For many property professionals, it was an anxious lead up to Labour's Autumn 2024 Budget. With much speculation around who would be the winners and losers in terms of taxation and spending cuts, there was pressure on property owners to evaluate their portfolios to ensure they would be as tax efficient as possible.
So, after all the hype, what were the key takeaways from the 2024 Autumn Budget for property professionals that should be under the spotlight? The Budget outlined several key changes and proposals that could impact the UK property market and we've rounded it all up for you below!
Increased Spotlight on Affordable and Social Housing
New Housing Development: Labour’s commitment to building one million new homes over the next decade, particularly in the affordable and social housing sectors, will create significant opportunities for property developers and construction professionals already in this space or those considering these sectors as possible options for their new build schemes. Those already involved in public sector housing projects may see a surge in demand for construction services, including low-cost and sustainable housing.
Public Funding: Labour committed to a significant increase in public investment in affordable housing, to deliver nationally, significant numbers of new homes. This included the pledge mentioned above, with a focus on affordable and social housing. Again, for those already in this sector this is very good news
Existing Social Housing Stock: There was also an emphasis on improving the quality of existing social housing, ensuring tenants have better living conditions and stronger rights.
Abolition of the Right to Buy Scheme
Impact on Housing Stock: This long running scheme (set up under the Thatcher government) has been seen as a major factor in depleting social housing stock and thus leaving a dearth in affordable rentals. Labour reiterated its commitment to abolishing the Right to Buy scheme and instead proposed refocusing housing investment on building new homes instead of selling off existing ones. The abolition of Right to Buy will help preserve social housing stock. This in turn could lead to more opportunities for property managers, housing associations, and social landlords, as well as potential job opportunities for those wishing to work in the social housing sector.
Change in Market Dynamics: This will have a potential impact on private developers, as opportunities to acquire discounted former social housing properties peter out. There is also the possibility that the competition for 'good' tenancies increases: a positive for those renting, as private landlords will be required to offer similar or better accommodation than the social housing sector to attract the best tenants.
Potential Changes to Property Taxes from the Autumn Budget 2024
Tax is always the main focus of any budget: how much, what areas and how will it affect me. For property professionals, although there was much speculation about heavy taxation on developers and private landlords, much of this did not materialise. The following changes to taxes have been proposed:
Stamp Duty changes: Labour proposed reforms to the Stamp Duty system, particularly for first-time buyers, to make it easier for young people to get on the housing ladder. Estate agents and property solicitors may see increased activity, particularly from first-time buyers, due to these proposed changes.
Rebalance Of Property Taxes (Higher Taxes for High-Value Properties): The budget introduced measures to account for those with higher-value properties. Labour’s proposals to tax this asset more heavily, including possible wealth taxes or reforms to council tax, could have a huge impact on the luxury housing market. Depending on the thresholds set, High-net-worth individuals and developers operating in this space may need to adjust their strategies to account for these changes.
Impact on Investors: The tax changes may affect property investors, particularly those in the buy-to-let sector, as reforms may make it more expensive to acquire high-value properties, requiring a strategy adjustment.
Private Renting Market Reforms
There were proposals to tighten regulation of the private rental market, including rent controls/freezes to tackle escalating rents in some areas and an aim to improve tenant protections and strengthen tenants’ rights, ensuring a 'good' standard of rental accommodation across the board.
Rent Controls: This could have significant implications for landlords and property managers, particularly those with high rents in competitive urban areas. A portfolio review, particularly when purchasing a new property, would be essential to ensure that rents continue to meet mortgage payments without a shortfall, if a rental cap was put in place.
Increased Tenant Protections: Strengthening tenant rights and rent control measures may change the balance of power in the private rental market, particularly in light of the proposed changes in the social housing sector. Landlords may face stricter regulations regarding tenant treatment, rent hikes, and eviction procedures. This will require compliance with new tenant protection laws and possibly increased property management costs.
Improved Tenant Choice: With the aim to provide more affordable and social housing, competition for tenants would likely increase. Added to this the proposed reforms around property fitness and energy efficiencies, landlords may see renovation and retrofit costs increasing which will have to be factored in to the overall portfolio returns.
Sustainability and Green Building Initiatives
Energy-Efficient Homes: As mentioned above, Labour’s focus on retrofit schemes to improve the energy efficiency of homes, although it may have a possible detrimental effect on existing Landlords, it also presents opportunities for developers, builders, and property professionals involved in the green and sustainable building sectors. Energy consultants and sustainability experts will be in demand to help upgrade existing housing stock to meet new energy-efficiency standards. This was part of a broader commitment to green policies and reducing the carbon footprint of the housing sector.
Government Incentives: To allow for the changes required (especially to retrofit existing properties), there may be new subsidies or grants provided for homeowners and landlords to make properties more energy-efficient. Property professionals who specialise in sustainable building materials, retrofitting, or renewable energy solutions could see increased demand.
Spotlight on Wealth Inequality and Housing Investment from the Autumn Budget 2024 which many affect property professionals
Wealth Inequality: Labour’s budget outlined tackling wealth inequality, in part by addressing the growing divide between homeowners and tenants. They proposed measures to reduce the financial benefits of speculative property investment, particularly those aimed at short-term gains through rapid flipping of properties. Professionals focused on speculative developments may see increased regulation and new tax policies targeting this area.
Buy-to-Let Sector: Labour may introduce measures that disincentivise short-term speculative investments, which could shift the focus of the buy-to-let market towards long-term, responsible ownership. This shift could impact property developers, investors, and landlords involved in high-turnover rental markets.
Opportunities for Housing Associations and Charities
Public-Private Partnerships: There may be more opportunities for housing associations and non-profits to work in partnership with the government on social and affordable housing projects. These organisations could see a surge in demand for their services, particularly in the construction, management, and maintenance of affordable housing.
Tenant Support Services: With a renewed focus on tenant protection and welfare, housing professionals in the support services sector may see new funding or demand for tenant-related services (e.g., rent support, mediation, legal assistance).
Conclusion
For property professionals, the Autumn Budget 2024Â presents both challenges and opportunities. Developers and construction firms may find significant work in the affordable housing sector, while private landlords and investors will need to adjust to potential changes in rent controls, energy efficiencies, tenant reforms and taxation.
However, those working in sustainability and renewables or green building will also benefit from increased demand for energy-efficient retrofitting.
A need to stay informed and up to date as these proposed new policies unfold is crucial, as they could potentially change the property landscape in the coming years. By joining us for the Community Live, you will here from local property professionals in your area and how they are navigating or planning to navigate the Autumn Budget. Click the link below to sign-up for the Community Live or to get access to the recording. And as always if you have any questions, please contact us at Support@PropFundrs.com
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