Discover how the 2024 Autumn Budget affects UK property investors with insights on Stamp Duty changes, interest rate cuts, and regional trends.
The UK government’s Autumn Budget for 2024, announced by Chancellor of the Exchequer, Rachel Reeves, on 30th October, brought with it a number of changes that will have implications for residential property investors.
Fortunately, the outlook for buyers and landlords remains decidedly positive, with less substantial tax hikes than anticipated. While Stamp Duty is set to rise, there will be no increase to Capital Gains Tax for the sale of second properties. In addition, the Bank of England’s decision to cut interest rates will likely make borrowing cheaper for those looking to invest, and should lead to substantial growth in the housing market.
Read on to explore how the 2024 Budget could impact UK property investment trends and why now is a good time to take advantage of property investment opportunities in the North.
Capital Gains Tax unchanged for property
As expected, the 2024 Budget included some adjustments to Capital Gains Tax (CGT). The good news for buyers, landlords and investors, however, is that CGT charged on the sale of residential properties has not increased. The current residential property CGT rates (18% for lower rate taxpayers, and 24% for those who pay the higher rate) remain unchanged.
This maintains the relatively favourable tax treatment of residential property investments compared to other assets. With no rise in CGT, property remains a stable and attractive investment option compared to the volatility seen in other sectors.
By contrast, CGT on most other chargeable assets has seen an increase. On 30 October 2024, the rate for lower rate taxpayers was raised from 10% to 18%, while the higher rate was increased from 20% to 24%. These charges apply to the sale of most non-property assets, such as shares, business assets and personal possessions worth £6,000 or more.
Small stamp duty increase on additional residential properties
The news is not entirely positive for property investors, as the chancellor has announced an increase in Stamp Duty Land Tax (SDLT) for the purchase of additional residential properties. This includes second homes and buy-to-let (BTL) investments.
Fortunately, however, the increase is minimal. As of 31 October 2024, the extra SDLT surcharge has been raised from 3% to 5% – a rise of only 2%. First-time buyers will also be affected, with the stamp duty threshold for first home purchases reducing from £425,000 to £300,000.
While this announcement will spell a slight increase in upfront costs for potential investors, it’s important to consider the bigger picture. The property market remains overarchingly positive: thanks to a continued undersupply of homes, house and apartment prices in the UK are forecast to continue rising into the foreseeable future, especially in key regional cities such as Birmingham, Manchester and Sheffield. With the right property investment and rental strategies, the recent rise in stamp duty should be more than offset by the potential for significant returns.
In particular, buyers who take a long-term approach to property investment stand to benefit the most. The stamp duty increase may act as a disincentive to short-term-focused investors, leading to fewer BTL properties being purchased. This would exacerbate the existing shortage of rental accommodation, driving rents higher and increasing ROI over the longer term.
Stable inflation and interest rate cuts
Another key factor impacting UK property investment trends is the outlook for interest rates and inflation. Rising inflation often leads to increased mortgage rates and less demand for housing, which in turn can cause property prices to decrease.
Thankfully, the chancellor has reaffirmed plans to maintain the Bank of England’s 2% inflation target. Inflation is predicted to rise slightly to 2.6% in 2025, but drop back down to 2% by 2029, creating a relatively stable environment for property investors.
Furthermore, following the 2024 Budget, the Bank of England has cut interest rates from 5% to 4.75% – a move that will no doubt be welcomed by both new buyers and landlords with existing tracker and variable-rate mortgages.
According to Rightmove, this decision “will probably help relieve pressure on lenders to increase rates”. Mortgage rates should eventually start to fall as a result, making property investment even more appealing and accessible to those looking to finance their purchase.
The Bank of England interest rate has already been cut once in 2024, when it was reduced from 5.25% to 5% in August. The property market experienced notable house price growth as a result; therefore, it is likely that we will see a similar trend in the near future.
North vs. South property price growth
Overall, the outlook remains positive for UK property investors following the Autumn 2024 Budget. Stable inflation and lower interest rates, combined with a lack of increase to Capital Gains Tax on property, can only mean good things for the housing market.
The latest Savills UK house price predictions certainly reflect this: average house prices are set to increase by £84,000 from 2024-2029, according to the property adviser’s latest 5-year forecast. This means that now could be a particularly good time for UK buyers to look out for investment opportunities and potentially benefit from strong returns.
Crucially, the latest Savills data also predicts significant regional variation across the UK property market in the next five years. The areas forecast to see the strongest acceleration in house prices include:
- North West: 29.4%
- North East: 28.2%
- Yorkshire and the Humber: 28.2%
- West Midlands: 26.4%
By contrast, London will see growth of only 17.1% over the same timeframe. Property investment rates in London, in terms of rental yields and ROI, are therefore likely to be less lucrative than in fast-growing regional cities.
Manchester and Birmingham stand out as two key areas for UK property investment, with both benefiting from growing renter populations, booming job markets and ongoing regeneration projects. Both cities will also see improvements to transport infrastructure following the autumn Budget: the Chancellor has approved funding to increase capacity at Manchester Victoria station, and has also confirmed the extension of HS2 from Birmingham to London Euston.
Property investment opportunities in the North and the Midlands
If you’re interested in capitalising on the positive investment climate following the 2024 Autumn Budget, Select Property is here to help. We specialise in matching buyers with prime investment opportunities across the UK’s key cities, including Birmingham and Manchester, and have been delivering high-yielding projects since 2004.
With our extensive market knowledge and experience, we can help you build a property portfolio tailored to your individual goals and primed for long-term growth. Contact us for exclusive insights into high-growth markets like Birmingham and Manchester.