This afternoon, Chancellor Rachel Reeves delivered the first Labour budget in fourteen years. The autumn budget had been highly anticipated, especially considering Reeves’ announcement earlier in the year that her party had inherited a £22 billion ‘black hole in the public finances’. However, despite having to navigate this large and contested national debt, this afternoon Reeves presented a budget largely focused on recovery and investment. But how will the autumn budget impact the property sector?
The Budget in a Nutshell:
- Capital Gains Tax on non residential assets will see an increase from 10% to 18% for the lower band, and from 20% to 24% for the higher band – in line with current property CGT.
- Stamp Duty on second homes and investments has risen by 2% to reach 5%.
- A £1 billion fund has been allocated for the removal of hazardous cladding in response to the Grenfell Inquiry.
- There is a commitment to construct 1.5 million new homes across the UK and a renewed pledge to the Affordable Homes Scheme.
- £13 billion set aside for departmental capital spending with a focus on transport, R&D and green energy.
House Building
Earlier this year, the Labour Party pledged to address the housing shortage by committing to build 1.5 million homes across the UK under their “Get Britain Building” initiative. Today, Reeves announced £5 billion in new funding for housing development nationwide, with a substantial £3.1 billion directed to the Affordable Homes Programme – good news for first-time buyers and a potential relief for house builders as additional resources reach the planning system. Reeves also committed £3 billion to guarantee support that will directly aid local house builders. Regarding the Right to Buy scheme, she outlined plans to reduce Right to Buy discounts, allowing local authorities to retain sale receipts for reinvestment in housing.
The Chancellor also committed to funding the Warm Homes Programme that will impact 350,000 UK homes, making properties greener and cheaper to run. The government has allocated an initial £3.4 billion over the next three years to advance heat decarbonisation and household energy efficiency, which includes £1.8 billion aimed at fuel poverty programs, assisting over 225,000 households in cutting their energy bills by more than £200. In response to strong demand, funding for the Boiler Upgrade Scheme in England and Wales will be increased this year and next. Additionally, the government is investing in expanding the UK’s heat pump manufacturing supply chains to support this initiative.
Fire Safety and Cladding Remediation
In her budget, Reeves explained that she was dedicated to enhancing building safety and accelerating the remediation of unsafe housing in response to the Grenfell Tower fire. By 2025-26, investment in remediation efforts will exceed £1 billion, including new funding specifically aimed at expediting repairs within social housing. This is good news for those in residential properties and will surely be welcomed following the release of the Grenfell Inquiry in September.
Capital Gains Tax Update
Capital Gains Tax (CGT) is a tax on the profit made when selling, gifting, swapping, or receiving compensation for an asset, such as a second home or investment property. Today, the Chancellor announced an increase in CGT, raising the lower band from 10% to 18% and the higher band from 20% to 24% for profits from sales of second homes or investment properties. However, this change will not affect home-movers, as primary residential property sales remain exempt from these increases.
Stamp Duty Land Tax (SDLT) Update
Stamp Duty, or SDLT, is a tax applied to property purchases above a certain value. Currently, no stamp duty applies to properties priced under £250,000, but for those above, a 5% rate applies up to £925,000, with additional rates for higher values. Today, Chancellor Reeves announced that from the 31st October, SDLT will rise by 2% to 5% for second homes and investment properties. This surcharge does not impact first-time buyers or home-movers; it applies solely to those purchasing additional homes or investment properties.
Infrastructure Developments: Connectivity and Public Investment
The budget’s emphasis on infrastructure aims to modernise the UK’s transport systems and improve connectivity. A boost in capital investment has been designated to enhance public transport and roads, with the Chancellor setting aside £13 billion in 2025 for departmental capital spending, signalling robust support for infrastructure.
Transportation Projects
Increased funding for regional transport is expected to address congestion and improve accessibility across the UK. The government’s commitment to expanding infrastructure, according to the OBR, is likely to generate crowd-in effects, where private sector investments follow public spending. The Guardian highlights that effective and timely implementation will be crucial for maximising economic output and maintaining investor confidence. For developers in all property sectors this emphasis on transport, connectivity and digital infrastructure will be a crucial indicator of both resident trends and key investment locations.
Digital Infrastructure and R&D
A portion of the budget is earmarked for digital infrastructure and research and development (R&D) initiatives, aiming to secure the UK’s competitive position globally. By investing in new technologies, the government seeks to diversify its growth strategies beyond traditional sectors, with the OBR forecasting a potential 1.4% increase in GDP in the long run if these investments yield the expected productivity gains
Questions About the Autumn Budget?
The autumn budget has certainly delivered some significant changes directly impacting new homes, investment, and fire safety, to name but a few sectors. Should you have any questions regarding the budget and how it may impact you on your property journey, please don’t hesitate to get in touch with the Centrick team via the form below.
