As the Government’s hotly anticipated Autumn Budget approaches, several key players within the mortgage industry have urged Chancellor Rachel Reeves to “follow through on the promise” to “get Britian building” and revitalise the housing sector.
Speculating regarding policy areas that could impact property investment, homeownership, and mortgage affordability, there are rumours about changes to Capital Gains Tax (CGT), Inheritance Tax (IHT), and Stamp Duty, all of which play crucial roles in shaping the housing market.
One of the most significant concerns for property investors is the possibility of increased CGT.
If CGT rates are raised, this could discourage investment in buy-to-let (BTL) properties, prompting some landlords to consider selling, especially those with multiple properties.
This shift may result in a temporary surge of properties on the market, which could help ease the supply-demand imbalance to a small extent.
However, the long-term impact of higher CGT rates may deter future investments, potentially reducing rental market availability and affecting house price growth.
Inheritance Tax is another policy area under scrutiny – recent discussions have suggested that the Chancellor may adjust the IHT threshold, potentially making it more lenient.
If these changes materialise, more families could retain property assets across generations without a significant tax burden, meaning fewer homes might enter the market as part of inheritance sales.
Market professionals called on the Government to address Stamp Duty, a significant cost barrier for homebuyers, especially those entering the market for the first time.
Analysts speculated that the Government could offer temporary reliefs or revise the current Stamp Duty thresholds, set to expire in spring of next year, to further incentivise first-time homeownership.
Reduced Stamp Duty would directly lower upfront costs, making it easier for potential buyers to enter the market.
This could boost demand among first-time buyers and create upward pressure on house prices, particularly for entry-level properties, thereby driving increased mortgage applications.
Additional policies encouraging affordable housing, streamlining planning processes for new construction, support for SMEs and incentivising energy efficiency have also been called for, all of which could help to ease further pressures within the market.
In light of these potential changes, several industry experts shared their wishlists ahead of Wednesday’s statement.
Jeremy Leaf, North London estate agent and a former RICS residential chairman:
“The importance of improving supply of affordable housing to rent and buy, as well as transactions in view of their multiplier effect on job and social mobility, does not seem in dispute.
“We will be looking to see what impact the Budget has on those key areas.
“For instance, are the number of planning applications for private and social housebuilding likely to increase, keeping prices and rents in check?
“It is also generally accepted that first-time buyers are the engine room of the housing market.
“They trade up regularly, enable second steppers, and release rental properties back onto the market. Tenants would much rather pay their mortgage than their landlord’s.
“Since Help to Buy – which should more accurately have been labelled Help to Sell – came to an end, there has been little take up of the Mortgage Guarantee or shared equity schemes.
“So, some encouragement, such as retaining stamp duty concessions for first-time buyers, would be welcome.
“Talking of which, reductions in Stamp Duty, linked to improved energy efficiency, would represent a win-win – not just for the environment but for market activity.
“More incentives to bring empty or under-used homes back into use is also required.
“Landlords are leaving the sector, not yet in their droves, but in sufficient numbers to make rents unaffordable for many, while choice remains so poor.
“It is worth bearing in mind that approximately 25% of [private rented sector (PRS)] tenants pay housing benefit to landlords who effectively provide the social housing that Government is unwilling or unable to offer.
“We need more Government help to retain good, often elderly, landlords and encourage others to take their place.
“The cost of fixing the present housing crisis is huge but the cost of doing little or nothing is likely to be much higher – not just in the mounting cost of paying housing benefit and providing temporary accommodation.
“Either way, Madam Chancellor, please leave well alone and try to stimulate as much selling and renting as possible, which will not only be good for the market but economic growth.”
Matthew Robertson, co-founder and CFO of Valouran:
“In the UK, we already have the highest tax burden as a proportion of GDP since records began after the second world war, so what we need is a budget that is going to stimulate growth, not one that raises taxes yet further.
“The UK is lagging behind other countries – since 2008, the US economy has grown at double the rate of the UK economy.
“A key pillar of a growing economy is the private sector having the confidence to invest, and proposed rises in the rate of CGT would have the opposite effect, acting as a disincentive to investment.
“With regard to plans to abolish non-dom status, I would hope the Chancellor would listen to the advice of the Office for Budget Responsibility (OBR) that such a move would in fact raise no extra tax.
“There is misconception that people who are not domiciled in the UK avoid tax altogether, when in fact they pay full rates of tax on earnings in the UK just like anybody else.
“The UK ought to be somewhere that welcomes these international wealth creators as they represent a key source of private sector investment.”
Chris Parra, president and CEO of One Caribbean Estates:
“In the Budget, I would most like to see initiatives that support sustainable growth within the property sector and incentivise investment in the prime property market.
“Specifically, announcements addressing Stamp Duty and Capital Gains Tax adjustments would be beneficial.
“Reducing or restructuring SDLT, especially for high-value transactions, could stimulate more activity in the upper market segments.
“Additionally, targeted incentives for sustainable building practices and energy-efficient upgrades in luxury properties would not only appeal to environmentally conscious buyers but also align with long-term Government goals around climate action and sustainability.
“Returning SDLT thresholds to pre-pandemic levels would likely have the biggest impact on the prime property market.
“Increased SDLT rates are a considerable barrier for high-net-worth individuals and foreign investors considering property purchases in the UK.
“If the Government instead reset these thresholds – to reduce the Stamp Duty payable – the market would see increased activity, particularly in high-value transactions, as buyers would feel more confident about entering or expanding their portfolios.
“Additionally, a reduction in SDLT would positively influence associated sectors like property management, rentals, and luxury services, all of which benefit from a robust high-end property market.”
Nathan Emerson, CEO at Propertymark:
“The Chancellor has a real opportunity to promote much-needed progression within the housing sector.
“Carefully planned housing policy is the cornerstone to every community across the entire UK and is fundamental to a successful economy.
“With the population expected to hit 70 million within the next five years, it’s imperative to have a strategy that upscales a workforce capable of delivering a sustainable mix of homes in key areas of demand.
“There must be very careful consideration on how available land is utilised moving forwards, ensuring brownfield areas are fully prioritised before dipping into greenbelt land and that there is robust wider infrastructure to support such developments.
“Any proposed taxation structure must promote long-term investment in housing and ensure flexibility for those wishing to move to homes that are best suited to their needs.
“It’s also important that there is full evaluation regarding future ‘new towns’ to ensure any proposals drive success and deliver future proof solutions for generations to come.”
Adrian Moloney, group intermediary director at OSB Group:
“As we approach the Budget announcement, it’s crucial to acknowledge the potential unintended consequences of any tax decisions – especially around Capital Gains Tax and National Insurance for businesses and employees.
“It has been suggested that the rate of CGT on the sales of second homes and buy-to-let properties will remain untouched, but we won’t know until 30 October, whether this is based on fact or speculation.
“As one of the largest specialist lenders, we’re remaining positive in our outlook as we know that the housing market is extremely resilient.
“From what I am hearing from brokers, they are busy especially on the ‘business as usual’ side of the market.
“While there will be some who have stalled their decisions until there is more clarity around the Budget, there are plenty of positive signs that the industry is once again adapting to market fluctuations.
“The need for flexible products, such as 1-year fixes, alongside solid advice from brokers, is more crucial than ever.
“So, will a more favourable budget stimulate activity? Ultimately, time will tell, but the signs suggest the market is on track for a stronger finish to the year and into 2025.
“As rates have become more competitive and lenders compete for the best deals, borrowers should benefit from increased choices.
“We will be keeping a close eye on the Chancellor’s announcements the day before Halloween.”
Russell Gous, editor-in-chief of TopMoneyCompare:
“The rumoured [CGT] hike in this week’s Budget could hit UK expats hard.
“Even if you’re no longer domiciled in the UK, CGT is still payable on UK property and land sales, and you may face UK tax on overseas property if you return within five years of leaving.
“Ultimately, a rise in CGT rates – especially if aligned with higher income tax bands – could see expats’ tax liabilities skyrocket.
“This could be particularly punishing if double taxation agreements don’t fully protect them from being taxed in the UK and by their new home country.
“Remember, CGT is also calculated in pounds sterling, so exchange rates can add another layer of financial strain.
“The timing of an overseas sale can not only impact the rate you’re taxed but also the amount you have to pay due to the prevailing exchange rate.
“A weaker pound will see your overseas assets valued at a relatively higher value in GBP, increasing the total amount payable.
“A strengthening pound will see you pay more in your foreign currency when you actually exchange currency to meet your tax obligations.
“The Government should be aware that expats, many of whom maintain strong financial ties to the UK, could be disproportionately affected by these changes.
“This tax hike, coupled with currency volatility, could make it harder for them to manage their finances effectively.“
Matt Harrison, commercial director at finova Payment Mortgage Services:
“It’s no secret the home moving market needs resuscitating.
“Rachel Reeves has pledged to ‘get Britain building again,’ and now is the time to follow through on the promise with strong initiatives aimed at kickstarting housing development.
“The Government could introduce incentives for developers, such as tax breaks for constructing affordable homes and streamlined planning approvals to fast-track developments.
“By putting housing at the forefront of the Budget, the Government can play a key role in reviving the market and offering more people the opportunity to own their homes.”
Melanie Spencer, sales and growth lead at Target Group:
“With plenty of rumours surrounding a potential U-turn, it would be positive for the private rental sector and the wider housing market not to see a rise in capital gains tax.
“We are already seeing high levels of applicants for a diminishing number of rental properties.
“If landlords continue to dispose of properties with the threat of a higher tax burden, issues of high rents and low supply will only be amplified.
“This of course has a knock on effect on the wider housing market as tenants are unable to build the necessary deposits to make the moves onto the housing ladder.”
Nicholas Jones, mortgage services and marketing director at Access Financial Services:
“Potential rises in capital gains tax could also lead to more landlords exiting the market, which will further push up rents that are already being squeezed.
“This could then push renters out of the market, leaving them in need for a mortgage solution that puts them first, such as a zero deposit mortgage.
“Ultimately, what we need from the Chancellor are changes that support strong consumer and investor sentiment in the UK economy generally – that, in turn, will drive the mortgage industry.”
Adam Oldfield, managing director at Phoebus Software:
“The Budget looks like good news for the equity release market, which could potentially benefit from the likely changes to Inheritance and Capital Gains Taxes.
“There is a strong suspicion that people will start to reconsider their position post-Budget and potentially utilise their equity for family in an attempt to reduce their exposure.
“Otherwise, families may face paying higher inheritance tax bills on property amongst other things – so many estates may want to mitigate their liabilities by releasing equity in their homes.”
Nick Hale, CEO of Movera:
“We must address questions about housing affordability and availability.
“The original Help-to-Buy scheme helped many get on the property ladder, what is clear is another scheme is needed, but we now need to evaluate whether an updated version or a new, more comprehensive strategy is required.
“Rather than introducing short-term fixes, I’d like to see a long-term plan that could include expanding shared ownership or simplifying existing structures.
“The Government has a real opportunity in this Budget to enact meaningful reforms that will support first-time buyers and ensure the housing market becomes more accessible for all.”
Simon Webb, managing director of capital markets and finance at LiveMore:
“A potential freeze on SDLT for downsizers aged 65 and over would be a very positive step.
“If introduced, this could relieve some of the financial burden that discourages older homeowners from moving into smaller, more manageable properties.
“Many of these homeowners would otherwise consider downsizing but are held back by the costs associated with SDLT.
“Reducing this barrier could increase housing market fluidity, helping free up larger properties for younger families and, in turn, boost housing availability across generations.
“From the perspective of older borrowers, it could allow them to free up home equity, enabling them to live more comfortably in retirement.”
Maria Harris, chair of the Open Property Data Association (OPDA):
“Growing uncertainty over a potential fall in Stamp Duty thresholds next year has left the market unsettled in the lead up to the Budget.
“On top of this, recent housing discussions have homed in on the Government’s ambitious house building targets which many see as being out of reach.
“The housing crisis isn’t just about hitting numbers.
“The real challenge lies in our chronically slow and complex homebuying process which stalls transactions and erodes consumer confidence.
“But there’s a new sense of hope with the recent Data Use and Access Bill announcement last week- a potential game-changer.
“This legislation could set us on a path to a faster, simpler homebuying journey.
“If the Chancellor takes decisive action on Wednesday to stabilise the market and support these efforts, it would show her clear commitment to reducing barriers and rebuilding confidence for buyers.”
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