The UK’s 2024 Autumn Budget, unveiled by Chancellor Rachel Reeves, marked a pivotal moment in British economic policy. As the first Labour budget in 14 years, it arrived amidst significant challenges, with Reeves inheriting what she described as a dire economic situation. Her mission with this budget was to stabilise the economy while addressing long-standing issues, including the housing crisis.
With a £40 billion increase in taxes, the budget represents a substantial shift, placing the burden primarily on employers through higher National Insurance contributions and targeting wealth accumulation through increases in Capital Gains Tax and stamp duty on second homes. Amidst these sweeping fiscal measures, the housing market remains a focal point, balancing short-term relief with long-term reform.
Short-term policies such as maintaining higher stamp duty thresholds for first-time buyers and home movers until 2025 aim to support those stepping onto or progressing up the housing ladder, bolstering the housing market from the base up. Simultaneously, the steep increase in stamp duty for second-home buyers signals a push to curb speculative investment and free up housing supply. However, a pledge of £500 million for affordable housing and investments in safety measures such as the removal of dangerous cladding reveal the limitations of the government’s budget allocations relative to the scale of the housing crisis.
This article examines the budget’s implications for the UK housing market, exploring how its measures may reshape the landscape for buyers, renters, and investors in 2025 and beyond. By delving into both the immediate impacts and the structural challenges they aim to address, we assess whether these policies effectively lay the foundations for a fairer and more sustainable housing market.
Stamp Duty Reforms: Opportunities and Challenges
The 2024 Autumn Budget introduced significant changes to stamp duty, creating both opportunities and challenges for the housing market. For second-home buyers and investors, the landscape has become notably harsher. From November, the additional stamp duty rate rose from 3% to 5%, meaning second-home buyers must pay an extra 2% on the full property value. This change could further discourage investment in an already-strained rental market, where static supply has driven rents to rise faster than wages. With 12.5% of homes for sale already exiting the rental sector, this policy may accelerate that trend, reducing options for renters and increasing competition.
However, for first-time buyers and home movers, the budget extends a temporary lifeline. The current elevated stamp duty thresholds, which exempt first-time buyers from paying tax on properties up to £425,000, will remain in place until April 2025. Similarly, home movers can still benefit from a threshold of £250,000 during this period. Yet after April 2025, these thresholds will drop to £300,000 and £125,000 respectively, introducing higher tax burdens for future transactions.
These reforms aim to encourage homeownership and disincentivise speculative investments. But while providing short-term relief, the looming 2025 changes could prompt a rush to buy before thresholds are lowered, distorting the market. Meanwhile, challenges in the rental sector risk exacerbating affordability issues for those unable to buy. Balancing immediate incentives with long-term housing market health remains a critical and unresolved tension.
Capital Gains Tax and Inheritance Tax: Policy Continuity
The 2024 Autumn Budget introduced changes to Capital Gains Tax (CGT) but left rates on residential property untouched, reflecting a cautious approach to housing market interventions. While CGT rates for other assets increased from 10% to 18% for lower-rate taxpayers and from 20% to 24% for higher-rate taxpayers, residential property sales will continue to be taxed at 18% and 24%, depending on the seller’s income bracket. Chancellor Reeves emphasised that the UK still has the lowest CGT rates among European G7 nations, signalling a desire to remain competitive for property investors.
This continuity provides some stability to an ongoingly volatile property market. By maintaining current CGT rates for residential sales, the government avoids adding further disincentives for landlords or owners considering selling. However, with rising rental demand and diminishing supply due to other tax and regulatory pressures, this decision may do little to address the broader challenges faced by renters.
Similarly, inheritance tax (IHT) rules for property will remain unchanged until 2030. Under the existing system, the first £325,000 of an estate is exempt, with allowances rising to £500,000 for direct descendants and £1 million for a surviving spouse passing property to their children. While these thresholds provide predictability for estate planning, they largely benefit wealthier homeowners, leaving broader affordability issues unaddressed.
The budget’s CGT and IHT policies signal a focus on stability, but they stop short of delivering transformative changes to the housing market.
Affordable Housing: A Long-Term Solution?
The 2024 Autumn Budget’s £500 million pledge for affordable housing signals the government’s recognition of the UK’s deepening housing crisis. This investment, part of a broader £5 billion package, aims to deliver 33,000 new homes and support small housebuilding projects like Liverpool Docks and Cambridge’s growth initiative.
This reflects a targeted but limited approach to boosting supply, which falls short of addressing the true scale of the problem. England’s social housing stock continues to dwindle, depleted annually by the Right to Buy scheme. To counter this, the government is reducing Right to Buy discounts and allowing local councils to reinvest proceeds fully into new housing stock. These changes aim to sustain social housing supply in the longer term, but may not immediately alleviate current shortages.
The budget’s focus on affordable housing signals a commitment to addressing structural challenges, but its scale limits its immediate effectiveness. Meaningful change requires a sustained, coordinated effort to tackle systemic barriers and develop a housing market that works for all income levels.
Dangerous Cladding: A Critical Safety Measure
In the aftermath of the Grenfell Tower tragedy, fire safety in high-rise residential buildings remains a critical concern, and the 2024 Autumn Budget reflects this priority with a £1 billion commitment to remove dangerous cladding next year. This funding marks a vital step toward addressing lingering safety risks in thousands of properties across the UK, many of which house vulnerable populations.
From the perspective of fire safety surveying, this investment is long overdue but essential. Dangerous cladding, often made from combustible materials like aluminium composite panels, poses a significant fire spread risk, especially in high-rise buildings where evacuation can be challenging. Experts emphasise that removing cladding is just the first step, and that ensuring comprehensive fire safety requires additional measures such as upgrading fire doors, improving compartmentation, and enhancing fire detection systems.
Bearing this in mind, critics are asking whether the £1 billion pledge is sufficient to make a meaningful difference to fire safety, given the scale of the problem. Many buildings still face delays in remediation due to funding gaps, logistical challenges, and disputes over responsibility among developers, building owners, and insurers. Fire safety professionals warn that without a clear framework to expedite remediation, vulnerable residents could remain at risk for years.
This funding signals progress, but the government must address systemic issues in building regulation and enforcement to prevent future crises. Strengthening the oversight of construction materials and mandating stricter fire safety compliance are critical steps to ensure this investment translates into meaningful, lasting improvements in resident safety.
Broader Economic Context
The 2024 Autumn Budget, framed as a response to economic challenges inherited from the previous government, introduced £40 billion in tax increases designed to stabilise public finances. This significant fiscal tightening, while necessary to address a fragile economy, has broad implications for the housing market.
The bulk of the revenue will come from employers through a £25 billion rise in National Insurance contributions. This could indirectly impact housing by curbing business investment and wage growth, squeezing household disposable incomes. Combined with heightened living costs, potential buyers may find it increasingly difficult to save for deposits, dampening demand in the property market.
For landlords and property investors, additional taxes—such as increased Capital Gains Tax on non-residential assets and higher stamp duty for second homes—may further discourage investment. These measures are likely to exacerbate the shrinking supply of rental properties, contributing to upward pressure on rents.
Meanwhile, the broader economic backdrop remains uncertain, with households still facing rising interest rates and inflationary pressures. Mortgage affordability is likely to remain a concern, particularly for first-time buyers entering the market.
Chancellor Reeves’ emphasis on difficult choices highlights the tension between short-term fiscal discipline and long-term economic growth. A stable housing market relies not only on targeted policies but also on the health of the wider economy, making sustained recovery critical to the sector’s future. While the budget includes some measures to support affordability and housing supply, broader economic headwinds could undermine these efforts.
Looking Ahead: Predictions for 2025 and Beyond
The 2024 Autumn Budget sets the stage for a transformative period in the UK housing market, but its long-term effects remain uncertain. With higher stamp duty thresholds for first-time buyers and home movers set to expire in April 2025, the next 16 months are likely to see a surge in market activity as buyers rush to take advantage of current tax reliefs. This could temporarily inflate demand, driving up house prices in the short term.
Post-2025, the reduced thresholds may dampen market activity, particularly among first-time buyers, as affordability challenges intensify. The increase in stamp duty for second-home buyers, combined with unchanged Capital Gains Tax rates for property sales, could continue to dissuade investors, further tightening rental supply. This would exacerbate the affordability crisis for renters, particularly those on lower incomes.
On the supply side, the £500 million pledge for affordable housing, while promising, is unlikely to deliver significant relief in the short term. Long-term growth in housing supply will depend on sustained investment and policy reforms beyond this budget.
Experts predict that rising rents and constrained mortgage affordability could drive more people toward renting or shared ownership models, reshaping market dynamics. However, systemic issues like the undersupply of homes and inadequate regulation in the private rental sector will require ongoing attention.
By 2025, the housing market will reflect the mixed outcomes of these policies—a landscape shaped by short-term pressures and the gradual implementation of longer-term solutions.
Conclusion
The 2024 Autumn Budget demonstrates the complexity of addressing the UK’s housing crisis, balancing long-term fiscal responsibility with measures aimed at supporting buyers, renters, and housing supply. While policies such as maintaining higher stamp duty thresholds until 2025 offer immediate relief for first-time buyers and home movers, looming changes could pose affordability challenges in the near future. Likewise, increased stamp duty on second homes seeks to free up housing stock but risks exacerbating the rental market’s struggles, where supply constraints continue to drive up costs.
The £500 million commitment to affordable housing and the £1 billion allocation for unsafe cladding removal highlight the government’s acknowledgement of the significant structural issues in the market. However, these investments are unlikely to deliver the rapid or comprehensive change needed to address decades of undersupply and safety concerns.
Capital Gains Tax and inheritance tax policies provide continuity and predictability, but they also reflect the limitations of a budget more focused on fiscal stabilisation than transformative housing reform. Broader economic headwinds, including high interest rates and inflation, compound the challenges facing the housing market, dampening demand and affordability alike.
Looking ahead, the success of these policies will depend on their ability to foster a fairer, more sustainable housing market. This will require not only sustained investment but also a commitment to long-term policy reform. The 2024 Budget may mark a step forward, but meaningful progress will depend on how these measures evolve over 2025 and beyond to meet the UK’s enduring housing challenges.
