HOW WILL THE BUDGET EFFECT YOU

1. Stamp Duty Increase for Second Homes

Labour has raised the stamp duty surcharge for second-home purchases by 2%, moving the rate to 5%. This measure is intended to cool demand for second homes and rental investments, potentially easing competition for primary residences. However, some industry experts believe it could also discourage investment in buy-to-let properties, affecting rental supply and pushing rents higher due to constrained inventory​

2. Freeze on Inheritance Tax Thresholds

The inheritance tax threshold will remain frozen until 2030, which could increase inheritance costs as property values rise. This change may influence property-holding decisions, especially among families with higher-value properties who would face higher estate taxes if property values continue to appreciate​.

3. Encouragement of Housing Supply Growth

The Labour budget has set ambitious targets for housing supply, including a plan to construct 1.5 million new homes over the next five years. To help achieve this, the government has committed to streamlining the planning process, which includes recruiting additional planning officers and simplifying regulations. While these steps are intended to ease development bottlenecks, property developers emphasize that comprehensive and timely reform is crucial to achieving these goals​.

4. Support for First-Time Buyers

Labour retained the existing stamp duty threshold of £425,000 for first-time buyers but did not introduce further incentives. This lack of additional support has been a disappointment for aspiring homeowners, particularly in high-cost regions like London, where property prices are well above average. This limited relief may hinder efforts to make homeownership more accessible to young buyers​

5. Potential Impacts on Rental Market

With the absence of changes to capital gains tax on rental properties, many landlords may opt to hold onto their properties rather than sell. While this stability can be positive for those invested in rental properties, it limits the availability of homes for purchase and could keep rental prices high due to continued demand outstripping supply​ In summary, the Labour budget focuses on measures aimed at improving housing supply through streamlined planning and modest tax changes. However, without substantial new support for first-time buyers or further relief in inheritance tax, the impact on affordability and accessibility in the property market may remain limited in the near term. The industry emphasizes that these measures must be part of broader, sustained reform to achieve meaningful improvement in housing affordability.