What does the Autumn Budget mean for the Real Estate sector?

The long-awaited Budget was announced yesterday by the Chancellor, Rachel Reeves. We explore the impact of it on the Real Estate sector in this article.

SDLT

• There will be an SDLT surcharge from 3% to 5% for those buying second homes which takes effect from today, 31 October 2024. The new rates will not apply to a transaction where contracts were exchanged before 31 October 2024, provided it is not an excluded transaction.
• Businesses buying properties worth more than £500,000 will have to pay an extra 2% which means a rise from 15% to 17%, also with effect from today.
• Despite their manifesto pledge, Labour did not raise the SDLT surcharge paid by non-UK residents which remains at 2%.
• The nil rate bands for those buying residential properties are likely to fall from 1 April 2024 to £125,000 and £300,000 for first-time buyers. No comment was made about this during Rachel Reeves announcement, but the change is already taking place under the current law.
• First-time buyers will be exempt from stamp duty up to £300,000 if the total property price is no more than £500,000.

Capital gains tax

Capital gains tax for residential homes is to remain at the current rates, 18% and 24%. On other assets, the lower rate of capital gains tax will be increased from 10% to 18% and the higher rate from 20% to 24%.

Business rates

There will be reforms to business rates which will primarily benefit the retail, hospitality and leisure (RHL) industries.

Labour’s intention is to introduce permanently lower multipliers for RHL from April 2026-2027. This will likely be funded via a higher multiplier on properties with a rateable value of at least £500,000.

In 2025-2026, eligible RHL properties in England will benefit from a 40% relief on their business rates liability. This will be subject to a cash cap of £110,000 per business.

Agricultural property relief

From April 2026, the existing 100% rate of relief for qualifying business and agricultural assets will apply for the first £1 million of combined agricultural and business property amounts. Anything above this will be subject to a 50% rate.

Affordable housing

Ms Reeves confirmed Labour’s manifesto pledge to build 1.5 million homes over the course of this Parliament, and committed to invest £5 billion to deliver plans on housing next year. There will also be an additional £500 million allocated to the Affordable Homes Programme to build up to 5,000 extra homes and £3 billion support for small and medium enterprises and the Build to Rent sector in the form of housing guarantee schemes.

Cladding

The Chancellor announced more than £1 billion investment to remove dangerous cladding from homes next year.

If you would like to find out more about how these changes will impact you or your business, please contact a member of our Real Estate team.

This article was written with the assistance of Noemi Stepan-Sarkissian