Budget 2024: What Property Investors and Landlords need to know about the Autumn Budget

Budget 2024: What Property Investors and Landlords need to know about the Autumn Budget

Today’s budget statement from Chancellor Rachel Reeves brings a range of changes that could impact property investors, landlords, and homeowners. Here’s a summary of the main points you need to know:

1. Capital Gains Tax (CGT) on Property
   There’s relief for property investors as CGT on residential property remains unchanged for now. With earlier speculation of an increase, this is a positive outcome for landlords and second-home owners, allowing them to continue with liquidity plans without the need for rushed sales or extended holding periods. The government’s £5 billion commitment to stimulate housebuilding is another promising signal, aiming to encourage growth in the property market. It has increased from 10% and 20%, that apply to assets other than residential property and carried interest, to 18% and 24% respectively otherwise.
2. Stamp Duty Land Tax (SDLT)
   The Chancellor has raised the SDLT surcharge on second properties from 3% to 5%, which equates to approximately £25,000 on an ‘average’ property in Kensington and Chelsea. While this change raises entry costs for new investors, it is not at a level that is unpalatable for those looking at property as an asset in other parts of the globe and we expect to see yields generally improve over the coming years.
3. Introduction of the New Resident Base Scheme
   The Non-Domicile System will soon be replaced by a New Resident Base Scheme. Although details are still pending, we expect this new system to bring complex changes that will affect non-domiciled landlords. TLC Estate Agents will be closely monitoring this development with our tax partners and will keep our clients informed as more details emerge.

Beyond these three main areas, the budget also touched the below areas to name a few:

• Inheritance tax – has been frozen until 2030 with a personal allowance of £325,000 and an additional allowance of £175,000 should you be passing on a residential property to a direct descendent. Pensions will also be subject to inheritance tax too.
• National Insurance for employers - This has increased from 13.8% to 15% from April 2025 with the threshold reducing from £9,100 to £5,000.
• Entrepreneurs’ relief – Business Asset Disposal Relief (BADR) will remain at 10% this year, before rising to 14% on 6 April 2025 and 18% from 6 April 2026-27
• VAT on private school fees in confirmed from January 2025.
• Fuel Duty is frozen for another year
• Alcohol Duty rates on draught products are cut by 1.7% saving a crucial penny on the Pint!

For our clients with a long-term view, especially in Kensington and Chelsea, this budget reinforces property as a reliable investment that can continue delivering both income and long-term value.

Why Property Remains a Strong Long-Term Investment

Overall, this budget may not be as severe as initially portrayed in the media. For those who understand property as a long-term asset, it continues to offer strong fundamentals, providing both steady income and capital growth over time.

With the mortgage market stabilizing at realistic long-term rates and increased economic spending, asset values are likely to appreciate. While we may see fewer new landlords entering the market due to higher entry costs, this also means rental stock could tighten. As demand for rentals remains stable and strong, rental values are likely to rise over time, enhancing yields and providing added security for property investors.

The Renters Reform, though well-intentioned, could also inadvertently drive up rents in the short term due to reduced flexibility for Landlords and increased compliance costs, further strengthening property’s appeal as a secure income stream and appreciating asset for committed long-term investors.

In summary, for our professional landlords and investors, the property market remains a resilient asset class. Despite modestly higher barriers to entry, it has weathered this budget with enduring strength, and we expect attractive returns to follow for those with a long-term perspective.

If you’d like to discuss how these changes could impact your investment strategy, or if you have any questions about your portfolio, please don’t hesitate to get in touch. Reach out to Toby@tlclondon.com , and our team will make sure you’re well-prepared for what lies ahead. At TLC Estate Agents, we’re here to guide you through every change in the market, helping your investments thrive over the long term.