The UK’s latest Autumn Budget announcement may have brought changes for the property sector, however we do not believe the announcements will have too strong an impact on the Cotswolds residential market. We have however, looked through the key points and put together a breakdown of what you need to know from the Autumn budget:
Stamp Duty Increase on Second Homes
One of the headline changes is the increase in Stamp Duty on second homes, rising from 3% to 5%. For a £1 million property, this results in an additional £20,000 in Stamp Duty costs. While the aim of this increase is to moderate second-home purchases, we believe it could have broader implications for the rental market. If the rise in stamp duty results in fewer people investing in buy-to-let properties, the volume of available rental properties could reduce which could in turn lead to an increase in rental prices as demand outstrips supply.
Capital Gains Tax: A Relief for Landlords
As always, there are ups and downs in the Autumn budget. This time despite the increase in Stamp Duty, there was some relief for landlords as Capital Gains Tax rates for residential properties remained unchanged at 18% and 24%. This is encouraging news for those with existing portfolios, allowing them to maintain property investments without facing an additional tax burden upon selling. The exemption helps sustain confidence within the sector, particularly in high-demand areas like London.
Energy Efficiency Targets for Landlords
The government has committed to achieving stringent energy targets, with rental properties required to reach an Energy Performance Certificate (EPC) rating of C by 2030. Although immediate action isn’t required, landlords will need to consider future improvements, potentially impacting maintenance budgets. However, with the timeframe already mapped out for the EPC requirements, we believe landlords now have the time to plan for the required improvements to achieve the necessary EPC ratings. Read more about property compliance here.
Employer’s National Insurance Increase: Impact on Tenants
The Budget also included an increase in employers’ National Insurance contributions. There is the potential for these rises to have an indirect consequence – as employer costs rise, wage growth could stagnate. With businesses potentially slowing pay increases, tenants may find they have less disposable income to dedicate to rent in the future. We will wait to see if this results in tension in the rental market – it could be potentially balance out any predicted rental prices rise in response to constrained property supply.
Limited New Support for First-Time Buyers
This Budget did not introduce a replacement for the Help to Buy scheme, leaving many first-time buyers seeking alternative routes. And whilst options like the Own New rate reducer are emerging, aimed at making homeownership more accessible, the lack of support could see first time buyers remaining in long-let properties for longer.
VAT on School Fees
We anticipate the private school sector will be impacted by the addition of VAT on school fees from January 2025. It will undoubtedly make a private education out of reach for some families and enquiries at local state schools have already risen. With that in mind we anticipate an increase in demand for rental properties close to outstanding state schools in the area. We are fortunate that across the Cotswolds there are many fantastic state schools such as Burford School, Farmors in Fairford, The Cotswold School in Bourton-on-the-Water, Campden School and Kingham School.
Navigating the Changes
Whether you’re a property owner looking to expand or optimise your portfolio, or a tenant looking to secure your next dream rental home, our team is here to support you every step of the way. With a focus solely on the residential lettings marketing in the Cotswolds, we are passionate about supporting property owners and tenants navigate these changes. If you’d like to find out more about any of our rental properties or meet with a member of our team to discuss your property portfolio, get in touch today.
