Unexpected Fears Averted for Landlords this All Hallow's Eve in Autumn Budget
The 2024 Autumn Budget, delivered by Rachel Reeves, the first female Chancellor of the Exchequer, has brought significant changes to the housing sector. The policy adjustments centre around social housing, Right to Buy discounts, and rent settlements, with Labour proposing specific changes and industry experts reacting cautiously.
Labour's plans include reforms to the Right to Buy scheme designed to curb the depletion of social housing stock. The government aims to protect and increase affordable housing availability by limiting discounts and tightening eligibility criteria [2]. This shift marks a departure from previous policies that encouraged the selling of social homes at substantial discounts, which reduced overall social housing numbers.
In terms of investment, the Budget and Labour’s outlook anticipate modest growth in housing transactions, supported by eased mortgage regulations. These regulations include more flexible stress tests and higher loan-to-income ratios that could help first-time buyers [1]. However, industry experts warn of construction risks and potential tax rises that might dampen private housing investment growth despite forecasts of slight increases in construction output through 2026 [3].
Regarding rent settlements, while the details in the Autumn Budget are less explicit, the focus on social housing funding and regulatory tightening suggests an intention to stabilise or improve conditions for renters in social homes [2]. Industry reactions from housing associations recognise these steps but emphasise ongoing challenges such as maintenance, decarbonisation, and tenant wellbeing which require sustained investment beyond budgeting [2].
Moreover, the Budget provides over £5bn of government investment to the housing sector. This investment will be used to renovate sites across the country, including at Liverpool Central Docks and in Cambridge. Additionally, £3bn worth of support in guarantees will be provided to boost the supply of homes and support small house builders [4].
On the other hand, the lack of a stamp duty relief extension will see current thresholds revert back as of March next year, adding to the upfront costs for landlords purchasing properties [5]. Furthermore, the additional stamp duty charged on the purchase of second homes will also increase these costs [6].
In a positive note, landlords will not see an increase in Capital Gains Tax for the sale of residential property portfolios [7]. Also, a rent settlement of CPI+1% for the next five years has been introduced to help ease financial pressures in social housing [8]. Additionally, a five-year social housing rent settlement has been promised to offer financial stability for housing associations, with the possibility of a 10-year settlement after a consultation process [9].
However, the Affordable Homes Programme will deliver only 5,000 of the 1.5 million new properties Ministers have committed to provide over the next five years [10]. This has raised concerns about the effectiveness of the programme in meeting the government's housing targets.
Richard Beresford, chief executive of the National Federation of Builders, has expressed support for the £5bn funding boost for affordable housing, the commitment to allow councils to retain 100% of Right to Buy receipts, and the £3.4 billion for retrofitting [11]. However, he is concerned about the increase in Employer National Insurance contributions, which he believes will hinder the industry's ability to take on and train new staff [11].
In conclusion, Labour’s 2024 Autumn Budget approach aims to strengthen social housing through restricted Right to Buy discounts and support first-time buyers via mortgage affordability easing. Experts note potential risks from taxation and stress the need for continued attention to housing quality and investment sustainability [1][2][3]. It is a significant step towards addressing the housing crisis, but the challenges ahead require careful navigation and sustained investment.
[1] BBC News (2024). Labour's Autumn Budget: What it means for the housing market. [online] Available at: https://www.bbc.co.uk/news/business-62689317
[2] The Guardian (2024). Labour's Autumn Budget: How will it affect housing? [online] Available at: https://www.theguardian.com/business/2024/nov/01/labours-autumn-budget-how-will-it-affect-housing
[3] The Telegraph (2024). Autumn Budget 2024: What it means for the housing market. [online] Available at: https://www.telegraph.co.uk/business/2024/11/01/autumn-budget-2024-what-means-housing-market/
[4] GOV.UK (2024). Autumn Budget 2024: Investing in housing. [online] Available at: https://www.gov.uk/government/publications/autumn-budget-2024-investing-in-housing/autumn-budget-2024-investing-in-housing
[5] GOV.UK (2024). Stamp Duty Land Tax: Changes to the residential nil-rate band. [online] Available at: https://www.gov.uk/guidance/stamp-duty-land-tax-changes-to-the-residential-nil-rate-band
[6] GOV.UK (2024). Stamp Duty Land Tax: Second homes and additional properties. [online] Available at: https://www.gov.uk/guidance/stamp-duty-land-tax-second-homes-and-additional-properties
[7] GOV.UK (2024). Capital Gains Tax: Private Residential Relief. [online] Available at: https://www.gov.uk/capital-gains-tax/private-residential-relief
[8] GOV.UK (2024). Autumn Budget 2024: Social housing rent settlement. [online] Available at: https://www.gov.uk/government/publications/autumn-budget-2024-social-housing-rent-settlement/autumn-budget-2024-social-housing-rent-settlement
[9] GOV.UK (2024). Autumn Budget 2024: Five-year social housing rent settlement. [online] Available at: https://www.gov.uk/government/publications/autumn-budget-2024-five-year-social-housing-rent-settlement/autumn-budget-2024-five-year-social-housing-rent-settlement
[10] GOV.UK (2024). Affordable Homes Programme: Delivery. [online] Available at: https://www.gov.uk/government/publications/affordable-homes-programme-delivery/affordable-homes-programme-delivery
[11] The Independent (2024). Autumn Budget 2024: What did the National Federation of Builders say? [online] Available at: https://www.independent.co.uk/news/business/news/autumn-budget-2024-national-federation-of-builders-b2132933.html
- The Labour government's plans for the 2024 Autumn Budget include reforms to the Right to Buy scheme to prevent the depletion of social housing stock, with the aim of protecting and increasing affordable housing availability.
- The budget provides over £5bn of government investment to the housing sector, a portion of which will be used to support small house builders, as well as renovate sites across the country.
- Industry experts, while acknowledging the steps made towards stabilising or improving conditions for renters in social homes, have emphasised the need for sustained investment beyond budgeting to address ongoing challenges such as maintenance, decarbonisation, and tenant wellbeing.
