The Autumn Budget 2024 introduces several measures impacting the residential property sector, notably adjustments to Stamp Duty Land Tax (SDLT) and modest funding increases for affordable housing. However, these changes appear more fiscally driven, aimed at addressing the "£22 billion black hole" in public finances, rather than tackling the underlying, longstanding challenges of the housing market.
A prominent measure is the increase in the SDLT surcharge on additional properties from 3% to 5%. Intended to reduce investor competition and aid first-time buyers, this adjustment primarily functions as a revenue-raising strategy. While it may offer short-term relief to homebuyers, it risks reducing rental supply by discouraging buy-to-let investors, potentially driving rent prices higher in high-demand areas. This unintended outcome could impact affordability for renters, particularly those already facing housing challenges.
Additionally, the budget maintains plans to roll back SDLT relief thresholds in April 2025. When exemptions reduce from £250,000 to £125,000 for general buyers and from £425,000 to £300,000 for first-time buyers, transaction costs will rise. This could accelerate market activity ahead of the deadline, followed by a likely slowdown, adding new obstacles for prospective homeowners amid affordability pressures.
The recent reduction in the Bank of England base rate brings some relief to mortgage holders and prospective buyers facing high borrowing costs. However, this alone may not offset the budget’s fiscal measures, which could continue to weigh on affordability. Furthermore, recent Bank of England commentary suggests the Autumn Budget’s measures may slow any further rate reductions.
The government’s target to build 1.5 million homes over the next five years is ambitious, but familiar obstacles persist. Past targets have fallen short due to planning delays and local resistance, and the budget’s additional £500 million for affordable housing, though a positive step, is unlikely to resolve the considerable backlog. With over a million people on social housing waiting lists, more substantial investment would be required to have widespread impact.
Addressing these targets demands planning reform to overcome persistent barriers such as delays, regulatory complexities, and local opposition. While the budget pledges more resources for planning authorities, faster progress would require streamlining approvals and easing regulatory burdens. Transparent, national guidelines balancing local and national housing needs could support this, but without meaningful planning reforms, achieving new housing targets will remain difficult.
In summary, the Autumn Budget 2024 appears focused more on addressing fiscal pressures than implementing essential housing reforms. While adjustments to SDLT and increased funding for affordable housing may provide limited short-term benefits, they fall short of addressing the core issues of affordability and supply. At Nuven Surveyors, we’ll continue to monitor these developments closely, advising clients on navigating the challenges ahead.
