Was The Budget Bad For The Property Market?

Mark ShiptonProperty market news

There was much negative speculation in the build-up to Labour’s first Budget in October. After all, people across the country were already under financial pressure, with high mortgage rates, high food prices and rising home energy prices due to the new energy cap. Many feared predictions that the Budget would only bring higher costs.

But was the Budget bad for the property market? Let’s take a look. 

Capital Gains Tax on residential properties

Before the Budget, the main worry we heard from our clients was that Capital Gains Tax on residential properties would increase. This led to some clients (and many landlords around the UK) putting their properties on the market. 

There was a big sigh of relief when it was confirmed that the rates of Capital Gains Tax on residential property would remain unchanged. 

Stamp Duty

The Budget included a rise in Stamp Duty—effective immediately—from 3% to 5% for people buying second homes, regardless of whether they were going to live in these second homes themselves or have them as a buy-to-let. This came as a shock. 

We had a buy-to-let purchase complete on the 1 November with no problems but can imagine numerous sales across the country have been and will be renegotiated slightly to deal with this impact. 

We also worry that this additional expense will deter buy-to-let investors from starting or adding to their portfolios. In turn, fewer properties may be in the rental market, keeping current record-high rents at their stratospheric level. 

Stamp Duty thresholds

The last government adjusted Stamp Duty thresholds to benefit homebuyers, particularly first-time buyers, by reducing or eliminating their Stamp Duty payments. However, Labour’s 2024 Budget didn’t include any extensions to these higher thresholds, which are now due to expire at the end of March 2025. 

This means that the £250,000 threshold for home movers will drop to £125,000 on 1 April 2025, meaning anyone buying a property above this value will face up to £2,500 or more in Stamp Duty costs. 

We suggest that all first-time buyers planning to buy soon try to speed up the process if they can so they can save thousands of pounds while that’s still possible. After March 2025, first-time buyers will also see their Stamp Duty exemption limit drop from £425,000 to £300,000. 

To give you an idea of what these additional costs might look like, currently, first-time buyers are not required to pay Stamp Duty on a property worth up to £425,000.  From 1 April 2025, the Stamp Duty payable on a property worth £350,000 will be £2,500 and for a property worth £400,000, it will be £5,000. First-time buyers buying a house worth £450,000 will see their Stamp Duty rise from £1,250 to £7,500. 

New housing 

Before the election, Labour made big promises about building more housing in the UK. This Budget set out funding to start this process. £5 billion was set aside for investment in Labour’s housing plan, as well as £500 million towards the Affordable Homes Programme. £25 million was also allocated to the building of 3,000 energy-efficient new homes, targeting 100% of these to be affordable. 

The lack of housing in the UK, especially affordable housing, has been a problem for years. We see this allocation of funds as a positive move from Labour and hope it is a sign that they are serious about addressing the massive shortage of housing. Time will tell how achievable their targets will be, given the expense of building energy-efficient homes and the current cost of material and labour.   

I would recommend, without hesitation, Chris Brewer and his team at Grace Miller to anyone thinking of selling their home who wants a reliable and responsive service. My sale had its ups and downs when the original buyer pulled out after everything was agreed and I am grateful for the professional support provided by Chris and his team at what was a very stressful time for me and the achieving of a successful sale that soon followed

H Jones.

If you’re concerned about the next steps to take with your property following the Budget, or if you’d like us to proactively approach our block management clients to enquire about their interest in selling before the higher threshold term ends, please get in touch. We’re here to help you.