What does the Autumn Budget mean for the housing market?

On October 31, 2024By Karl

Chancellor Rachel Reeves announces her Autumn Budget: the first Labor 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 Our latest study shows that the average is high First-time buyer mortgage payment £350 higher than five years ago. and home energy billsWhile it is down from its 2022 peak, it is up 10% this month according to the latest data energy price ceiling.

We recently surveyed more than 34,000 people to find out what they want to see from the new government. An overwhelming majority (60%) of renters said they would like to see more support for first-time homebuyers, while the most important thing for existing homeowners is to simplify the homebuying process.

What changes to housing were announced in the Autumn Budget?

Housing announcements included £5bn of government investment to deliver Labour’s housing plan and a £500m boost to the Affordable Homes Programme. It is planned to invest in areas across the country, such as Liverpool Central Docks, where 2,000 new homes and waterfronts will be transformed.

£25 million will also be spent delivering 3,000 new energy-efficient homes across the country, with the aim being that 100% of them will be affordable.

Capital Gains Tax on residential properties will remain unchanged.

The government has also pledged to collaborate with the industry on plans to make the Mortgage Guarantee Scheme permanently available to support loan value by 95%.

What’s going on with stamp duty?

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

Stamp duty is a type of tax paid to the government when purchasing property or land. And what buyers pay varies depending on the cost of the property and whether you’re buying a home to live in or an addition.

The stamp duty surcharge for second home buyers, such as homeowners buying property to rent out, is scheduled to increase by 2% from 31 October 2024, from 3% to 5%.

Our property expert Tim Bannister says: “Increasing stamp duty on additional home purchases means a homeowner could face additional charges of more than £7,000 from tomorrow, based on the average asking price for a home. “In the short term, some homeowners may need to pause for thought , but in the long run we expect this to become just another expense that homeowners have become accustomed to considering.”

The previous Conservative government set stamp duty thresholds until March 2025; This meant house movers would pay lower stamp duty charges and in many cases (mostly for first-time buyers) no stamp duty would be payable. There has been no announcement regarding an extension of the current raised thresholds, meaning they will be withdrawn at the end of March 2025. Tim says: “At the rate where no stamp duty is charged to house movers due to deduction from £. Anyone buying a property worth between £250,000 and £125,000 above this amount could face paying up to £2,500 more in stamp duty land tax. Meanwhile, the threshold at which first-time buyers pay no stamp duty is likely to drop from £425,000 to £300,000. If a first-time buyer buys a property with an average UK price of £370,759, they will pay £3,538 in stamp duty from March 2025; “This figure does not currently correspond to any fee.”

“We can now see buyers, especially first-time buyers, either bringing their plans forward or trying to complete their deals before fees increase. It currently takes an average of 152 days to complete a property transaction once a sale has been agreed; This means completing a deal on time tomorrow. This is an average and highlights the need to act quickly if you want to avoid higher charges, although most people hope to complete it faster,” adds Tim.

The number of properties affected by the change in stamp duty thresholds varies by region. You can take a look at this Percentage of homes currently exempt from stamp duty People buying their first home and how this will change after March 2025.

Capital Gains Tax remains unchanged

As we approach the budget, we have seen some trends emerge in the housing market after a few expected changes. One of these changes mentioned was an increase in Capital Gains Tax, which could see landlords pay increased tax on any income from rental properties.

We saw one earlier this year A record number of former rental homes for sale Some homeowners have decided to sell their properties as a result of rumors of tax changes and other additional costs for homeowners that have increased over the years. However, today’s budget confirmed that current Capital Gains Tax rates on residential properties will remain unchanged.

What’s happening in the housing market right now?

We saw strong activity levels during the typically busy fall season, with many more people looking to move out than we saw in the quieter market of 2023. The number of sales agreed increased by 29% compared to the same period. Last year, the number of people sending questions to real estate agents about houses for sale increased by 17%. Moreover, with a 12% increase in the number of homes for sale, buyers will find more home options.

While there is a lot of activity in the housing market, we saw below-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 the market need to set a realistic price to find buyers.

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