Budget 2024: Impact on the Rental Market and Housing Sector

The 2024 Budget has introduced several significant changes that will impact the rental market and housing sector. Hermione Homes has made a summary of the key points and the potential implications:

Stamp Duty Hike

The Budget announced an increase in the stamp duty levy for landlords purchasing additional properties, raising it from 3% to 5%. The National Residential Landlords Association (NRLA) has expressed concerns that this hike will exacerbate the housing supply crisis. According to NRLA chief executive Ben Beadle, this increase could result in a net loss of half a million homes from the rental market over the next decade. The NRLA argues that higher taxes on rental properties will lead to increased rents, making it harder for tenants to find affordable housing. 

However, it’s important to remain positive. The budget has raised £40 billion and has not imposed heavy burdens on landlords, as corporate tax for real estate transactions has not increased. Although the increase in stamp duty might lead to a reduction in the number of available houses and an increase in rents, the government will invest massively in the country's infrastructure, stimulating consumption. Public housing is set to see a significant increase.

Housing Benefit Rates

The Work and Pensions Secretary confirmed that housing benefit rates will be frozen from next year. The NRLA criticized this decision, stating that it fails to address the gap between housing costs and the support provided to tenants. This freeze, coupled with the stamp duty hike, is expected to make it even more challenging for those claiming benefits to access and sustain tenancies in the rented sector.

Capital Gains Tax

While the Budget announced increases to Capital Gains Tax, the rates on residential property have been frozen at current levels. This decision provides some relief to landlords, as it avoids additional financial burdens on property transactions.

Local Authority Retention of Right to Buy Receipts

The Chancellor confirmed plans allowing local authorities to retain the full receipts from right-to-buy schemes. These funds will be reinvested in new housing, aiming to boost the supply of affordable homes.

Investment in Infrastructure and Public Housing

The Budget includes proposals to hire hundreds of new planning officers to accelerate housing development and plans to invest £1 billion in removing dangerous cladding next year. Additionally, the government will invest heavily in the country’s infrastructure, stimulating consumption and economic growth. Public housing will see a significant increase, addressing the need for more affordable housing options.

Conclusion

The 2024 Budget presents a mixed bag for the rental and housing sectors. While the stamp duty hike and housing benefit freeze pose challenges, the investment in infrastructure and public housing offers hope for future improvements. Landlords and tenants alike will need to navigate these changes carefully to adapt to the evolving landscape.