What does the Autumn Budget mean for the housing market?

The Autumn Budget from Chancellor Rachel Reeves introduces significant initiatives for housing, particularly geared toward affordability, sustainability, and boosting the supply of new homes. Here’s a breakdown of the Budget’s key points and what they might mean for the London housing market and beyond:

Here’s a breakdown from estate agent Anthony Pepe – who can help if you have a house for sale in Winchmore Hill and many other areas of North London – of the Budget’s key points. We also look at what the schemes might mean for the London housing market and beyond.

Investment in Affordable Housing and Development

The government's commitment of £5 billion to Labour’s housing plan is one of the standout aspects of this Budget. With a £500 million boost to the Affordable Homes Programme, there is potential for increased housing supply across various sites, such as the Liverpool Central Docks project. However, the real test will be in how quickly these developments translate into available properties, especially in high-demand areas like London.

In London, where demand consistently outpaces supply, additional investment could help alleviate the chronic shortage, but market conditions are likely to remain competitive due to high land costs and planning constraints. Given the strategic importance of making these homes energy-efficient and affordable, London buyers and renters alike may see more options within reach, though timelines will play a critical role in easing current pressures.

Expansion of Energy-Efficient Housing

With an additional £25 million earmarked for the construction of 3,000 energy-efficient homes, the government targets a dual benefit of sustainable housing and long-term affordability. As energy prices continue to strain household budgets, these energy-efficient homes, aimed at affordability, may appeal strongly to London residents facing higher-than-average living costs.

Capital Gains Tax Unchanged for Landlords

An anticipated change to Capital Gains Tax did not materialize, a relief for landlords who feared further fiscal pressures. The decision to maintain current rates should stabilize the rental market somewhat by reducing the financial incentive to offload rental properties. That said, London’s rental market, already strained by high demand, may continue to experience challenges as fewer landlords enter or expand in the market due to other pressures, such as higher mortgage rates and now-increased stamp duty on second homes.

The Future of Stamp Duty Relief

With no changes to stamp duty relief for first-time buyers in this Budget, the looming expiration of current thresholds in March 2025 remains a pivotal point for buyers. For first-time buyers in London, where property prices are high, the anticipated drop in the threshold from £425,000 to £300,000 could increase the upfront cost, affecting affordability. This may lead to a surge in activity as buyers aim to complete transactions before the relief ends, though longer transaction times in London (currently around 152 days) might temper this.

Higher Stamp Duty for Second Homes

The increase in the stamp duty surcharge on second homes from 3% to 5% could deter some property investors, particularly in a high-cost market like London. As Tim Bannister notes, the average additional charge for landlords will be over £7,000, a meaningful increase. In the short term, this may dissuade some investors from purchasing buy-to-let properties, potentially easing competition for first-time buyers. Long term, however, experienced landlords may factor in the surcharge as part of the cost of doing business, meaning London’s rental market may not see as much relief from this change as hoped.

Current Market Dynamics

The London housing market is currently seeing strong activity, with sales up 29% compared to last yearand more properties available, giving buyers a bit more choice. However, house price growth remains modest at 0.3%, suggesting sellers may need to moderate their expectations in a price-sensitive environment. In London, realistic pricing and efficient sale processes will be crucial as buyers navigate high mortgage rates and upcoming stamp duty changes.

Conclusion

This Budget reflects a cautious yet committed approach to improving housing accessibility and sustainability. For Londoners, the investments in affordable, energy-efficient homes are promising, though the benefits will likely be gradual. Meanwhile, the impending changes in stamp duty relief may drive some urgency among buyers, particularly first-timers. In the short term, buyers and sellers alike may look to balance the rising costs of borrowing and transacting in a market where both demand and caution are strong.

House for Sale in Winchmore Hill? Come to Anthony Pepe

At Anthony Pepe we can help if you have a property for rent or sale in Winchmore Hill, Highbury, Harringay and many other parts of North London and Hertfordshire. We also offer landlord and maintenance services – for more information follow this link.

Adapted from Rightmove