Autumn Budget 2024: Key updates for landlords

Landlords are well aware that there has been a lot to contend with in recent years - from new government leadership and chaotic budgets, to high interest rates and double-digit inflation. Following on from Labour’s election victory in the summer, October’s Autumn Budget has provided landlords with yet another set of considerations to contend with as we look towards next year. 

Stamp Duty Land Tax (SDLT)

Stamp Duty Land Tax (SDLT) is set to be the most impactful change to professional landlords. As of the 31st October 2024, the SDLT surcharge on second homes has increased from 3% to 5%, which could have significant financial implications for landlords - especially those with plans to add to their portfolios. Prior to the Budget, Shawbrook’s research* showed that landlord confidence had risen in the past 12 months, with 33% of landlords planning to add to portfolios compared to 25% a  year ago.  The increase to SDLT could put a dent in their confidence but professional landlords may be able to mitigate this with strategies such as negotiating on purchase prices. 

There is hope that Labour’s planning reforms will provide a boost to developers, and will in turn provide more rental properties and opportunities for professional landlords to capitalise on. The decision not to extend stamp duty relief for first-time buyers - who make up the majority of new homes purchases - could also lead to increased rental demand as a consequence of the change. 

Capital Gains Tax (CGT)

On a more positive note, the heavily rumoured changes to Capital Gains Tax (CGT) didn’t materialise. Ahead of the budget, it was reported that the Government planned to increase CGT on the profits made from selling residential property - but this was not announced. Corporation Tax was also capped at 19% for profits under £50,000, and 25% for profits over £250,000, and a marginal system has been introduced for profits falling between those two thresholds. This will be relevant to all professional landlords who operate under a Limited Company structure. According to the Government, nine out of ten companies currently trading will have a Corporation Tax rate below 25%.

The £500m pledge to the Affordable Homes Programme, alongside £3bn of support for SME housebuilders in the build to rent sector, could also provide further opportunities for landlords. Whilst the SLDT increases will prove to be a challenge, and other factors such as increased National Insurance Contributions for employers could impact professional landlords, the decision not to increase CGT on profits will have provided some relief. However, the Government does need to do more to support the PRS if it is to alleviate the current housing crisis and meet its ambitious targets.

Conclusion

So, while certain measures will pose challenges, Shawbrook has seen that professional landlords have remained incredibly agile over the past few years amidst tough economic conditions, and have been able to adapt their business strategies and diversify their portfolios. This is likely to be the case following the Budget, as landlords will factor in changes as part of their costs, and will hopefully be able to continue adding to their portfolios and expanding their businesses at a crucial time for the property market.

^{*The research was conducted by Censuswide, surveying 501 landlords aged 18 and over in the UK between the 5th and 10th of September 2024.}