Autumn Budget 2024 – What You Need to Know

A couple of weeks ago, Rachel Reeves delivered Labour’s first budget in 14 years, and it wasn’t quite what people expected — including us. In this breakdown, we’ll walk you through the autumn budget affects property investors, including capital gains tax, stamp duty, and other changes that could impact property investors. Let’s get into it.

Capital Gains Tax

Many of us expected Labour to increase capital gains tax (CGT) rates for those selling properties. Currently, CGT stands at 18% for lower-rate taxpayers and 24% for higher-rate taxpayers.

Labour has been vocal about placing the tax burden on “those with broad shoulders” and focusing on the wealthy, so it seemed likely they would raise this tax. However, they left it unchanged for now, a relief for property investors.

However, they did make a change in non-residential capital gains, raising the tax to match residential rates. Lower-rate taxpayers now pay 18%, and higher-rate taxpayers pay 24%, whether the gain is residential or non-residential.

This move still leaves many investors breathing a sigh of relief — but remember, this is Labour’s first budget, and they may well revisit capital gains tax in future budgets.

For sellers, some of them are thinking they should cash in, which only strengthens this buyer’s market.

Stamp Duty Hike and Its Effect on the Market

This was one of the biggest surprises. Until now, investors paid an extra 3% stamp duty on property purchases. Effective immediately, this has increased to 5%.

When this surcharge first came in back in 2016, many investors thought it would kill deals, but we adjusted by factoring it into prices.

The same will likely happen with this new rate, but it may dissuade some amateur investors.

Different regions have different stamp duty equivalents: Wales has a 4% land transaction duty, and Scotland has a 6% land and building transaction tax. This increase will impact England alone, potentially cooling the market slightly as fewer people may be willing to buy additional properties.

Many are sitting back, unsure about the market thinking “Do deals really stack up anymore”. But, fewer buyers mean less competition—a prime reason to get out there and find deals while others hesitate.

Interest Rate Cuts: Should You Hold Out?

Last week, the Bank of England reduced the base rate from 5% to 4.75%, which is encouraging. Although many mortgage companies anticipated this cut and already factored it into their pricing, we might see another rate drop in December if inflation stays low.

But here’s the thing: if you find a property you want to buy, it could take three or four months to complete the transaction.

By the time your mortgage finalises, rates might have come down again, meaning you could get an even better rate. Waiting until rates are lower might seem smart, but by then, everyone will know about the rate cuts, and competition will likely surge in spring.

Why compete when you can get ahead now?

Pensions: Partial Tax on Withdrawals

Previously, pension withdrawals could be tax-free under certain conditions. Now, only the first 50% of a pension withdrawal will be tax-free; the remaining portion will incur a 20% tax. This is another revenue measure that targets wealth accumulated in pensions. If you have a pension, you’ll want to understand these changes and how they affect your retirement planning.

A Buyer’s Market: Time to Take Advantage

Right now, it’s a buyer’s market, which means more sellers than buyers—an ideal scenario for investors. Many sellers don’t want to carry properties into 2025; they’d rather sell now and enjoy the festive season with peace of mind. So, not only is there less competition, but sellers are also motivated. They’re likely to be more flexible on price or terms, giving you the upper hand in negotiations.

Getting Ready for 2025: Set Yourself Up Now

Waiting until spring may seem like a safer option, but by then, you’ll face more competition.

Entering 2025 with deals secured gives you a head start and better positioning for any upcoming market changes. This season is a great time to negotiate deals while others hesitate. Sellers want closure before the New Year, and with fewer buyers around, it’s an ideal moment to take action.

Download our prospectus here to find out how you can take advantage.