Now that the dust is settling from Chancellor Rachel Reeves’s Budget last week, Labour’s first for 14 years, it seems a good time to assess its implications for the UK’s housing market, and how it might affect you if you’re looking to buy or sell a home.
So what are the key points and what do they mean?
- Additional-home stamp duty up from 3% to 5%
If you buy an extra home while already owning a main residence, you will now pay an additional 2% in stamp duty based on the value of the whole property. Previously, stamp duty was charged at an extra 3% of the whole value of the place, as well as any applicable standard stamp duty – now that figure stands at 5%.
Sector experts say the move will probably unsettle property investors, not least in a market where one in eight (12.5%) of homes on the market are ex-rentals. However this is increasing competition for places to rent, which is clearly good news for landlords.
- Stamp duty threshold remains in place for first-time buyers and movers until next spring
Those buying their first home will still be able to take advantage of an elevated stamp duty threshold until April next year. This means there will be nothing to pay on a property which costs £425,000 or less. This threshold will, however, drop to £300,000, from next April onwards.
But for now, homes sold for between £425,000 and £625,000, first-time purchasers have to pay 5% stamp duty on that proportion of their new home. For places worth more than £625,000, standard stamp duty rates kick in. In April, first-timers will be charged at 5% in the portion of the home between £300,000 and £500,000.
From next April 2025, the stamp duty threshold for movers will come down to £125,000, while 2% stamp duty will be payable on the portion between £125,000 and £250,000.
- Capital Gains Tax up, rates on property stay the same
Capital Gains Tax is payable on any money you make from selling assets, including second homes. The Budget saw this duty rise for lower-rate taxpayers (i.e. those earning below £50,270 annually) to 18% from 10%. For higher-rate tax payers, it goes up to 24% from 20%.
But the rates for residential property sales are unchanged at 18% and 24% respectively. And Reeves has stressed that the UK still has the lowest rates of this tax of any European G7 economy.
- No change on inheritance tax rules until 2030
At the moment, you can inherit the first £325,000 of the value of a property without paying a penny in tax, or £500,000 where a house is passed on to direct descendants of the original owner, such as their children or grandchildren, £1m if a property transfers to a spouse and then direct descendants.
These rules will now remain in place until 2030.
Other key points from the Budget include the pledging of £1bn to clear hazardous cladding from high-rise blocks next year, plus the £500m set aside for affordable housing as part of a £5bn package to create 33,000 new homes.
What are house prices doing in East Sussex at the moment?
One of Britain’s biggest lenders, Halifax, has just recorded a month-on-month change of a 0.3% uplift in UK house prices, with a year-on-year increase of approaching 5% (4.7%). It says this represents the strongest growth in the market since November 2022. But here’s more about the local picture in East Sussex:
- The average price paid for properties in East Sussex as of October 16, 2024 is £503,000, a figure which represents a 5.1% increase over the last 12 months. For a detached property, it rises to £606,124.
- The most expensive area in the county is Ditchling, while the least expensive area is St Leonards Green.
- Location, space to work from home and access to transport links are they key drivers when selecting a property locally.
Finally, while, at the beginning of the year the forecast for house prices was relatively bleak, the latest predictions have been noticeably more upbeat. And, for us at Oakfield, this reflects what we’ve seen ourselves in our part of the world with a busy summer and autumn across our areas in East Sussex.
Oakfield says
At Oakfield Estate Agents, we broadly welcome the Budget, particularly its commitment to new homes and the removal of dangerous cladding
We’re also expecting activity to remain brisk – even as we enter winter, not traditionally the busiest season for property transactions – and there’s even still time to move and be in a new home for Christmas if you’re quick. Equally, confidence in the housing market should continue as inflation stays under control and interest rates continue to come down.
Operating across East Sussex and with offices in Eastbourne, Hastings and Bexhill-on-Sea as well as Uckfield, Lewes and Heathfield, we work in lettings and rentals, property sales and purchases plus block management.
Get in touch today to learn more about what we could do for your next property transaction, or book a valuation.