New 2024 Budget: what changes for property sellers and buyers

1) £500 million to pay for 5,000 new affordable social homes

2) Stamp Duty Tax changes for second homes and buy-to-let

For second home purchases, buy-to-let investors and companies buying residential property, the stamp duty tax increases from 3% to 5% from 31st October 2024.

3) Stamp Duty Tax change for First-time buyers

The 0% stamp duty threshold for first-time buyers will be reduced from 31st March 2025.
First-time buyers start to pay SDT from £300,000 instead of £425,000
First-time buyer’s relief decreases from £625,000 to £500,000
First-time buyers could save thousands of pounds if they purchase their home before 31st March 2025 to benefit from the current rates of relief.

Other home buyers will start paying stamp duty from £125,000 instead of £250,000.

Current stamp duty thresholds – in place since September 2022

In 2022, the stamp duty tax threshold was increased from £125,000 to £250,000. This means no stamp duty tax is payable for purchases up to £250,000.

For first-time buyers, the threshold was increased from £300,000 to £450,000 – under the condition that the total property price is under £625,000. This corresponds to a tax saving of up to £11,250.

These higher thresholds are valid until 31 March 2025.

New stamp duty thresholds from the end of March 2025

First-time buyers won’t pay stamp duty tax on purchases up to £300,000 if the total property price doesn’t exceed £500,000.

Anyone buying an additional property that is not their main residence pays a 5% surcharge from 31 October 2024, while non-UK residents will continue to pay a 2% per cent surcharge.

You have 14 days to pay stamp duty tax from the date of completion. If you miss this deadline, you could face a fine or be charged interest on tax owed.

3) New Budget Changes to Inheritance Tax

Inheritance tax at 40% on an estate is still due on everything above the tax-free inheritance tax allowance of £325,000. However, there is no inheritance tax payable when inheriting from a dead spouse or civil partner and you will also inherit your spouse’s unused nil-rate band. Additionally, if you leave your home to direct descendants there’s an additional property allowance of £175,000 each. This gives a maximum combined allowance of £1,000,000.

The current inheritance tax thresholds are due to be frozen until April 2028, and the government is extending these threshold freezes for a further two years to April 2030.

4) New Budget Changes to Capital Gain Tax

Capital Gains Tax (CGT) has been increased for employers, business owners and shareholders in the 2024 Budget. Capital gains tax is charged on profits you generate from selling an asset like a second property or shares.

The capital gains tax due for buy-to-let investors and second homeowners on the sale of their property will remain unchanged at either 18% or 24%, depending on whether you are a basic or higher-rate taxpayer.

Many landlords have already started selling buy-to-let properties due to increased regulation, high mortgage rates and other unfavourable tax changes.  As a consequence, buy-to-let fixed rates have fallen to their lowest since the start of September 2022, according to the latest analysis by Moneyfacts.

Here is more information on Capital Gains Tax if you are selling: https://hoa.org.uk/advice/guides-for-homeowners/i-am-selling/capital-gains-tax-selling-home/

The new Budget changes for property sellers and buyers affect everyone, in particular First-time buyers in London whose buying power is reduced. A high supply of property due in part to landlords selling their investments may lead to selling prices stagnating or decreasing. But London’s demand has been resilient in the past and the decrease may be minimal, depending on your borough.