Budget Report

The Chancellor's autumn budget has set the stage for a number of changes in the property market, with many buyers and sellers already adjusting their plans for the year ahead.

The increase in stamp duty for landlords and second home buyers from 3% to 5% is already in effect, but there was some more positive news too. Capital gains tax on residential property will remain at its current levels, and there will be a £5 billion investment package to boost housing supply and the 95% mortgage guarantee scheme will become permanent, offering ongoing support for first-time buyers.

Next March, however, will see the end of the current stamp duty holiday, with first-time buyers' tax-free threshold dropping from £425,000 to £300,000, and other buyers' threshold falling from £250,000 to £125,000. This gives buyers just a few months to take advantage of current rates, and early signs suggest many are planning to do just that.

The impact of the stamp duty changes will vary significantly by region. While buyers in more expensive areas such as London and the Southeast will face higher purchase costs post-March, those in lower-priced parts of the country will see little change.

The new 5% stamp duty premium for buy-to-let and second homes though may deter landlords from further investments, but those staying in the market could benefit from robust rental demand and yields as supply levels are reduced.

In the short-term, the impact might be greater on second-home owners as they were already nervous about being targeted for substantial rises in council tax, especially in tourist areas.

Reeve’s plans in her budget for the housing market weren’t all about raising taxes, though, she also announced a £5 billion house-building package, including £500 million for affordable homes and £3 billion to support smaller builders and the Build to Rent sector. Another £1 billion has been allocated to the removal of dangerous cladding.

It’s the kind of ambitious investment programme that many from inside and outside the property world have been demanding for some time.

Overall, however, it was a fairly mixed budget for the sector but not as bad as many feared. The majority are still digesting its implications and so it will be a while before we see its true impact on the market. For first-time buyers, however, there is no time to wait. The combination of the stamp duty deadline and the predicted mortgage rate cuts means they are likely to be very active over the next few months. And, although they will lose their stamp duty discount in March, the prospect of Rachel Reeves’ 1.5 million new homes should offer hope of a brighter future to all aspiring young homeowners.

If you are considering investing in the property market, why not take a look at some of the fabulous properties we have coming up in our next auction at Phillip Arnold Auctions?

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