Autumn Budget: What did the last few years have in store for property investors?

Introduction

Autumn Budgets are a relatively recent phenomenon. Prior to 2017, Budgets were usually delivered in the Spring. But, the timings shifted to account for the fiscal year. While there have been a few exceptions to the rule, we saw fairly consistent Autumn Budgets between 2017 and 2024.

And while an Autumn Budget can be delivered across the months of September, October, or November, they always tend to set the financial tone for the winter.

Several Chancellors have come and gone in recent years. Yet each of their announcements left an indelible mark on the economy.

Autumn Budget 2024

Date:

Wednesday, 30 October 2024

Chancellor:

Rachel Reeves

Highlights:

• Rates of income tax and National Insurance (NI) paid by employees, and of VAT, to remain unchanged
• Basic rate capital gains tax (CGT) on profits from selling shares to increase from 10% to 18%, with the higher rate rising from 20% to 24% – but CGT on the sale of second homes untouched
• Stamp duty surcharge, paid on second home purchases in England and Northern Ireland, to rise from 3% to 5%
• Companies to pay NI at 15% on salaries above £5,000 from April, and up from 13.8% on salaries above £9,100
• Current affordable homes budget, which runs until 2026, boosted by £500m

Commentary:

This was a groundbreaking budget for all, regardless of ideology or political believes. Rachel Reeves became the first female Chancellor of the Exchequer in history to deliver a Budget. Which may have meant the pressure was even more intense than normal.

That pressure was shared across the UK however, as the Chancellor shared how the government was to introduce £40bn of tax rises. This was painful for all to hear, but the economy itself was on its way to recovery. The OBE forecasted that the UK economy would expand by 1.1% this year, 2% next year and 1.8% in 2026.

It remains to be seen how Labour’s plans will pan out. Landlords were spared from the worst of CGT rises, but employers would be hit by National Insurance hikes.

Source: BBC, Property Industry Eye, The Times, Investors Chronicle

Autumn Budget 2022

Date:

Wednesday, 23 September 2022

Chancellor:

Kwasi Kwarteng

Highlights:

• Basic rate income tax was to be cut by 1p to 19p, while the 45% top rate for high earners was scrapped
• A 1.25% rise in National Insurance was to be reversed
• Cap limits on bankers’ bonuses were to be scrapped
• A planned rise in corporation tax from 19% to 25% was scrapped
• No stamp duty levied on the first £250,000 of a property, up from £125,000. For first-time buyers, this rose to £425,000.

Commentary:

Kwasi Kwarteng, our Chancellor for 38 days, delivered a “mini-Budget” on September 23, 2022. The now infamous “Growth Plan” received anything but a mini reaction. Many U-turns were announced. We all know what came next.

There was a run-on sterling and the value of the pound plummeted. The gilt market went into freefall, forcing the Bank of England to step in. Even the International Monetary Fund felt obliged to urge the government to reconsider its plans. The fallout was so dramatic, it led to the resignation of both Kwasi Kwarteng, and Liz Truss.

The mini-Budget also had a profound effect on the property market. Confidence dropped across the board. Nearly 1,000 mortgages were pulled from the shelves overnight as panic set in, and we’re still recovering now. House prices also came under pressure in the 2nd half of 2022, with the fallout of the mini-Budget, along with the cost-of-living crisis, deterring investment.

Source: BBC, The Guardian, The Guardian, The Guardian, CNBC

Autumn Budget 2021

Date:

Wednesday, 27 October 2021

Chancellor:

Rishi Sunak

Highlights:

• A 50% business rates discount was to be delivered for the retail, hospitality, and leisure sectors in England, up to a maximum of £110,000
• The National Living Wage was to be increased to £9.50 an hour
• £1.7bn was to be invested in local areas across the UK courtesy of the Levelling Up Fund
• A 4% levy was to be placed on property developers with profits over £25m to help create a £5bn fund to remove unsafe cladding
• £24bn was earmarked for housing, including £11.5bn for up to 180,000 affordable homes, with brownfield sites targeted for development

Commentary:

Rishi Sunak’s second Budget of 2021 brought with it a number of substantial changes. Many of these involved optimistic spending. Mr Sunak was focused on getting the economy to finally shake off Covid-19. To this end, he welcomed improving employment figures, investment, wages, and optimistic public spending data.

While many welcomed the government’s efforts, others noted the massive expansion of the welfare state. The Institute for Fiscal Studies said Rishi’s shake-up of the rules would result in the middle classes being able to claim more from the state. This may have raised our collective welfare bill.

Source: BBC, Gov.uk, The Telegraph

Autumn Budget 2018

Date:

Wednesday, 29 October 2018

Chancellor:

Philip Hammond

Highlights:

• The personal allowance threshold was raised from £11,850 to £12,500
• The higher rate income tax threshold was raised from £46,350 to £50,000
• All first-time buyers purchasing shared equity homes of up to £500,000 would become eligible for first-time buyer’s relief
• £500m was set aside for a Housing Infrastructure Fund, which was designed to enable some 650,000 homes to be built
• Lettings relief was limited to properties where the owner is in shared occupancy with the tenant
• Partnerships were created with English housing associations to create more homes
• Guarantees of up to £1bn were issued for smaller house-builders

Commentary:

The 2018 Budget brought with it the end of austerity, according to then-Chancellor Philip Hammond. At the time, public finances proved to be resilient, and the economy was in relatively good shape. Public borrowing came in lower than expected, and wages grew at the highest level seen in nearly a decade. Meanwhile, debt as a share of GDP fell to 83.7%.

For property investors, homeowners, and landlords, there were a few key changes to note (see highlights).

The response to the Budget was, as to be expected, mixed. Some pundits welcomed certain elements, such as freezes on alcohol duties and funding for housing. But at the same time, Sadiq Khan argued this Budget failed to truly end austerity, while the Institute for Fiscal Studies warned Philip Hammond was gambling with the publics’ finances.

Source: BBC, The Times, The Sun, London.gov.uk, The Guardian

Autumn Budget 2017

Date:

Wednesday, 22 November 2017

Chancellor:

Philip Hammond

Highlights:

• Stamp duty was abolished for first-time buyers purchasing properties up to a value of £300,000, with similar rules extended to London buyers
• £44bn was set aside to meet the government’s housebuilding target of 300,000 new homes a year
• Councils were awarded powers to charge a 100% council tax premium on empty properties
• Billions were to be invested in various regeneration and development efforts

Commentary:

The 2017 Autumn Budget brought with it many changes for the property industry. Much of it focused on raising standards and supply in the market. This was somewhat expected, given the recent disaster at Grenfell Tower.

Overall though, this wasn’t the most well received Autumn Budget. Some commentators argued the Budget didn’t really help “ordinary” people. Pensioners, small business owners, families and more were unlikely to see any real improvement in living standards.

Also, while property investors would likely benefit from the stamp duty cut, some warned it would push property prices ever higher. Preventing many first-time buyers from entering the market.

Despite this, many people were expected to have a little extra in their pockets following changes to certain tax rules and allowances.

Source: BBC, Mirror, The Independent, The Times