2024 Budget aims to unlock housing with investment in affordable homes

The Autumn Budget 2024 will shape the property landscape in significant ways. Here’s a look at the top housing updates, and what they mean for property owners, landlords, and buyers across the UK.

The Government is pushing forward with a £5 billion initiative for housing development, with £500 million allocated to the Affordable Homes Programme. Part of this includes £25 million dedicated to building 3,000 energy-efficient homes—100% of which are intended to be affordable. This reinforces the Government’s commitment to tackling the affordability crisis while promoting sustainable housing, a crucial step toward addressing the cost of living and energy efficiency in housing.

In support of first-time buyers, the Mortgage Guarantee Scheme has been made permanent. However, while intended to facilitate 95% loan-to-value mortgages, this scheme has historically struggled to significantly impact the broader availability of high-LTV products. The Budget leaves out more direct assistance for first-time buyers, which could mean limited new entry to the housing market, especially given persistent high property prices.

While the Capital Gains Tax (CGT) on residential property remains unchanged, one major announcement was an unexpected 2% increase in the Stamp Duty Land Tax (SDLT) surcharge on second homes, now at 5% from 31st October 2024. This brings the surcharge closer in line with rates in Scotland and will tighten budgets for prospective second-home buyers, particularly in the buy-to-let and holiday home markets.

Savills have done some research on what the increased surcharge will mean in pounds and pence:

Meanwhile, SDLT rates for primary residences remain unchanged, and, contrary to many expectations, first-time buyers did not receive an extension on the current higher-rate thresholds. This means that the price at which stamp duty starts to be charged will revert back to £300,000 (from its current level of £425,000) in April 2025.

There will be no immediate changes to inheritance tax relief for main residences. Couples can still shield up to £1 million in their primary home from inheritance tax. However, inheritance tax will now include UK-based assets held by individuals who have been UK residents for 10 of the past 20 years.

For non-domiciled residents (‘non-doms’), taxation has shifted to a residence basis, meaning they will now be subject to UK income and capital gains tax on worldwide assets. Gains on foreign assets will be taxed if acquired since April 2017, and worldwide assets will face UK inheritance tax exposure for those meeting the residency requirement. These changes could impact the high-end property market, potentially dampening some demand from foreign buyers.

The 2024 Autumn Budget’s housing initiatives, particularly the permanent Mortgage Guarantee Scheme and funding for affordable homes, signal a continuing commitment to affordability. However, the unanticipated hike in the SDLT surcharge and the impact on non-doms mean landlords and high-end property investors may reconsider their strategies in light of shifting tax liabilities and market demand. For renters, these changes could mean further pressure on rental costs due to limited new supply in the private rental sector, underscoring the evolving dynamics of the UK property market in 2024 and beyond.

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