What does Labour’s 2024 Autumn Budget mean for the property market?

At the end of October, Chancellor Rachel Reeves unveiled Labour’s first budget in 14 years – what was undoubtedly a notable occasion for the economy and politics of the UK. Drawing on extensive experience in the property market, I have considered how this budget could influence our sector. Given Labour’s ambitious housing, taxation, and investment plans, its budget presents both opportunities and challenges for buyers, vendors and property investors. With planned public spending increases of £69.5bn per year from 2025/26^[1], together with increased borrowing and taxes, this constitutes one of the most important budgets in many decades.

Several measures were presented (or left unchanged) in the Budget that affect buyers, sellers, landlords, and tenants directly. These include:

Stamp duty avoids further relief measures

After purchasing a property within England and Northern Ireland, Stamp Duty Land Tax (SDLT) is enforced. The amount of stamp duty payable is determined by the property value and also who the buyer is, such as if they are a first-time buyer, the purchase of an additional property, or a company purchasing houses or apartments.

Labour announced no further relief past the Conservatives’ deadline to increase stamp duty charges, even for first-time buyers. From April 2025, the value of properties that stamp duty needs to be paid on will fall from £250,000 to £125,000. Houses costing between these two figures will be subject to a 2% duty tax. For first-time buyers, stamp duty will then be due on properties over the value of £300,000, down from £425,000 currently.

With regards to second-home buyers, the higher rate for additional properties will increase from 3% to 5%, effective from 31 October 2025 – unsettling news for property investors. Here’s the stamp duty breakdown for second-home purchases from October 2025:

• £0 – £250,000: 5%
• £250,000 – £925,000: 10%
• £925,000 – £1.5 million: 15%
• Above £1.5 million: 17%

The budget announced by Labour pays particular attention to first-time home buyers by providing £500m towards the Affordable Homes Programme and a pledge to construct 1.5 million new homes over five years. Furthermore, small housebuilders have received funds that amount to more than £3bn for enhancing the supply.

These developments offer hope to younger buyers who are finding it difficult to break into the market but the successful implementation of such ambitious plans will be of utmost importance.

Capital Gains Tax remains unchanged for property

Capital Gains Tax (CGT) is a tax on the profit after an asset is sold for more than its purchase price. The tax is imposed on the profit and not on the entire sale value. There is a CGT on sales of shares, any belongings above £6,000 (except motor vehicles) and property that the owner does not occupy.

On property investment, however, CGT comes into play in the case of owners of these properties, their purchasers, and individuals who buy property for letting purposes. Private homeowners typically do not pay CGT on their main residence, thanks to Private Residence Relief, provided they meet certain conditions such as having lived in the property throughout the ownership period and not using it for significant business purposes.

One of the most notable aspects of the budget was that CGT rates for residential properties were left untouched, contrary to earlier speculation that these might rise. This decision likely reflects an effort to maintain stability in the rental housing market during a time of broader fiscal changes.

Happily for property investors and second home owners, CGT on residential property sales remains unchanged at 18% and 24%.However, for non-property assets the Budget introduced increases in place as of October 30 2024:

• The lower rate for non-property assets has risen from 10% to 18%
• The higher rate has increased from 20% to 24%

Inheritance tax increases for landowners

Inheritance Tax (IHT) alterations are likely to affect high-income individuals who hold property, a business or a farm to a considerable extent. The frozen IHT thresholds have been extended for a further two years until 2030.

However, new rules introduced by Labour now limit Agricultural and Business Relief to a tax-free threshold of £1 million, with any excess amounts attracting a 20% tax-effective rate.

From April 2027, pensions are also subject to tax, as unused pots and death benefits will be included in the gross value of the estate.

The property market is going through a period of change

As we could have expected, Labour’s Autumn Budget focused on measures meant to alleviate the housing crisis in the UK and promote greater economic equity across the UK, among other things. Still, an increase in stamp duty and changes to inheritance tax can only be viewed negatively by prospective property buyers, current landowners with an estate valued over £1 million, or those within or looking to enter the investment property market.

We actively monitor these changes at King West and our team is more than willing to assist every one of our clients in navigating these changes. Whether you’re dreaming of renting a charming townhouse, purchasing a stunning historical family home, or exploring opportunities in some of England’s most picturesque countryside, our experts offer personalised advice and support tailored to your needs.

To discuss your future property plans, get in touch our expert team at our offices in Stamford (Tel: 01780 484520) or Market Harborough (Tel: 01858 435970).

^[1] https://lordslibrary.parliament.uk/autumn-budget-2024-key-announcements-and-analysis/#heading-3