UK Budget 2024 | How Will It Affect Property Investors?

The UK’s 2024 Autumn Budget has brought notable updates for property investors, introducing changes in taxes, housing investment, and policies aimed at stabilising the real estate market.

Here are the key points for property investors to consider:

1. Changes in Capital Gains Tax: The main rates of Capital Gains Tax that apply to assets other than residential property and carried interest, are increasing to 18% and 24% (from 10% and 20% respectively) for disposals made on or after 30 October 2024.
2. Support for Affordable Housing: The government pledged ￡500 million to boost affordable housing across the UK, a move that may benefit developers focusing on affordable and mixed-income housing projects. This funding includes support for the “Right to Buy” scheme, allowing councils to retain the entirety of proceeds from property sales to reinvest in local housing. This policy shift could spur new investment opportunities in social and affordable housing, creating potential joint ventures with local councils and government bodies.
3. Green Infrastructure and Energy Efficiency: With significant allocations for carbon capture and renewable energy initiatives, the Budget encourages property investments with a focus on sustainability. The creation of Great British Energy and further funding for renewable projects signal strong government support for green infrastructure, which may lead to incentives for landlords investing in energy-efficient upgrades. Additionally, the ￡3.4 billion Warm Homes Fund aims to improve heating systems across residential properties, creating attractive opportunities for investors targeting properties that could benefit from such grants.
4. Economic Growth and Market Stability: The government’s two new fiscal rules—aiming to balance the day-to-day budget by 2029/30 and reduce net liabilities as a proportion of the economy—reflect a focus on financial stability. With forecasts predicting GDP growth of 1.1% in 2024 and a stronger 2.0% in 2025, these measures could provide a stable economic environment for property investments.
5. Inflation and Interest Rate Projections: The Budget also acknowledged persistent inflationary pressures, and while not directly influencing monetary policy, it complements the Bank of England's ongoing efforts to stabilise inflation. Property investors should anticipate how interest rates might respond to government spending and inflationary trends, as rate hikes would impact mortgage costs, rental yields, and the affordability of property financing.

In conclusion, the UK’s 2024 Budget offers both challenges and opportunities for property investors. While increased tax burdens may require adjustments in capital strategy, substantial government support for affordable housing, energy efficiency, and economic growth provides avenues for profitable investment in targeted sectors.

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