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Budget 2024: Key points related to property, plus industry reaction

Stamp duty on homes to rent increased from 3% to 5%
Landlords will need to pay stamp duty of 5% when purchasing additional properties, a move the NRLA believes will only exacerbate the housing supply crisis. Rachael Reeves announced the move in the Budget on 30 October, with immediate effect. 

The NRLA has hit out at the plans – which it says could see a loss of half a million homes from the rental market over the next 10 years. NRLA chief executive Ben Beadle says: “Hiking stamp duty on homes to rent when 21 people are chasing every rental property makes no sense. Analysis by Capital Economics has found that increasing Stamp Duty on rental properties from 3% to 5% will see a net loss of half a million homes to rent over 10 years.  

“This will not help the huge number of tenants for whom homeownership is still a distant dream. The Chancellor has failed to heed the warnings of the Institute for Fiscal Studies that higher taxes on the rental market lead only to rents going up. What tenants needed was a Budget to boost the supply of new, high-quality rental housing. What we got is a recipe for less choice and higher rents.”   

 

Capital Gains Tax on residential property unchanged
Elsewhere in the Budget, increases to Capital Gains Tax were announced, however rates on residential property have been frozen at current levels. 

Simon Chadowitz, a partner at Fladgate, comments: “The Chancellor’s changes to the Capital Gains Tax regime were less far-reaching than expected. There will be significant relief among investors and property vendors who could not complete live deals before (the Budget).

“More notable is the abolition of non-dom status, one of several measures in the Budget that risks disincentivising international high-net-worth individuals from residing and investing in the UK. Given their reliance on discretionary spending from wealthy global customers, the hospitality and luxury retail industries may be at the sharp end of these changes. Combined with SDLT changes for second home purchases, the residential sector is also likely to feel the effects at the luxury end of the market.”

 

Right to Buy Reform
The chancellor also confirmed plans that will allow local authorities to retain the full receipts of right to buy schemes to reinvest in new housing.  

Paula Higgins, chief executive at the HomeOwners Alliance, says: “The Chancellor hasn’t gone as far as to abolish the Right to Buy Scheme but has changed the rules so that local authorities can plough 100% of the receipts from sales into new housing. Currently councils only have access to 50% of the money raised from sales, with the rest going to the Treasury.   

“They are also looking to reduce the level of discounts, increasing the length of time you need to have lived in the home in order to qualify and for the scheme to not apply to newly built council homes. 

“The Right to Buy scheme has been a particularly good economic leveller for working-class people, giving them security for life with a roof over their head they otherwise wouldn’t have been able to afford. But it has also been abused when you hear that an estimated 41% of Right to Buy homes are now owned by private landlords, who rent them out at much higher rates and ironically back to the councils.”  

 

Hundreds of new planning officers
Reeves also revealed proposals to hire ‘hundreds’ of new planning officers ‘to get Britain building again’ and plans to invest £1bn in removing dangerous cladding next year.  

Paresh Raja, CEO of Market Financial Solutions, comments: “The government’s commitment to house building should stimulate activity across all segments of the housing market, creating a wide range of opportunities for buyers and investors. But people can be forgiven for listening to the Budget pledges with a degree of scepticism – almost every Budget includes promises to build more homes, but the devil is always in the detail. 

“Reforming the planning system is clearly key, so the government’s focus on this area is welcome, with the rumoured additional planning officers being confirmed by the Chancellor. It not only needs to be easier for new developments to get the green light, but also for investors and property owners to do more with existing real estate – conversions, renovations and extensions can do a lot to boost the national housing stock.” 

 

5000 new affordable homes
Lastly, the Chancellor announced an extra £500m to pay for 5,000 new affordable social homes. This will increase the affordable housing bill to £3.1bn a year.

Paula Higgins, at the HomeOwners Alliance, concludes: “The cash injection is desperately needed for housing associations to deliver their contribution to the government’s ambitious target of 1.5m new homes over the next four years. The new long term housing strategy for affordable housing due out in 2025 should give more clarity over how government intends to meet its longer term target. 

“The government has also made it crystal clear that they want to see a substantial increase in the number of social rent homes delivered. This is likely to be at the detriment of the other types of affordable housing and in particular shared ownership and First Homes, unless more money is made available.”

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