UK Budget 2024: Key Takeaways for the Property Sector

On Wednesday this week, the UK government announced the 2024 Budget, a pivotal moment for many industries, especially the property sector. The country is currently amidst many upheavals due to ongoing economic turmoil and its aspirations to attain growth. In this blog, we’ll look at what some of the key points from the announcement were and what they might mean for the UK property sector.

Investment in Affordable Housing

One of the biggest announcements was the government’s pledge to invest £2 billion to create affordable homes. The plan is designed to alleviate the ongoing housing crisis by addressing increased demand for accessible housing. According to the National Housing Federation, more than 340,000 new homes are needed annually, whereas only 216,000 were built last year. This investment could provide much-needed relief for those struggling to enter the housing market, making homeownership more achievable for many.

Stamp Duty Adjustments for First-Time Buyers

Another important component of the Budget was targeted relief for first-time buyers through changes to stamp duty. Now, first-time buyers are exempt from stamp duty up to £300,000, as long as the property price is no more than £500,000. In high-priced areas like London and the South East, this presents additional challenges for those stepping onto the property ladder. Although no major changes were made to existing thresholds, focusing on specific regions with slower sales aims to stimulate the market and assist young buyers.

Capital Gains Tax Allowance Freeze

The government addressed the capital gains tax (CGT), a key consideration for property owners and investors. The Budget retained the current CGT allowance at £12,300, allowing gains up to that amount to be tax-free, with current rates held at 18% and 24%. This decision may provide stability for investors, encouraging them to retain properties longer rather than seeking immediate profit through sales.

National Insurance Increase for Employers

The 2024 Budget also includes an increase in employer National Insurance contributions (NICs), raising costs for businesses, especially impacting property firms with larger staff rosters. This rise adds pressure amidst inflation and borrowing costs. According to RSM UK, this change could affect hiring and operational budgets across sectors, and for property firms, it may contribute to higher rental and property management costs, potentially affecting tenant rents.

Focus on Sustainability and Energy Efficiency

Sustainability featured prominently in the Budget, with new green home grants introduced for homeowners and landlords to improve energy efficiency. This aligns with the government’s goal of reducing carbon emissions while meeting demand for energy-efficient homes. Research by the Energy Saving Trust shows that energy-efficient properties can command up to 14% higher prices than less efficient homes, making sustainability an essential consideration for current and future homeowners.

Support for Renters

The Budget also recognised the challenges faced by renters. Approximately 60% of renters struggled with rent payments last year, according to the Office for National Statistics. In response, a fund was introduced to support rental assistance programs, aiming to create greater stability within the rental market. This support intends to help tenants facing financial hardships, reducing the risk of evictions and homelessness.

Future Outlook for the Property Sector

Measures in the 2024 Budget demonstrate a proactive approach to pressing issues in the property sector. Increasing affordable housing, supporting first-time buyers, addressing capital gains tax, and promoting sustainability are some of the meaningful steps being taken to create a robust and equitable property market. As new homes and financial assistance programs become available, there is hope for a more resilient property market. Property stakeholders must stay alert to these changes and adapt to new opportunities, proving that while challenges persist, there are paths toward improvement in the UK property sector.

Jonathan Steele, Finance Director at Helpthemove, said:

“This Budget introduces a mix of stability and opportunity for the UK property sector. This is complemented by the commitment to affordable housing and regional stamp duty relief – a focus on accessibility to buyers, particularly first-timers who have been priced out in recent years.

Perhaps most importantly, the freeze on the capital gains tax allowance was notable because it will help ensure confidence among property investors and landlords who are crucial to the rental market. Put together, these measures may strike a better balance and make the property landscape resilient.”

Sources

• National Housing Federation (2023). “The Housing Crisis: How Many Homes Are Needed?”
  • National Housing Federation
• Energy Saving Trust (2022). “The Value of Energy Efficiency.”
  • Energy Saving Trust
• Local Government Association (2023). “Housing Need in England.”
  • Local Government Association
• Office for National Statistics (2023). “Living Costs and Conditions: Rental Affordability.”
  • Office for National Statistics
• RSM UK (2024). “Autumn Budget 2024 Highlights.”
  • RSM UK
• The Standard (2024). “Budget 2024: All the Property Announcements from Chancellor Rachel Reeves.”
  • The Standard