The Autumn Budget of 2024

The Autumn Budget of 2024, delivered by the UK's first female Chancellor, marked a significant moment in history. Beyond the headlines, this budget brought some encouraging news for UK property investors. Here’s a breakdown of what’s changed and why it’s good news for those with investment interests in the UK property market.

Key Takeaways for Property Investors

1. Capital Gains Tax (CGT) Holds Steady
   One of the most anticipated changes, an increase in CGT, was notably absent in this budget. CGT rates remain at 18% for basic rate taxpayers and 24% for higher earners on residential property, allowing property investors to continue benefiting from their capital growth without new tax burdens. This decision supports both short-term investors considering liquidation and long-term holders building wealth over time.

2. Increase in SDLT on Additional Properties
   In a move labeled a “rabbit out of the hat” by Lucian Cook of Savills, an unexpected increase in the Stamp Duty Land Tax (SDLT) surcharge for second properties was announced. The surcharge has increased from 3% to 5%, impacting investors with multiple properties. For instance, on a £400,000 property, SDLT now totals £27,500, up from £19,500. While this requires more capital upfront, it may also encourage a shift towards more affordable investments in regions like Manchester and Birmingham, where attractive properties are often priced well below London levels

3. Regional Investment Shifts
   The new SDLT surcharge may drive investors to explore high-growth regions outside of London and the South East, narrowing the price gap between these areas and the rest of the UK. Manchester, Birmingham, and other key regional markets continue to show strong rental yields and capital growth potential, offering compelling alternatives to traditional southern hotspots.

4. Opportunity in Commercial and Mixed-Use Investments
   As the SDLT changes primarily target residential purchases, buy-to-let investors might increasingly consider commercial or mixed-use properties, such as flats above shops. These options remain unaffected by the SDLT changes and provide a diversification opportunity within the property investment landscape.

A Global Comparison of Stamp Duty

The UK continues to offer a competitive environment for property investment, especially when compared internationally:

• Australia: 6% on property values above $130,000
• Dubai: 4%
• France: Ranges from 2% to 12%
• Germany: 3.5% to 6.5%
• Singapore: 30%

These figures highlight the UK’s appeal, with comparatively low entry costs that, combined with favorable holding costs, make it an attractive destination for overseas property investors.

The Magnate Perspective

In summary, this budget was far from the financial shock some expected. Although the increase in the SDLT surcharge raises upfront costs, the stability in CGT allows for an advantageous exit strategy, reinforcing the UK’s appeal as a stable, long-term investment hub.

For existing UK buy-to-let investors, this may be a strong signal to hold. With continued constraints on housing supply and increased demand, rental income is likely to see an uptick, benefiting those looking to maximize yield.

We understand the importance of informed, strategic planning in property investment. Our team at Magnate Assets is fully updated on the latest budget implications and is here to help answer any questions or provide guidance on maximizing your UK property investments in light of these changes.

For more details or a personal consultation, please get in touch with us today.