils can retain all receipts from these sales, allowing for reinvestment in new social housing projects.


Final Thoughts for Landlords

The 2024 Budget highlights the government’s commitment to affordable housing but includes mixed implications for private landlords and investors. While increased support for housing development is promising, the HRAD increase and lack of targeted support for landlords facing energy efficiency upgrades may impact long-term property investment decisions. For our clients, it’s essential to stay informed of these changes and consider their potential effects on property management and rental yield.

For any questions on how the Budget changes might affect your properties or investment plans, please contact us at Hodsons Estate Agents – we're here to help you navigate the evolving property landscape.

 

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