The first Labour Budget for 14 years was a hotly anticipated political event, with rumours swirling in the build-up. Now, with Rachel Reeves safely back in No. 11, we can start digesting the contents. Here is what’s relevant to home movers.
The Chancellor tried to curry favour by freezing two thresholds that, despite devolution, apply in Scotland and Wales, as well as England. While there was an increase to capital gains tax applied to non-property assets, the rate applied when selling an additional property was frozen. This remains 18% for basic rate tax payers, and 24% for higher and additional rate tax payers.
Inheritance tax thresholds unchanged
Inheritance tax thresholds were also frozen. This tax applies when a deceased’s assets are worth more than £325,000. The £500,000 remains when a residence is passed to direct descendants, and the threshold will remain at £1 million when a tax free allowance is passed to a surviving spouse or civil partner.
Unexpected rise to additional property stamp duty
Those hoping to purchase an additional property – perhaps to rent out or use as a holiday home – were almost instantly hit with a higher tax bill. In England, the stamp duty surcharge on additional homes increased from 3% to 5%. The change took effect from 31st October 2024.
The Budget’s second home stamp duty news was in addition to a previously-announced change for first-time buyers. Currently, first-time buyers pay no stamp duty on the first £425,000 of a purchase. This is changing on 1st April 2025, when stamp duty will apply to the portion of a purchase over £300,000.
The Budget was, however, delivered against a positive backdrop. Zoopla’s October House Price Index revealed just how upbeat home movers were feeling. Thanks to optimism, there are 26% more homes with ‘sale agreed’ status now, when compared to a year ago.
The most active group are first-timer buyers. The portal found 36% of all sales are made by property novices, with existing homeowners buying with a mortgage accounting for 31% of purchases. Cash buyers represented 27% of buying activity.
So what are buyers paying? The UK’s average house price is £267,500 – up £100 on the last set of figures. As a result, Zoopla says house prices have risen 1% in the last year.
Rent controls in the news
Back to Wales and the publication of a new white paper designed to reform the country’s housing sector. The document, released in October, concluded that rent controls in Wales were not appropriate. Instead, the Government wants to gather better, more localised rental data before developing ideas.
Justifying their decision, ministers cited ‘emerging evidence from Scotland’ - where temporary rent controls are in force - as one of the reasons for scrapping the idea. It also felt rent controls could have a negative effect on private tenants, reduce the number of rentals available, lead to higher rental costs and increase the risk of homelessness.
Worries about rental inflation and supply
In Scotland, the SNP want to make the country’s temporary rent controls permanent by way of control zones with individual price caps. Its New Deal for Tenants Bill also proposes to make it easier for private renters to decorate and keep pets, as well as give tenants greater protection from eviction.
The news coming out of Scotland and Wales is being followed by those in England, as rent controls have been mentioned by Labour in the past. Of concern is the impact similar measures have had in Scotland. It has experienced the UK’s highest rental inflation, according to The Negotiator, with landlords exiting the Scottish market and housing emergencies being declared in three regions.
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