What does the Autumn Budget mean for the housing market?

Chancellor Rachel Reeves has delivered her Autumn Budget: the first Labour Budget in 14 years.

Ongoing cost of living pressures are likely to have contributed to the large amount of coverage and speculation the Budget has received in recent weeks. Mortgage rates remain high, with our recent study showing that the average first-time buyer mortgage payment is £350 higher than five years ago. And household energy bills, while down from their 2022 peak, rose by 10% this month under the latest energy price cap.

Rightmove recently surveyed over 34,000 people to find out what they wanted to see from the new government. An overwhelming majority of renters (60%) said they wanted to see more support for first-time buyers, while simplifying the home-buying process was the most important thing for existing home-owners.

What changes were announced for housing in the Autumn Budget?

Housing announcements included £5 billion government investment to deliver Labour’s housing plan, with a £500 million boost to the Affordable Homes Programme. Investment is planned for sites across the country, such as Liverpool Central Docks, with 2,000 new homes and a transformation of the waterfront.

There will also be £25 million put towards the delivery of 3,000 energy-efficient new homes across the country, with a target of 100% of these being affordable.

Capital Gains Tax on residential property will remain unchanged.

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.

What’s happening with stamp duty?

There was no mention in today’s Budget of the extension to the current stamp duty relief for first-time buyers, which is due to end in March 2025.

Stamp duty is a form of tax paid to the government when buying property or land. And 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%.

Rightmove property expert, Tim Bannister, says: “Increasing stamp duty on additional home purchases means that, based on the average asking price for a home, a landlord could face an additional charge of more than £7,000 from tomorrow. In the short-term, some landlords may need to pause for thought, but in the longer-term we expect it becomes another charge that landlords become accustomed to considering.”

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. Tim says: “With the rate at which no stamp duty is charged for home-movers due to fall from £250,000 to £125,000, anyone purchasing a property over this amount could face paying up to £2,500 more in stamp duty land tax. Meanwhile, the threshold rate at which first-time buyers do not pay stamp duty is likely to fall from £425,000 to £300,000. If a first-time buyer buys a property at the average UK price of £370,759 they will pay £3,538 in stamp duty from March 2025, compared with nothing now.”

“We may now see a rush of buyers, particularly those purchasing for the first time, either bringing their plans forward or trying to get their deal done before charges go up. It currently takes a lengthy 152 days on average to complete a property transaction once a sale is agreed, which would mean agreeing a deal tomorrow to complete on time. While this is an average and many will be hoping to complete more quickly, it highlights that those who are hoping to avoid higher charges will need to act quickly”, Tim adds.

The number of properties affected by the change in stamp duty thresholds varies by region. You can take a look at the percentage of homes currently free from stamp duty for people buying their first home, and how that will change after March 2025.

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.

Earlier this year Rightmove 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.

What’s happening in the housing market right now?

We’ve seen strong levels of activity in the typically busy autumn season, and lots more people looking to get on with home moves than we saw in the more muted market of 2023. The number of sales agreed is up 29% compared to the same time last year, while the number of people sending enquiries to estate agents about homes for sale is up 17%. On top of that, buyers will also find more choice of homes, with the number of homes for sale up 12%.

While there’s lots of activity in the housing market, we did see lower-than-average growth in house prices this month (+0.3%), compared to the seasonal average of 1.3%. This shows that the market is still price sensitive, and sellers coming to market need to set a realistic asking price to find a buyer.

What areas do Carpenter Surveyors cover for surveys and valuations?

Areas we cover:

Warwickshire, Worcestershire, West Midlands, Staffordshire, Leicestershire, Rutland, Nottinghamshire, Derby, Gloucestershire, Herefordshire, Cotswolds and Northamptonshire.

Get a Quote from Carpenter Surveyors today.