The Autumn Statement had more leaks than the average toilet, leaving no real big surprises for the cash strapped public, just the lingering smell of resignation.
What the Autumn statement means for UK property is for those invested in it there could be both significant movement or lack of it at certain times over the next few years.
Capital gains cuts for landlords
For many over-leveraged landlords due to re-mortgage in the next few months, the increase in interest rates alongside energy efficiency improvements required by 2025-28 had meant many were already considering abandoning ship. With the new capital gains cuts, from £12,000 to £6,000, due to be implemented from April 2023 and then reduced further to £3,000 from April 2024, any “consideration” to sell up could be expedited over the next five months, generating more stock to flood the market, which first time buyers can’t afford at the same price as they once could before the mini budget, reducing prices.
Many landlords will then be faced with the dilemma of either bearing the loss for a few years until rates reduce down, making their investment once again profitable to rent or sale, or cutting their losses to be shot of it. For tenants, this could further reduce stock, maintaining rental increases but reduce prices post April as those landlords who couldn’t sell are forced to stick it out.
Managing taxes
After a 2.4% increase in revenue from capital taxes generated this year due to buyers racing to get on or off the ladder whilst rates were still reasonable and property prices were high, it comes as no surprise that capital gains tax, stamp duty, and inheritance tax have been either frozen or reduced, as this figure according to the OBR is then due to “reduce by an average of £9.3 billion (20.7%) a year from 2023-24 onwards due to the downturn in the property market as a result of higher mortgage rates, as well as a weaker outlook for equity prices.”
If that isn’t a clear indication of what the UK property market is going to do over the next year, I don’t know what is (clue, it isn’t good.)
Stamp Duty
According to the OBR the temporary rise in SDLT thresholds costs £1.1 billion a year on average while it is in force. To tighten the Government’s fiscal belts, they announced that on the 31st of March 2025 they will scrap the recent tax cut, reverting back to its previous levels. Given this and their house price predictions of a 9% drop between the fourth quarter of 2022 and the third quarter of 2024, I expect the last quarter of 2024 and the first quarter of 2025 to see an increase in buyer activity, especially with first time buyers looking to get on the ladder whilst there is a stamp duty saving to be made and before property prices start to increase again.
Social housing
Social housing rents, which were due to rise at the consumer price index rate plus 1pc, would have been due a hike of 11.1%. Instead, it was announced that it will increase 7% and be capped at this level for 2023-2024. There’s a reason people say balance is an impossible dream and this is particularly true in this contentious arena. Social landlords are claiming the need for additional funds to maintain and invest in stock whilst tenants are struggling to not only heat their home and feed themselves but now also keep a roof over their head.
5% increase in council tax bills
For homeowners across the UK, the Government’s decision to give councils carte balance to increase council tax by 5% without a need for a referendum is expected to yield £4.8 billion a year by 2027-28. This is the equivalent to increasing the average Band D council tax bill in England by around £250 (11%) in that year. Where implemented, expect many MP’s seats to be lost over this.
The Chancellor Jeremy Hunt said “we do not leave our debts to the next generation.” His Autumn Statement demonstrates that the Government intends to doorstep collect funds on every household to achieve this, potentially creating a difficult situation when they revisit to do their door-to-door re-election canvassing.
