Effects of the Autumn Budget on the Property Market

A £40 billion plan to raise taxes certainly sounded daunting when Chancellor Rachel Reeves unveiled her first budget at the end of October. The housing market had waited anxiously for news of her plans. The sector was well aware that the confidence seen in early autumn could quickly be destroyed by over-zealous actions of the new government.

Stamp duty rises will hit all

One of the big surprises of the budget was the raising of stamp duty for those buying second homes and buy-to-let properties. The rate rose with immediate effect the day after the budget announcement, up from its existing 3% rate to 5%, and will be particularly felt by landlords wanting to expand their portfolios and those buying second homes.

Other buyers may have thought they’d escaped higher stamp duty charges but the omission of announcements wasn’t enough to get away without a rise. In the mini-budget of Autumn 2022 stamp duty thresholds were frozen. They will expire at the end of March and Reeves’ lack of further announcements means that stamp duty will now become due from £125,000 from the beginning of April rather than the £250,000 threshold of before, while the threshold for first-time buyers will reduce from its current £425,000 to £300,000. This will add affordability strains to already stretched buyers.

Improvements in affordability should ease cost of living pressures

The chancellor also announced several changes intended to increase affordability for UK workers, particularly at the lower end of the scale. These included an increase in the National Living Wage, which will rise by 6.7% for over 21-year-olds and by 16.3% for 18- to 20-year-olds.

With no increases in personal tax and National Insurance contributions, the government also revealed that personal tax thresholds, which had previously been frozen, will rise in line with inflation from April 2028.

More homes available through Labour’s housing plan

The government has made much of its housing plans since its manifesto days, expanding on its ambitions after it took power with investment planned across the country. As well as a £5 billion plan to deliver its housing ambitions, the Government announced a further £500 million boost to its Affordable Homes Programme in the budget to fund additional affordable homes.

An extension of the mortgage guarantee scheme to make it easier to buy

The mortgage guarantee scheme helps to make it easier for first-time buyers to get on the property ladder by supporting lending at a 95% loan-to-value. The government has confirmed it plans to make this a permanent feature, though it is consulting with industry on how to do that and will announce further details in the second phase of its spending review.

For more information on how we can assist you on your sales journey, please contact one of our branches in Seaford, Peacehaven, and Newhaven areas. If you would like further guidance on any part of the sales process, get in touch with us today.