You can’t move for speculation about the Autumn Budget right now. Across the property market, from homebuyers and landlords to brokers and lenders, people are eagerly anticipating what will be in the Chancellor’s speech, and it’d be fair to say that there’s more than a little trepidation, too.
Those a little longer in the tooth (like myself) know how this typically works. In the build-up to these big fiscal announcements, sources in or close to the government will float certain policies or reforms – they’ll see what the response is and then assess which ones to actually move ahead with. This has been the pattern over the past two months, with a vast array of different tax hikes, spending cuts and legislative changes touted.
What we do know, based on Rachel Reeves’ own briefings, is that taxes are going to go up. The state of public finances is purportedly worse than Labour first thought, and despite last year’s promise that the 2024 Budget – which included various tax increases – being a “once-in-a-parliament” necessity, it’s almost certain that further tax reforms are going to central to the Chancellor’s speech on 26th November.
What are we likely to see in the Budget?
Filtering through the different predictions is difficult. So, let’s focus on some common, prominent themes that most warrant attention.
Firstly, there is widespread expectation that property-related taxes will feature more prominently than headline income tax or VAT increases – especially given the financial constraints the Treasury is facing.
One key area is the potential replacement or reform of Stamp Duty Land Tax (SDLT). Reports suggest that for higher-value homes (for example purchases above £500,000) the government may introduce a new annual charge rather than the lump-sum SDLT model.
A radical shift away from SDLT being charged at the point of purchase is looking less likely now than it was in the summer. But potential changes to rates and bands is still a possibility.
Additionally, another possibility to watch for is reform to local property taxes – specifically, a move away from the current banding system (based on 1991 valuations) for council tax, towards something tied to current market value.
Landlords, in particular, should watch the possibility of additional levies on rental income, or widened tax measures applied to the private rented sector. Speculation includes applying national insurance contributions (NIC) to rental profits (which currently are exempt), and changes to capital gains tax (CGT) or reliefs as they apply to residential property investments.
Finally, affordability remains a driver in the housing market, and we should not discount announcements that support first-time buyers, new-builds or green-retrofit properties. Indeed, some commentators expect stamp duty reliefs, mortgage guarantee extension or targeted incentives for energy efficient homes.
How can brokers, lenders and landlords prepare?
One thing we can say for certain is that changes are coming. We might not know exactly what, but it’s clear that a pragmatic mindset is critical, and this applies to lenders, brokers and borrowers.
For one, stress testing is going to be an important area for consideration. Brokers working with BTL clients will need to help in assessing rental yields, outgoings and tax burdens. If rental profits are going to be exposed to NIC, for instance, then the margin between yield and cost may shrink. Landlords should build scenarios for increased taxation and ensure the borrowing case remains viable.
Meanwhile, if SDLT reforms are indeed announced, then lenders and brokers must be ready to respond. Typically, whenever less favourable SDLT changes are on the horizon, there is a spike in transactional activity as buyers looking to complete on purchases before those changes take effect. Moving quickly will be important if this is the case.
More generally, my view is that whatever is unveiled in the Budget, stakeholders across the property and BTL markets must try to avoid knee-jerk reactions. Headlines will sensationalise certain policies, and there is usually no shortage of doom-mongering. So, it’s wise to keep strategic, long-term decisions in view and not panic based on initial conjecture.
Change as opportunity, not just challenge
Ultimately, those involved in the BTL market will know all too well that policy shifts are inevitable. The past decade has made that point only too clear.
What distinguishes successful lenders, brokers and landlords is the ability to respond with agility while still making informed decisions. While the Budget will almost certainly introduce challenges – whether via tax or regulation – it should not be viewed as something to fear. Instead, it is another turning point in a market that has already adapted to significant political and economic change over the years.
At Chetwood Bank (through ModaMortgages and CHL Mortgages for Intermediaries) we remain committed to supporting brokers and landlords with that pragmatic mindset: helping structure applications and portfolios that are resilient, flexible and future-aware.
Darrell Walker is group sales director at Chetwood Bank for ModaMortgages and CHL Mortgages for Intermediaries
